Published On: Fri, Apr 20th, 2012

IMF likely to reach $400 bn ‘firewall’ target: Japan

The International Monetary Fund looks set to receive the US$400 billion it needs to boost a “global firewall” and help stem Europe’s debt crisis, Japan’s finance minister said.

“I think it is becoming highly possible that we will achieve a sum near the targeted $400 billion,” Jun Azumi told reporters in Washington, in footage broadcast in Japan on Friday.

“I think this will give relief and stability to the global economy,” he added.

Azumi was speaking after the first day of a two-day meeting of finance ministers and central bank chiefs of the world’s 20 largest economies.

With worries mounting that Spain might require the eurozone’s fourth bailout, IMF head Christine Lagarde said Thursday she was confident the global crisis lender would get a significant boost to its intervention capacity.

“As part of the outcome of this meeting, we expect our firepower to be significantly increased,” Lagarde told reporters.

She did not give a figure for her “global firewall”, but warned that “dark clouds” still hover and that more turmoil in Europe could affect the entire global economy.

Japan made a $60 billion pledge earlier this week, which was followed by promises from the EU, Sweden, Denmark and Poland, among others, taking the fund to 80 percent of the target.

But all eyes at the IMF headquarters were on whether the BRICS economies seeking greater say in the running of the IMF – Brazil, Russia, India, China and South Africa – would meet the balance.

China, the world’s second-largest economy, has kept quiet on the issue and many of the BRICS have voiced concern that their funds could be used to add to already huge bailouts under way in Europe.

“We are willing to discuss various funding plans for the IMF with IMF members, in a frank and positive manner,” China’s foreign ministry spokesman Liu Weimin said, according to the Xinhua news agency.

Indian Finance Minister Pranab Mukherjee, speaking for his own country and the Group of 24 middle-income countries – including the BRICS – declined to link contributions to the crisis fund with the size of their voice in the IMF.

But he did say that the G24 felt the IMF needed to push harder to complete the minor restructuring of voting rights mapped out in 2010 and quickly embark on a much larger one.

“Quota reforms should not be delayed” he said, adding that the “ground realities” of the shift in economic power to the BRICS “ought to be recognised.”

“We believe that the ultimate goal must be to better reflect the growing role of (emerging economies) as a whole in the global economy,” the G24 said in a statement after meetings with Lagarde. – Tuoitre