Three hours of wrangling by phone by eurozone ministers on Monday resulted in an agreement to boost the resources of the International Monetary Fund by some 150 billion euros ($195.9 billion). However, the eurozone may not meet its target a 200 billion euro fund without the participation of Britain, which has reportedly refused to contribute to the joint effort.
Reuters reported Tuesday that European Union finance ministers announced that the Czech Republic, Denmark, Poland and Sweden, not members of the eurozone, have said they will extend loans to the IMF to assist the smaller bloc of 17 countries; however, they must first seek approval from their parliaments. Officials had set an informal deadline of Monday to come up with the total of 200 billion euros, the amount agreed upon by EU leaders at their summit meeting Dec. 8-9, and had sought support from other countries for the sum.
Britain declined to participate, which means the eurozone will be more dependent on countries completely outside the EU, such as Russia and China, for additional loans. It said so in no uncertain terms, with sources within the British Treasury saying that the nation had decided not to be part of the boost in IMF funding. One source said, “We were clear that we would not be making a contribution,” and another said there was “no agreement on the 200 billion” total.
The EU was less forthright in its statement about Britain’s abstention from the plan, saying merely that London would make a decision on the matter early in 2012 at a G20 meeting.
In its statement, the EU also said, “Euro area member states will provide 150 billion euros of additional resources through bilateral loans to the fund’s general resources account. The EU would welcome G20 members and other financially strong IMF members to support the efforts to safeguard global financial stability by contributing to the increase in IMF resources.”
The U.S. has expressed its worry that the IMF is already too exposed to eurozone debt, and there are concerns that the plan may not work with Britain and the U.S. holding back, and Germany’s Bundesbank reluctant as well.
German Finance Minister Wolfgang Schaeuble commented on the U.S. absence from the plan, and was quoted in the report saying, “Washington cannot make bilateral loans available to the IMF without Congress approving it. There’s no chance of that and the American government has always made that clear.”