London: World leaders are looking to raise up to $1.0 trillion (€748 million) in new financing for the International Monetary Fund (IMF) and the World Bank, diplomats said on Thursday.
Group of 20 leaders want the extra cash to boost liquidity and help embattled countries - particularly in crisis-hit eastern Europe - through the global recession.
“One of the best outcomes would be that we obtain a package totalling $1.0 trillion,” one diplomat at the Group of 20 summit in London told AFP.
The British government’s secretary to the Treasury Stephen Timms said the G-20 would ramp up IMF funds to about $750 billion.
Questioned by reporters about whether resources would be trebled from the current $250 billion, he replied that he would “certainly expect it to be in that area.”
“The crucial thing... is to help the emerging economies get the benefit of growth because they have been responsible for such a large share of growth in the world economy over the last decade,” Timms added.
By late Wednesday, around $260 billion had been pledged by G-20 countries for the IMF to help countries stricken by the economic crisis, according to the source.
Canada ($10 billion), the European Union ($100 billion), Japan ($100 billion) and Norway have signalled that they would pledge extra cash through bilateral agreements that could boost the IMF’s current lending capacity of $250 billion, the official said.
The G-20 also aims to boost World Bank funding, partly by asking members to fund a total $100 billion a year over three years.
Earlier this month, the United States suggested that IMF lending should be trebled to $750 billion.
Britain’s international development secretary Douglas Alexander said the global financial crisis was forcing more cash-strapped countries to ask for emergency IMF funds.
“Traditionally, IMF resources have often been required in circumstances where national economies have got into classic balance of payments difficulties,” Alexander said at a press briefing.
“What we are now experiencing are countries who are obliged to consider approaching the IMF not because of decisions that have been reached domestically, but because of the impact of the global crisis.”
Alexander added that G-20 leaders would consider reform of the IMF in terms of conditions attached to getting funds, as well as the level of cash available.
Romania, Hungary, Iceland, Latvia, Serbia and Ukraine in Europe and Pakistan, Mexico and others elsewhere have sought emergency IMF cash in recent weeks.
“With the expected calls on IMF resources in eastern Europe, the present level of resourcing for the IMF - about $250 billion - is broadly judged not to be adequate,” British minister Timms said.
That was why G-20 finance ministers had last month anticipated that IMF funding would double to some $500 billion, Alexander added.