UK leaves door open to further IMF boost

Date: Monday 09 Jan 2012

David Cameron has left open the door to Britain giving billions of pounds of new support to the International Monetary Fund –and indirectly to ailing members of the Eurozone- in a move likely to infuriate eurosceptic MPs in his own Conservative party, the Financial Times reports in this morning´s edition.

In fact, thirty MPs from his own party joined forces with Labour this past summer to oppose Mr.Cameron´s petition to increase Britain´s IMF contributions.

On that occasion the government did finally obtain permission to contribute a further £10bn and only a few months ago the prime minister said that: “What we anticipate doing would be within that headroom.” But government insiders say the situation could change, if Japan and other leading countries like China and Brazil decide to increase their support for the IMF to help it deal with the Eurozone crisis. “Things could come to a head at the G20 finance ministers´ meeting next month,” said one.

Britain is already under pressure from Eurozone countries to increase its IMF commitments by about £30bn as part of a European package.

Worth noting as well, the FT calls attention to US opposition to any increased funding for the IMF, so that any fresh round of financing would have to be “ad-hoc”. Likewise, the newspaper cites the former head of the IMF´s China division. Eswar Prasad, as saying that,” there is a rising concern among the emerging markets that Europe is trying to pull a fast one, getting the IMF to take the risk of lending to Eurozone governments on its behalf.”

AB

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