http://www.zerohedge.com/news/europe-now-officially-bazookos-circus-italy-provide-%E2%82%AC235-billion-imf-cash-bailout-italy
Submitted by Tyler Durden on 12/19/2011 16:04 -0400
http://www.reuters.com/article/2012/04/21/us-imf-idUSBRE83I19X20120421
April 20, 2012
Europe Is Now Officially Bazooko's Circus - Italy To Provide €23.5 Billion In IMF Cash To Bailout Italy
The EU was already embarrassed into releasing a press release that it could procure €150 billion in Eurozone contributions to the IMF rescue, now that the UK is out of the picture and the December 9 Eurosummit agreed upon total of €200 billion including non-Eurozone contributors (mostly the UK with €30.9 billion) has been "adjusted." Now we find that the rabbit hole goes even deeper into Bazooko's Circus because according to a just released update, of the remaining meager €150 billion in funding, Germany will be responsible for €41.5 bn, France at €31.4 billion, andItaly will need to provide €23.5 billion and Spain another €15 billion. To, you know, bailout Italy and Spain. #Ref!
As a reminder: Bazooko's
http://www.reuters.com/article/2012/04/21/us-imf-idUSBRE83I19X20120421
WASHINGTON |
(Reuters) - Leading world economies on Friday pledged $430 billion in new funding for the International Monetary Fund, more than doubling its lending power in a bid to protect the global economy from the euro-zone debt crisis.
The promised funds from the Group of 20 advanced and emerging economies aim to ensure the IMF can respond decisively should the debt problems that have engulfed three euro zone countries spread and threaten a fragile global recovery.
"This is extremely important, necessary, an expression of collective resolve," IMF Managing Director Christine Lagarde said. "Given the increase that has just taken place, we are north of a trillion dollars actually. So I was a bit mesmerized by the amount."
The $1 trillion figure includes both the IMF's existing and newly won resources, as well as loans already committed.
The IMF would be able to use its increased firepower to help any country or region in need. But Europe's crisis was the driving force behind the push for more funds, though officials and investors alike said it merely buys time for Europe to undertake more economic reforms.
Greece, Ireland and Portugal have already received bailouts. Investors now are worried that Italy and Spain, the euro zone's third and fourth biggest economies, will fail to bring down their debt burdens quickly enough to satisfy financial markets and be forced to follow the same path.
The IMF traditionally has provided aid to struggling emerging market nations, but the euro zone debt crisis has made big industrial economies a new focus. And emerging economies, which have been pressing for a greater say at the IMF, joined in pledging additional funds.
GRAVEST ECONOMIC THREAT
Worries about the debt crisis have dominated talks among finance officials in Washington this week for the semi-annual meetings of the IMF and the World Bank, with Spain facing special scrutiny.
The IMF has warned the crisis presents the gravest risk to global economic expansion, though the G20 said in its statement that the threat of a major blowup has started to recede. The IMF estimated in January it would need $600 billion in fresh funds, but Lagarde lowered that figure to $400 billion, saying actions Europe had taken to quell the crisis had cut the risk.
In foreign currency markets, investors welcomed the G20 move, giving a boost to the euro, which has enjoyed its best week since February.
But in a sign investors lack confidence that a big IMF war chest can draw a line under the region's problems, both Spanish and Italian bonds faced pressure on Friday. The yield on Spain's 10-year bond topped 6 percent before retreating..
David Keeble, global head of interest rate strategy at Credit Agricole Corp., said the expansion of the IMF's coffers was only a start in resolving the euro zone crisis.
"The $430 billion is a nice enough size. I'm guessing that they'll get a few billion more, although the market will no doubt come to the conclusion that no number is big enough," he said.
Indeed, IMF officials said the new funds would only buy time for Europe to continue difficult economic reforms. Tensions over whether European countries are sufficiently committed to making deep and painful cuts to their budget deficits or whether European Union policymakers have dug deeply enough into their own pockets have plagued G20 talks over financial resources.
Lagarde defended Europe's actions to date, saying its package of fiscal, financial and monetary measures taken in recent months were "sufficient." However, the head of the IMF's steering committee, the Singapore finance minister Tharman Shanmugaratnam, was more cautious.
"Whether Europe has done enough to build up its firewall depends really on its reforms," he said, speaking alongside Lagarde. "If its reforms lose credibility, if its reforms lose momentum, then quite frankly the firewall is not enough. So it depends entirely on the commitment to reform."
Not all G20 members were committing new funds.
The United States has said it has already done enough by providing dollar liquidity for European banks and Canada has said Europe needs to do more to erect a financial firewall, although it did not close the door completely.
"Circumstances could change," Canadian Finance Minister Jim Flaherty said.
EMERGING MARKETS
Emerging markets won assurances from their G20 partners that their growing economic clout would be rewarded over time with greater voting power in the IMF, known as quotas - an issue that was central to winning their support.
