Christine Lagarde: IMF may need billions in extra funding

Sunday, September 25, 2011
By Paul Martin

Christine Lagarde has signalled that the International Monetary Fund (IMF) may have to tap its members – including Britain – for billions of pounds of extra funding to stem the European debt crisis

Louise Armitstead and Jonathan Russell
TelegraphUK
25 Sep 2011

The head of the IMF has warned that its $384bn (£248bn) war chest designed as an emergency bail-out fund is inadequate to deliver the scale of the support required by troubled states.

In a document distributed to the IMF steering committee at the weekend, Ms Lagarde said: “The fund’s credibility, and hence effectiveness, rests on its perceived capacity to cope with worst-casescenarios. Our lending capacity of almost $400bn looks comfortable today, but pales in comparison with the potential financing needs of vulnerable countries and crisis bystanders.”

The suggestion came after European officials revealed they were working on a radical plan to boost their own bail-out fund, the European Financial Stability Facility (EFSF), from €440bn (£384bn) to around €3 trillion.
The plan to increase the EFSF firepower is the crucial part of a three-pronged strategy being designed by German and French authorities to stop the eurozone’s debt crisis spiralling out of control. It also includes a large-scale recapitalisation of European banks and a plan for an “orderly” Greek default.

The Rest…HERE
Although Britain is not involved in the large-scale eurozone bail-out projects, it is liable for 4.5pc of IMF funding.

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