Belfast Telegraph

IMF to ask UK to pay extra as it tries to raise £324bn

By Andrew Woodcock

The UK looks set be asked to increase its contribution to the International Monetary Fund, after it confirmed it is looking at raising an additional £324bn to shore up ailing economies.

Downing Street confirmed Chancellor George Osborne is ready to put any “decent” request from the IMF for an additional UK contribution to MPs for approval.

But Prime Minister David Cameron made clear that any increase in UK funding would have to be designed to assist struggling countries and not to bail out the euro.

IMF officials believe that the organisation's existing £259bn ($400bn) lending capacity needs to be increased by around £324bn ($500bn) to protect the global economy from instability caused by the continuing eurozone crisis.

Britain is liable for 4.5% of IMF funding, so an increase on this scale could take the UK's commitment beyond the £40bn currently approved by Parliament — potentially provoking furious opposition among MPs.

In a statement confirming that the IMF is preparing for an appeal for more funds, a spokesman said: “Based on staff's estimate of global potential financing needs of about $1trillion (£648bn) in the coming years, the Fund would aim to raise up to $500bn (£324bn) in additional lending resources”.

This total includes the recent European commitment of about £130bn ($200bn) in increased Fund resources.

“At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations with the Fund's membership have been completed.”

Speaking yesterday at 10 Downing Street following talks with Italian Prime Minister Mario Monti, Mr Cameron said: “We are founder members and great supporters of the IMF. It's a key international institution.

“We set out our conditions at the Cannes G20 summit about expansion of the IMF. We believe the IMF must always lend to countries, not to currencies. We would only act if that was with others, not just as part of a eurozone measure.”

He added: “But above all, we want to see that the eurozone is standing behind its own currency.

“The case has to be looked at in that context, but we are founder members of the IMF and strong supporters of it.”

Belfast Telegraph

Popular