IMF to secure $400b funding for Europe

The Group of 20 nations on Friday stood ready to commit at least $400 billion to bulk up the International Monetary Fund, though Brazil wants to tie the cash to a pledge that emerging market voting power at the IMF will increase.

The IMF has been aiming to raise at least $400 billion — a doubling of its lending capacity — to ensure it has enough firepower to respond if Europe’s debt crisis escalates.

“We have been aiming at around $400 billion or beyond, and I am confident we will reach this objective in the G-20 meeting today,” EU Economic and Monetary Affairs Commissioner Olli Rehn said.

A G-20 official familiar with a draft of the communique the group of advanced and emerging countries was preparing for release said that there would be “firm commitments to increase resources available over $400 billion.”

British Chancellor of the Exchequer George Osborne on Friday said his country will loan the IMF $15 billion as part of a drive expected to add more than $400 billion to the global lender’s resources.

Osborne cast the move as a sign of Britain’s fiscal strength.

Russia also said the G-20 was ready at a meeting on Friday to pledge enough new funds to meet IMF chief Christine Lagarde’s $400 billion target. She said earlier this week the IMF had already secured about $320 billion from Europe and Japan.

“Trust me that the G-20 will announce the final amount. This will be an amount that will satisfy the management of the International Monetary Fund,” said Sergei Storchak, Russia’s deputy finance minister. He said Russia would offer $10 billion.

Support from Russia, China and Brazil has been seen as crucial to double the IMF’s war chest so it has the resources it might need to aid countries that face fallout from Europe. An international diplomat said that in all, emerging nations have lined up at least $100 billion.

The IMF has warned that the eurozone’s debt crisis presents the gravest risk to the global economic expansion, and financial markets worry that Spain and Italy may next require bailouts, following Greece, Ireland and Portugal.

Lagarde said on Thursday she expects to seal a deal on fresh funds at the World Bank/IMF meetings this weekend. But Brazil said that as a condition for funds, emerging powers want fresh pledges to recognise their fast-growing global economic weight written into the G20 communique. They are frustrated over delays — particularly in the United States — in implementing an agreement to lessen Europe’s sway at the IMF and lift China into the No. 3 voting slot.

“What we want and demand in every meeting is that this commitment be reaffirmed,” Brazilian Finance Minister Guido Mantega said on Thursday after a meeting of officials from the so-called BRICS nations — Brazil, Russia, India, China and South Africa.