"We conditioned the money to the completion of the IMF's quota reform so that emerging countries have larger representation - that was accepted," Brazilian Finance Minister Guido Mantega said after the G20 meeting.
While the BRICS group of leading emerging nations - which also includes Russia, India, China and South Africa - have agreed to provide more money, the exact amount each country will chip in was not announced. The issue now goes to the G20 leaders' summit in Los Cabos, Mexico, in June.
The BRICS countries are especially frustrated that the United States is stalling over implementing a 2010 voting reform deal, which would reduce Europe's dominance on the IMF board and give China the No. 3 position. Danish Finance Minister Margrethe Vestage said the European Union would go ahead and give up two IMF board seats later this year as planned.
The G20 communiqué reaffirmed members would redistribute IMF power by the October meeting, and stick to plans to revisit voting shares next year. This action would recognize that the world economy has changed substantially in view of strong growth in dynamic emerging markets, the communiqué said, meaning that emerging economies should have greater clout at the IMF.
and here is the running total from the IMF....
http://www.imf.org/external/np/sec/pr/2012/pr12147.htm
IMF Managing Director Christine Lagarde Welcomes Pledges by Members to Increase Fund Resources by Over US$430 billion
Press Release No. 12/147April 20, 2012
Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), issued the following statement today:
“We warmly welcome pledges by our members to increase IMF resources by over $430 billion, almost doubling our lending capacity. This signals the strong resolve of the international community to secure global financial stability and put the world economic recovery on a sounder footing. These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members. They will be drawn only if they are needed, and if drawn, will be refunded with interest.
I would like to express my thanks to all the countries that have already announced specific contributions, which are listed below. I am also grateful to China, Russia, Brazil, India,Indonesia, Malaysia, and Thailand1 and other countries all of whom have indicated that they will be among the contributors.
This broad-based response to our request for additional resources will help strengthen global economic and financial stability in the interests of all our members. We made a call to action, and our members have delivered. By their bold actions, our members have once again shown their firm resolve to stand by the IMF and ensure it has the resources necessary to do its job. In turn we at the Fund commit to safeguard our members’ interests and resources. I am very encouraged by this further demonstration of strong support for the Fund, and I look forward to further commitments from our broader membership.”
Total commitments so far of over US$430 billion to the current effort to increase Fund resources consist of pledges from:
Euro Area
|
€150 billion
|
(about US$200 billion)
|
Japan
| US $ 60 billion | |
Korea
| US $ 15 billion | |
Saudi Arabia
|
US$15 billion
| |
United Kingdom
|
(US$15 billion)
| |
Sweden
|
at least US$10 billion
| |
Switzerland
|
US10 billion
| |
Norway
|
SDR 6 billion
|
(about US$9.3 billion)
|
Poland
|
€6.27 billion
|
(about US$8 billion)
|
Australia
|
US$7 billion
| |
Denmark’s Nationalbank
|
€5.3 billion
|
(about US$7 billion)
|
Singapore
|
US$4 billion
| |
Czech Republic2
|
€1.5 billion
|
(about US$2 billion)
|
TOTAL3:
|
Over US$430 billion
1 Conditional, Indonesia, Malaysia and Thailand will undertake the necessary domestic consultations to join this international effort, seehttp://www.imf.org/external/np/sec/pr/2012/pr12148.htm
2 Conditional, see http://www.cnb.cz/en/public/media_service/ press_releases_cnb/2012/20120126_pujcka_mmf.html
3 Including China, Russia, Brazil, India, and other countries.
* * * * *
Mexican Finance Minister Jose Antonio Meade noted that the bulk of the G-20 members had chosen to contribute to the group’s commitment to augment the IMF’s lending resources. This showed that “the whole of the community is very comfortable with the way we have moved forward,” Meade said.
Bank of Mexico Governor Agustin Carstens stressed that boosting the IMF’s lending capacity, while an important step, is only one element in combating crises. “Different countries have contributed in different fashions,” Carstens stated. “Each country is contributing through its own means and its own capacity.”
Lagarde said at the news conference that formal and specific pledges from IMF member countries to boost IMF resources amounted to more than $360 billion. The balance taking the total to more than $430 billion comprised commitments that still had to be ratified by pledging countries.
Lagarde told reporters the G-20 commitment shows the resolve of the international community to have available the tools to defend against crisis. “We shall make use of it wisely, in accordance with the rules, with due regard to making sure that the creditors’ interests are well protected, with the appropriate risk mitigation strategy in place.”
The joint G-20–IMFC statement said the agreement to boost the IMF’s resources “shows the commitment of the international community to safeguard global financial stability and put the global economic recovery on a sounder footing.”
Lagarde said in her statement: “This broad-based response to our request for additional resources will help strengthen global economic and financial stability in the interests of all our members.”
■ Mexico is to host a G-20 summit in Los Cabos in June.
and note BRICS conditionality .....
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