IMF seeks more funds

Wed Jan 18, 2012 6:33pm EST
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By Lesley Wroughton and Krista Hughes

WASHINGTON/MEXICO CITY (Reuters) - The International Monetary Fund is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout of the euro zone debt crisis, but the United States and other countries are throwing up roadblocks.

The United States and Canada said on Wednesday Europe must put up more of its own money to solve its sovereign debt crisis, clouding prospects that G20 talks in Mexico this week can lay the ground for a deal on bolstering IMF resources.

"We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts," a U.S. Treasury spokesperson said. "The IMF cannot substitute for a robust euro area firewall."

Group of 20 deputy officials are set to discuss boosting IMF resources, which will need leaders' signoff, at a meeting in Mexico City on Thursday and Friday ahead of a late February finance ministers' meeting of advanced and development nations.

The IMF currently has a lending capacity of about $380 billion and estimates there are about $1 trillion in "uncovered" financing needs over the next two years.

"Based on staff's estimate of global potential financing needs of about $1 trillion in the coming years, the fund would aim to raise up to $500 billion in additional lending resources. This total includes the recent European commitment of about $200 billion in increased fund resources," an IMF spokesman said.

"At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations," he added.

IMF sources who were present at an IMF board meeting on the issue on Tuesday told Reuters the IMF was seeking to raise up to$600 billion, with $100 billion needed as a "protection buffer."   Continued...

<p>International Monetary Fund Managing Director Christine Lagarde during a news conference in Brasilia, December 1, 2011. REUTERS/Ueslei Marcelino</p>