Washington — Members of the International Monetary Fund (IMF), led by the G20 advanced and emerging market economies, pledged to boost the global fund’s lending capacity by more than $430 billion during the annual IMF and World Bank Spring Meetings April 19–22 in Washington.
“This effort, together with the national and regional structural, fiscal and monetary actions that have been put in place in the past months, shows the commitment of the international community to safeguard global financial stability and put the global economic recovery on sounder footing,” said a joint statement by the G20 and the IMF’s policy-setting International Monetary and Financial Committee (IMFC).
The pledges, which will nearly double the fund’s resources, came in response to a call for more financial firepower by IMF Managing Director Christine Lagarde. Speaking to the hundreds of finance and economic leaders gathered for the start of the Washington meetings April 19, Lagarde said the global economy has entered a “timid” recovery but still faces high risks. She said the IMF requires additional resources to promote global economic stability and to contain any further financial crises.
“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,” Lagarde said in an April 20 statement.
Lagarde said the pledges signal “the strong resolve of the international community to secure global financial stability,” and that the money will be made available for crisis prevention and resolution.
The funds "will be drawn only if they are needed and, if drawn, will be refunded with interest,” Lagarde added.
She said the money will be available for the whole membership of the IMF, and not earmarked for any particular region.
Speaking to the IMFC meeting April 21, U.S. Treasury Secretary Tim Geithner said the United States welcomed the decision to add to IMF resources and “continues to support the smooth functioning of international financial markets” as the largest contributor to the IMF and the World Bank.
He said the groups’ annual meetings focused largely on the global economic recovery. The outlook has improved, and progress is being made to reduce global imbalances.
“The positive tone of recent data suggests the economy is gradually healing and getting stronger, but the financial crisis put our economy in a deep hole and it will take time to fully repair the damage and to restore economic security,” Geithner said, noting that unemployment rates are still high, the housing market continues to be weak and growth remains slow.
He said the United States will continue to work with its international partners to support the recovery.
In addressing the IMF and World Bank’s joint development committee, Geithner said the World Bank is an “indispensable partner for the United States” in leveraging resources to provide concrete results. He announced an increase in U.S. funding for the World Bank that will “help immunize 200 million children, extend health care services to more than 30 million people, give access to improved water sources to 80 million people, help build 50,000 miles of roads and train and recruit more than 2 million teachers.”
Calling the World Bank an effective tool for combating global development challenges, Geithner said talks during the meetings covered improving food security, ensuring gender equality, protecting the environment and promoting sustainable and inclusive economic growth around the world.
The economic and financial leaders are scheduled to meet again in October for the IMF and World Bank Fall Meetings in Tokyo.