The International Monetary Fund needs more resources to shore up the global economy and bailout countries which can no longer meet their debts, its managing director Christine Lagarde says.
The US has been reluctant to add more resources to IMF coffers to support Europe before the continent increased its own bailout fund. Earlier this week the European Financial Stability Fund was boosted to $1trn.
Giving a speech in Washington yesterday, Lagarde said the economic recovery is under threat from rising oil prices, high unemployment and Europe’s economic problems and that America would not be spared if it faltered.
She said the exposure of the US economy to Europe and the rest of the world meant whatever happened to the recovery outside of America would have a real impact on its domestic economy.
“We can provide a circle of protection against global turbulence, and help members adjust to changing circumstances with minimal disruption. But to do this effectively in today’s world, we need more resources.”
“If the European economy falters, the American recovery and American jobs would be in jeopardy. So America has a large stake in how Europe fares, and how the world fares.”
According to Bloomberg, the IMF currently has around $367bn available to lend. Lagarde has been trying to boost that by $500bn.