Japan vows $60 billion to boost IMF firepower

Tue Apr 17, 2012 4:17am EDT
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By Tetsushi Kajimoto

TOKYO (Reuters) - Japan said on Tuesday it will provide $60 billion in loans to the International Monetary Fund, becoming the first non-European nation to commit money to boost the fund's financial firepower to contain the euro zone debt crisis.

Finance Minister Jun Azumi said Japan hoped Tokyo's contribution, which will be formally announced at a Group of 20 financial leaders' meeting later this week, will encourage other countries to follow suit.

Indeed, IMF Managing Director Christine Lagarde was quoted as saying she hoped to secure government agreements this week to raise the IMF's funds by more than $400 billion, about two-thirds of the amount the Fund had said in January it would need.

"I really hope this week we'll reach the critical mass of more than $400 billion. We are determined to do all we can," she was quoted as telling Italy's main financial newspaper Il Sole 24 Ore, though she also said finally sealing the funds might take a bit longer.

Japan's announcement comes ahead of the IMF and World Bank Spring Meeting and a G20 finance leaders' gathering in Washington, which run from Friday to Sunday.

"Following a series of euro zone's policy responses, it is important to strengthen IMF funding and pave the way for ensuring an end to the crisis not only for the euro zone but also for Japan and Asian countries," Azumi told a regular news conference after a cabinet meeting.

"I am confident that many other countries will pledge contributions to the IMF," he said.

The IMF, which acts as a lender of last resort for governments, said in January it would need $600 billion in new resources to help "innocent bystanders" who might be affected by economic and financial spillovers from Europe.   Continued...

A photographer takes pictures through a glass carrying the International Monetary Fund (IMF) logo during a news conference in Bucharest March 25, 2009. REUTERS/Bogdan Cristel