Washington: The head of the International Monetary Fund on Wednesday said she had commitments to raise fund resources in excess of USD 316 billion, "and more in the bag."
That significantly advances IMF Managing Director Christine Lagarde's efforts to roughly double the fund's lending capacity by adding USD 400 billion in new cash. It's also more than the USD 286 billion running total reached earlier in the week after Japan and Scandinavian countries pledged to supplement Europe's previous vow of USD 200 billion.
Because the fund must keep around 20 percent of its cash as prudential reserves, USD 316 billion in new resources would give the fund roughly USD 250 billion in extra lending capacity.
It currently has around USD 381 billion it can lend to countries in need.
The IMF said it needs more cash resources as an essential backstop to Europe's firewall to meet potential demand for emergency loans. Existing resources "pales in comparison" to potential demand for IMF cash, Lagarde has warned in recent months.
The fund boss didn't elaborate on where the additional resources were pledged from. But later, the IMF said Switzerland and several other countries had pledged a combined USD 26 billion and Poland, USD 8 billion. That would take the total pledges to around USD 320 billion.
Lagarde said new funds were needed as the state of global economy as "extremely unstable," warning that without international cooperation, a fragile recovery could collapse.
The comments on the eve of IMF and ministerial meetings where Lagarde said she wants to gather "critical mass" for her funding target.
"If countries decide they will cooperate ... they can actually change the course of things," she said, adding that if they don't, then the outlook "will not exactly be a pretty one," Lagarde said at a Bertelsmann Foundation event.
Earlier in the week, the IMF marginally revised its global economic outlook upwards, but warned that threats from the eurozone could plunge the world into another financial crisis and destroy growth prospects for countries both rich and poor alike.
First Published: Thursday, April 19, 2012, 09:57