IMF allows eurozone to stay in its fantasy world
Under Christine Lagarde’s stewardship the IMF is continuing to indulge the eurozone’s banks while the fund’s donor countries seethe .
By Liam Halligan
21 Apr 2012
For some time, International Monetary Fund supremo Christine Lagarde has argued that a stronger “global firewall” is needed, to contain “any future financial crises”. Well, at this weekend’s IMF-World Bank meetings in Washington, she announced there are now “firm commitments” from member states to boost the IMF’s lending power.
The extra resources, Lagarde’s officials dutifully claimed, will be “available for the whole IMF membership, not earmarked for any particular region”. Everyone knows this is nonsense. This higher IMF firewall has been created because governments around the world are petrified the eurozone could implode, sparking another “Lehman moment”.
Since 2007, the IMF has extended over $300bn in loans. With another $430bn of finance now available, in theory at least, these latest “pledges” have almost doubled its existing lending capacity.
“We made a call to action, and our members delivered,” proclaimed Lagarde. Behind the rhetoric, though, donor countries are seething — not least those who aren’t even in the euro. Switzerland, the UK, South Korea and Sweden have respectively stumped up $26bn, $15bn, $15bn and $10bn. Norway has weighed in with $9bn, Australia and Singapore pledging $7bn and $4bn each.