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G20 to up IMF resources by $500 billion
April 2, 2009 / 10:46 AM / 9 years ago

G20 to up IMF resources by $500 billion

LONDON (Reuters) - The latest draft of the G20 communique calls for an increase of International Monetary Fund resources by $500 billion (340 billion pounds), taking its total available for lending to $750 billion, G20 sources said on Thursday.

A G20 source from a large emerging market country said in addition the leaders were discussing allocating between $100 billion to $250 billion worth of IMF Special Drawing Rights for its member countries, which would put IMF resources close to $1 trillion.

That would effectively triple the amount of resources available for lending through the global financial institution, from the $250 billion the IMF is already able to tap to help shore up economies hit by the global financial crisis.

Japan and the European Union have already said they will give $100 billion each, and the United States has indicated it will give at least that amount. Norway has also committed $4.56 billion to support the IMF.

In addition, Canada announced on Thursday it will contribute C$10 billion to the IMF.

One source said the communique opened the door to the IMF going to capital markets to borrow, if needed, to shore up its resources.

The Fund considered borrowing on capital markets during the debt crisis of the early 1980s.

The IMF is authorised to borrow under its articles of agreement to replenish its holdings of currencies that are needed for lending.

It has also recently said it could issue bonds denominated in Special Drawing Rights, and China has indicated it would be interested in contributing to the IMF’s war chest this way.

Another source said there was a reference in the communique to IMF gold sales but “the language had not been firmed up” and it was unclear whether it would be separate from the 400 tonnes of gold the IMF committed to sell last year as part of a broader restructuring of its income.

Treasury minister Stephen Timms said the talks referred to gold sales over and above existing plans although others said no concrete decision would be taken at Thursday’s summit.

“What’s referred to here is in addition to what has been previously,” he told reporters at the summit.

Reporting by Lesley Wroughton and Axel Bugge. Editing by Mark Trevelyan

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