The International Monetary Fund is proposing to raise an additional $600 billion from G20 countries and emerging nations in order to help with the growing consequences of the Eurozone debt crisis. The IMF currently has a lending capacity of $380 billion, but they believe a global financing gap of around $1 trillion will bore its way into the global economy if affirmative action is not taken. IMF Managing Director Christine Lagarde expressed her desires to combat the crisis yesterday: “The biggest challenge is to respond to the crisis in an adequate manner and many executive directors stressed the necessity and urgency of collective efforts to contain the debt crisis in the euro area and protect economies around the world.”
Of the $600 billion that the IMF seeks, $200 billion will be expected to come from EU member states. Britain will be accountable for $19 billion, but the UK government has confirmed that it will not contribute until it sees dramatic “improvements in European Union efforts to sort out its currency.”
The IMF expects the emerging economies of China, Brazil, Russia, India, Japan and oil-exporting nations to be the top contributors according to a G20 official. Although these countries share less ties with the Eurozone than Britain or the US, they are still implicated and negatively affected by the debt crisis. Global growth forecasts were slashed this week and it is in the rising economies’ best interests to help sure up the Eurozone as to avoid a global financial meltdown.
Talks are expected to be held at the G20 finance ministers and central bankers summit in Mexico City on the weekend of the 25-26th February.
Photograph Courtesy of Stock Images
