UK offers £10bn loan to the IMF

Chancellor George Osborne has offered just under £10bn in loans to the International Monetary Fund (IMF) to help economies in trouble.

Finance ministers from the G20 group of leading economies are meeting in Washington to discuss boosting the IMF's resources.

IMF managing director Christine Lagarde wants to boost her organisation's lending capacity by $400bn (£250bn).

Mr Osborne can lend up to £10bn without parliamentary approval.

He stressed that the loan was part of global efforts and that other countries would also be announcing contributions.

He had some room for manoeuvre because Parliament has previously approved £40bn of loans, of which only £30bn has been committed.

The IMF had already received commitments of $320bn, including $60bn from Japan.

Brazil wants to have a bigger say in running the IMF in return for a commitment of extra money, while the US is not likely to offer any money because doing so would attract criticism at home in a presidential election year, according to BBC economics correspondent Andrew Walker.

Russia's deputy finance minister Sergei Storchak has said that his country will offer $10bn and that he is confident that the IMF will reach its funding target.

"Trust me that the G20 will announce the final amount," he said.

Committing the extra money does not mean it will actually need to be loaned.

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The IMF hopes that if private investors think that countries in trouble can be rescued if necessary, they will be more willing to lend to them and any funding problems will not escalate.

It has already warned that the eurozone's debt crisis poses the biggest threat to the global economy, and warnings about Europe are expected to top the eventual communique from the meetings.

In a speech made in January, Mr Osborne said: "IMF resources to support individual countries cannot be a substitute for further credible steps by the eurozone to support their currency."

Source & Image : BBC