Administration to Ask Congress to Expand Funds Available to IMF
Wednesday, March 11, 2009; 3:26 PM
The Obama administration is planning to ask Congress to expand the United States' primary line of credit to the International Monetary Fund from about $10 billion to $100 billion to boost emergency support for struggling economies around the world, Treasury Secretary Timothy F. Geithner said today.
Under the proposal detailed by Geithner, the IMF would be able to borrow up to $500 billion -- a ten-fold increase in the line of credit -- to bailout countries in crisis. The rest of the money could come from major European states as well as Saudi Arabia and Japan, which typically contribute to the fund, among others. China, which has not been a major contributor to the organization, has been asked for funds as well.
"The global recession is deepening," Geithner said. Given the intricate ties between economies across the world, he said it is critical for leading nations to move together in a "sustained" and "coordinated" fashion.
"We are going to move together to do what it takes," he added.
Geithner said he plans this weekend in London to press his counterparts from major economies to boost their fiscal stimulus and to sustain that spending for as long as the global recession lasts. He said the United States agrees with the IMF recommendation that such stimulus packages need to amount to 2 percent of each country's annual economic activity.
That message has not sat well with some members of the European Union. Some officials from these countries doubt the wisdom of falling deeper into debt to fund infrastructure and other projects aimed at creating jobs, as the United States is doing. Germany has so far agreed to spend 1.5 percent of their annual economic activity while France has signed off for about half that.
The international talks precede a summit of 20 world leaders on April 2 in London aimed at developing a plan to address the world's financial crisis and economic slowdown. But the disagreements over stimulus spending pose a challenge to that cooperation.
Another major item on the agenda for this weekend's gathering is to make sure a worldwide regulatory reform effort is moving forward. Geithner said he wants to expand the membership of the Financial Stability Forum in Switzerland, which provides a forum for world central bankers and regulators. He also wants to coordinate oversight of financial markets beyond the traditional banking sector.