Category Archives: IMF

US backs new IMF loan to Greece as details of bailout emerge

Timothy F. Geithner, Under Secretary of the Tr...

WASHINGTON – US Treasury Secretary Timothy Geithner has thrown Washington’s support behind the new austerity measures agreed by Greece and said the US backed the idea of a new IMF loan for Athens.

“We welcome the program of economic reforms agreed to by the prime minister of Greece and the coalition parties, and the public statement of support from the major economies of Europe,” Geithner said in a statement Sunday.

“This is a very strong and very difficult package of reforms, deserving of support of the international community and the IMF. The United States will encourage the IMF to support this agreement.”

The Greek parliament has approved a series of measures worth 3.2 billion euros in return for a second bailout deal that would write off 100 billion euros of debt and provide a loan of 130 billion euros to Greece.

Eurozone finance ministers are due to finalize the deal in Brussels on Monday in a bid to try to save Greece — which has already been granted a 110-billion-euro rescue package — from bankruptcy.

The International Monetary Fund, which in May 2010 gave Greece a 30-billion-euro loan as part of the first bailout, has remained silent in recent months on the idea of a new loan.

Its member states are divided on whether to continue financing a country that has not respected its financial commitments. The United States is the largest shareholder in the Fund and has enough votes to block any decision.


Japan, China to coordinate on IMF efforts on euro zone

Japan and China agreed they will jointly respond to any funding request from the International Monetary Fund, which is looking to more than double the size of its war chest to help countries deal with the euro zone crisis.

Japanese Finance Minister Jun Azumi, after meetings with Chinese Vice Premier Wang Qishan and Finance Minister Xie Xuren, said the two countries were ready to support the IMF but further efforts by euro zone members were necessary.

“What we agreed on…is that European countries need to do more, although (the situation), including Greece, is headed in a good direction,” Azumi told reporters in Beijing.

“We can expect some sort of request from the IMF to those including the United States, Japan and China. We agreed that Japan and China will coordinate closely and will jointly respond to IMF.”

The IMF is seeking to raise US$600 billion in new resources to help deal wit the euro zone debt crisis but countries outside of the 17-country euro bloc want to see its members stump up more money before they commit additional resources to the IMF.

Azumi said the two sides did not discuss the specific size of any funding support for the IMF although a Japanese finance ministry official said Tokyo was willing to commit a “sizeable” amount.

“The idea is Japan and China will coordinate, not compete, on any IMF action,” the official said, adding that both countries were fully aware of their importance in dealing with the crisis.

China, which has been consistently reluctant to make firm financial commitments, is seen as having the financial firepower to bail out some European governments given its US$3.2 trillion worth foreign exchange reserves at hand.

Earlier in the month, Chinese Premier Wen Jiabao said the world’s No. 2 economy is considering increasing its participation in the European rescue funds and is still studying how it might go about doing it, including possibly through the IMF.