Japan ready to lend $100B to IMF bailout fund
By TOMOKO A. HOSAKA,Associated Press Writer AP - Saturday, November 15
TOKYO - Japan is ready to lend up to $100 billion to the International Monetary Fund to support nations reeling from the global financial crisis, its prime minister said Friday.
The pledge by Prime Minister Taro Aso was among proposals outlined in a statement released ahead of a two-day Group of 20 meeting this weekend in Washington, during which Japan hopes to raise its clout as a global leader.
Aso blamed much of the crisis on individual governments' failure to monitor and regulate the emergency of new financial products.
"We should not forget, however, that at the root of this problem lies the issue of global imbalances...that the deficit of the U.S., the key-currency country, is being financed by capital inflows from around the world," Aso said.
He called for improvements in the IMF's role in monitoring financial markets and detecting potential crises early, and urged member countries to boost the Fund's financial resources for emerging countries.
"Japan is prepared to lend a maximum of $100 billion to the IMF from its Foreign Exchange Fund Special Account, as an interim measure before a capital increase takes place," Aso said.
Officials in Tokyo have repeatedly said Japan, with its nearly $1 trillion in foreign currency reserves, is ready to provide funds to the IMF if it needs more money for rescue packages. But they had previously not given an amount.
The Washington-based IMF has dipped into its reserves fund to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.
Finance Minister Shoichi Nakagawa said last month that Japan would offer cash along with proposals about accounting standards and other regulatory changes needed to reform the international financial system.
The IMF has about $210 billion but that may not be enough, he said.
Aso also proposed a general capital increase for the Asian Development Bank, "which currently has limited scope for new lending."
The G20 summit this weekend will bring together leaders from 20 of the world's biggest developed and developing economies to discuss ways to tackle the global financial crisis, including possible coordinated tax cuts or spending increases around the world.
The Paris-based Organization for Economic Cooperation and Development forecast that economic output would shrink 1.4 percent this quarter for the 30 market democracies that make up its membership _ and keep contracting until the middle of next year.
That would mean the developed world has now entered a slump estimated to last at least three quarters; two consecutive quarters is a common definition of recession. For all of 2009, these countries' economies would contract by 0.3 percent.
Associated Press Writer Jay Alabaster and AP Business Writer Yuri Kageyama in Tokyo contributed to this report.
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