09 December 2011

EU to channel €200 billion to IMF to strengthen global safety net

The EU leaders also laid out a new “fiscal compact” to prevent future debt run-ups and accelerated the start of a planned permanent €500 billion rescue fund.

European leaders meeting in Brussels agreed to make bilateral loans to the IMF of as much as €200 billion ($270 billion)—with €150 billion contributed by eurozone members and €50 from other members of the EU. These resources are expected to come from individual countries' reserves when needed, mostly via their national authorities, to the Fund's general resources.

The EU's exact contribution is expected to be finalised within the next 10 days. IMF Managing Director, Christine Lagarde, said the decisions taken by European leaders at their summit in Brussels “are an important contribution to helping address the crisis facing the eurozone and strengthening the global economic recovery”.

In a statement, the EU’s Council said: “euro area and other Member States will consider, and confirm within 10 days, the provision of additional resources for the IMF of up to €200 billion ($270 billion), in the form of bilateral loans, to ensure that the IMF has adequate resources to deal with the crisis. We are looking forward to parallel contributions from the international community.”

IMF revamps toolkit

The IMF has revamped its lending toolkit to bolster its ability to meet the needs of its member countries as global growth continues to weaken. Since the crisis erupted in 2007, the IMF’s lending commitments have reached a record level of about $250 billion. This has included an increase in concessional lending to the world’s poorest nations.

The reforms, which have been under way for some time, come in response to calls from the Group of Twenty (G20) industrialised and emerging market economies and the IMF’s broader membership for a stronger global financial safety net to help prevent crises.

Press release

© International Monetary Fund