G-20 pledges $430B in new funding for IMF

WASHINGTON -- Leading world economies on Friday pledged $430 billion in new funding for the International Monetary Fund, more than doubling its lending power in an effort to protect the global economy from the euro-zone debt crisis.

The funds from the Group of 20 advanced and emerging economies are intended to ensure the IMF can respond decisively should the debt problems that have engulfed some euro-zone countries spread and threaten the global economic recovery.

"This is extremely important, necessary, an expression of collective resolve," IMF Managing Director Christine Lagarde said.

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 said it merely buys time for Europe to undertake more economic reforms.

Greece, Ireland, and Portugal already have 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.

Worries about the debt crisis dominated talks among finance officials in Washington this week for the semi-annual meetings of the IMF and the World Bank.

The IMF has warned the crisis presents the gravest risk to global economic expansion, though the G-20 said that the threat of a major blowup has started to recede.

Ms. Lagarde called the fund-raising a "huge effort" that would increase the current funds available for loans to a figure above $1 trillion.

"We have the necessary tools in the toolbox and we will use this wisely," she said at a news conference wrapping up discussions among finance ministers and central bank governors of the G-20 countries.

The group includes traditional economic powers such as the United States and Germany and emerging powers such as China and Brazil.

The fund-raising effort exposed splits inside the 188-nation IMF.

The United States and Canada refused to participate in boosting the IMF's resources, seeking to keep pressure on Europe to do more.

Four countries that did not publicly reveal their contributions -- China, Russia, India, and Brazil -- all expressed reservations about pledging additional resources until the IMF implements a 2010 agreement to give emerging market nations more of a say in how the IMF operates.

Of the more than $430 billion in increased support that the IMF raised, the agency released a list of specific commitments from 12 individual nations ranging from $60 billion from Japan to $2 billion from the Czech Republic.

The biggest total amount was $200 billion pledged back in December by Europe including $150 billion from nations that use the euro currency and $50 billion from other European countries.