European officials are coming to the spring meeting of the International Monetary Fund (IMF), if not exactly hat in hand, still looking for more money. Worries over Spain mean that additional funding might be needed to combat the euro zone debt crisis, which once again is beginning to look out of control.
Bloomberg reported Monday that the reluctance of non-European countries to boost contributions to the IMF is in part due to a perception that Europe has not done enough to combat the debt crisis. The European Central Bank (ECB), however, believes otherwise, and in the course of the April 20-22 IMF meeting, euro zone countries will try to convince nonbelievers.
In March, under pressure from other countries to do more to contain the crisis, European officials agreed to boost the rescue mechanism for troubled countries by 500 billion euros ($654 billion) by allowing the temporary and permanent rescue funds to operate together for a limited period of time.
They also agreed to contribute 150 billion euros to the IMF, and, according to ECB executive board member Joerg Asmussen, “European governments have done their part.” He added, “I would now expect our non-European friends and partners to contribute their part to IMF resources.”
That is what euro zone member countries will be looking for, although those non-European members are by no means convinced. Finance Minister Jun Azumi of Japan said in the report, “if we’re asked if we’re 100 percent satisfied with Europe’s efforts, I would say they need further efforts.”
Timothy Geithner, U.S. Treasury secretary, said last month that the U.S. would not be raising its contribution, since the IMF already has “substantial financial resources.”
Another variable in the mix is, of course, the first round in French elections, which begins on April 22. As President Nicolas Sarkozy squares off against Francois Hollande, the outcome is by no means assured. And that will have an effect on discussions.
According to Jim O’Neill, chairman of Goldman Sachs Asset Management, “France faces a highly intriguing election, which could add to market woes.” It could also weigh on negotiations.