IMF's Bid For Funds Just Part Of Europe's Struggle
WASHINGTON (AP) â When the International Monetary Fund meets this weekend, its top goal will be as simple as it is difficult: Get member nations to pledge many more billions in aid â in case the IMF needs to rescue more European economies.
Yet even success would hardly inspire confidence in Europe's economy. It is, by all accounts, already in recession. And slowing economies elsewhere â from China to Brazil to India â may reduce the exports the continent needs to grow. European nations need faster growth to help lighten their debt loads.
All that is out of the IMF's control â whether or not it receives pledges of further aid this weekend.
"The extra IMF resources will serve as a backstop that will provide reassurance to financial markets," said David Wyss, former chief economist at Standard & Poor's. "But it doesn't address the issue of how you get growth started in countries that are in deep recessions."
What makes stronger growth so hard to achieve is that Europe's most troubled economies are under orders to cut â not boost â spending. That's part of the fiscal austerity deal under which many European Union members must curb spending to help combat the continent's debt crisis.
The IMF's policy meetings Saturday in Washington will focus on the more immediate task of raising more money. Its sister lending agency, the World Bank, will also hold policy meetings.
Before they do, finance ministers and central bank governors of the Group of 20 nations meet Friday to discuss Europe's debt crisis. The G-20 comprises traditional economic powers such as the United States, Germany and Japan and faster-growing emerging nations such as China, Brazil and India.
The IMF's managing director, Christine Lagarde, has scaled back her target for how much more aid the IMF needs member countries to contribute. The 188-nation IMF already has about $385 billion it can lend to troubled countries. In January, Lagarde had mentioned seeking up to $500 billion more in commitments.
Last week, she said less money might be needed because of stronger global growth. She didn't specify a figure. But she said Thursday that she's received about $320 billion in pledges and is seeking more.
Japan said this week it's prepared to contribute $60 billion. And three European countries â Denmark, Norway and Sweden â pledged a combined $26 billion.