The International Monetary Fund, armed with a replenished arsenal containing billions of dollars to battle Europe's lingering debt crisis, now must press governments in the eurozone to carry out bold changes to reassure nervous financial markets and avert sending the crisis into a more dangerous phase.
The IMF's final communiqué Saturday after hours of high-level meetings did not go beyond saying what structural reforms were needed to restore fiscal health and spur economic growth in the 17 countries that use the euro.
But U.S. Treasury Secretary Timothy Geithner told the IMF policy-setting panel that Europe needs to be more creative and aggressive in fighting its debt crisis, employing all the financial resources at its disposal, including the European Central Bank.
"The success of the next phase of the crisis response will hinge on Europe's willingness and ability ... to apply its tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets," Geithner said.
German Finance Minister Wolfgang Schaeuble said the countries experiencing financial crisis in Europe are undertaking far-reaching reform measures.
"This includes labor markets, social security systems, public administrations and financial market institutions," he said. "This will allow countries to regain competitiveness and strong growth. It is the only way we will be able to restore confidence of our citizens and investors."
During the weekend meetings of the IMF and its sister institution, the World Bank, finance ministers and central bank governors said the threat of a sharp global slowdown had eased, but still used words like "weak," ''fragile" and "challenging" to describe the outlook for the future.
The major accomplishment of the weekend was the pledge of at least $430 billion from individual countries that will nearly double IMF's reserves available for loans to almost $1 trillion.
"It is nice to have a big umbrella or a big firewall" IMF Managing Director Christine Lagarde told reporters at a news conference wrapping up the discussions. She and other officials said the extra resources should reassure financial markets that have been worried in recent weeks that Spain could be the next country in need of emergency loans from the IMF to escape a default.
The IMF, working with European governments, has provided rescue programs already for Greece, Portugal and Ireland, but Spain has a much bigger economy and would require much more financial support should it become unable to sell its government bonds to private investors.
Tharman Shanmugaratnam, Singapore's finance minister and the chairman of the IMF group, said that the IMF recognized that the world had to strike a delicate balance between getting government budgets back under control while at the same time promoting stronger growth.
The additional $430 billion in resources was announced by Lagarde following meetings of finance officials of the Group of 20 major economic powers Friday. The United States and Canada were two rich countries that did not make pledges. The United States would face problems winning support for increased support for the IMF and Canada expressed the view that Europe, as a rich continent, had sufficient resources to deal with its debt problems.
"They need to step up to the plate and overwhelm this issue with their own resources," Canadian Finance Minister Jim Flaherty told reporters.
Lagarde said Russia, India, China and Brazil had made private pledges but did not want to make public commitments until they had conferred with officials back home. This group has pushed for the IMF to put in place a 2010 agreement giving fast-growing, emerging economies such as theirs more of a voice in the agency's decision-making.
The IMF has struggled to find agreement because Europe will have to give up some of its voting power and seats on the 24-member executive board. At the moment, Europe controls eight; the expectation is that it could lose perhaps two.
Brazil, one of the developing countries that made a pledge but has not revealed the amount, has been vocal in its criticism of the IMF for allowing countries in Europe to delay resolution of the dispute over rebalancing the voting power.
Brazilian Finance Minister Guido Mantega said in his speech to the IMF committee Saturday that the resistance of some countries to the change in voting power had been "deeply damaging to this institution."
He said that even though Brazil would rank as the third largest economy in Europe behind Germany and France, its voting power at the IMF was equivalent to the Netherlands and smaller than Spain, Italy and Britain.
Elizabeth Stuart, a spokeswoman for Oxfam, the international aid agency, said that it was critical for the IMF to resolve the disputes over voting power so that the 2010 agreement can be implemented by the IMF's fall meeting.
"It is outrageous that a country like Luxemburg has more voting weight at the IMF than South Africa or Argentina," she said.
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....Meanwhile, everyone knows that what is needed to continue this Ponzi Scheme is around 9 Trillion Euros for the EU and 10 Trillion for the Zioconned USA....
If every country in the Zioconned and criminal Western world, hell-bent on crooked neo-colonial wars and utter destruction is in shambles. What does this tell you? What it tells me is that the Federal Reserve's and the IMF practices seem to have created utter corruption, deregulations and bad policies. And their pyramid scheme is coming to an end. We have allowed this entity to do what it wants at will. The fastest way out of this mess with the least effect on everyone is to rid ourselves of this monstrous private company. After all this is only owned by 1 percent of the population. It would seem to me, one percent taking a loss is better then 99 percent. Plus I do not think any unborn children should owe over 150.000 dollars just to be born....
The cost of living should have never been allowed to be controlled by inflation and deflation practices. And money being produced with nothing backing it. On the presumption it would be paid back by the American or EU peoples. The sad part is our governments have engaged into taxing the EU&American peoples. Now we must pay back the Trillions of book figures with our labor, by producing goods and services to which we are now denied access of purchasing power for our families. We must pay enormous debt charges with interest. We have all been used by this select few. The system that can at any time be cancelled out of existence with the dumping of pledged securities and, simultaneously, with the depression and deflation of all the physical and intangible assets of the EU&American peoples. Our governments have known for a long time what was going to happen to our economy.
Because Clinton established a 32-member bipartisan committee back in August of 1994 .... According to the committee's findings, by the year 2012, unless drastic changes are made, we won't even be able to pay the interest on the national debt. The federal government has allowed this to continue, As if they're trying to run our economy into the ground, It seems obvious that whom controls the issuance of their currency, first by inflation and then by deflation, the banks and corporations that have grow up around us will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered. How true the words of a former president....
Ask yourselves with all the knowledge out there, why do we continue to allow our own demise.....
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