Japan became the first of the non-European nations solicited to contribute to the International Monetary Fund (IMF) to commit funds to do so, and said it will provide $60 billion to the institution.
Reuters reported Tuesday that the announcement preceded the formal commitment, which will come at the G20 meeting of financial leaders later in the week. The pledge boosts overall commitments to about $310 billion, with approximately $200 billion coming from euro zone countries and another $50 billion from other European Union countries. The U.S. has said it will not commit any additional funds to the IMF.
Earlier in the year the IMF had said it could need as much as $600 billion in new funding to fulfill its role as lender of last resort to assist “innocent bystanders” who could be caught up in the economic and financial fallout from Europe and its debt crisis. Last week, however, Christine Lagarde, who heads the IMF, said that perhaps not so much would be necessary because economic risks had fallen.
That is a good thing, because not only the U.S. but Canada as well have no intention of making contributions, with the latter saying that the IMF has enough funding to do its job. China, Russia and Brazil are holding out, saying that they want more bang at the ballot box in exchange for contributions.
And even Japan says that Europe could do more to fight the debt crisis, despite its willingness to contribute. However, Finance Minister Jun Azumi said in the report that Japan hoped its example would encourage other countries to follow with their own contributions.
He was quoted saying, “Following a series of euro zone’s policy responses, it is important to strengthen IMF funding and pave the way for ensuring an end to the crisis not only for the euro zone but also for Japan and Asian countries.” He added, “I am confident that many other countries will pledge contributions to the IMF.”