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 Osborne: IMF backing will not be 'disproportionate'

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Mr007



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Join date : 2010-11-30

PostSubject: Osborne: IMF backing will not be 'disproportionate'   Fri Nov 04, 2011 6:44 am


George Osborne and IMF head Christine Lagarde The chancellor has said the UK must face up to its responsibilities regarding the IMF

George Osborne has said the UK will not contribute "disproportionately" to any fresh call for funding from the IMF.

He is at the G20 summit in Cannes, which has been overshadowed by uncertainty over the eurozone crisis and political turmoil in Greece.

The UK chancellor said he would act with other nations to ensure the IMF was ready for "anything thrown at it" but would not "go out on a limb".

Some Tory MPs have said the UK should not give any more money to the IMF.

Mr Osborne has said it is possible the UK could increase its contribution - but not to fund another eurozone bailout.

Speaking in Cannes, Mr Osborne also stressed the UK was preparing for all contingencies over the eurozone, including Greece leaving the single currency.

As a member of the International Monetary Fund (IMF), a global body which seeks to secure the stability of the international financial system, the UK is potentially liable to meet any request for increased funding to deal with financial crises in specific countries or regions.
'Global shocks'

Earlier this year, MPs voted to increase the UK's annual subscription to the IMF from £10.7bn to £20.1bn as part of an overall increase in the IMF's funding base agreed in principle in 2009.

However, more than 30 Tory MPs - as well as Labour - opposed the move and there is growing unease that there could be a further call for funds to deal with the fallout from the eurozone crisis.
Continue reading the main story
WHAT IS THE IMF?

* An international organisation with 187 member countries
* Created at 1944 Bretton Woods conference aimed at preventing economic crises
* Promotes monetary cooperation and stability
* Provides rescue loans to members in financial trouble and makes demands to get their finances under control

* Profile: IMF and World Bank
* Nick Robinson: Osborne v new coalition

Mr Osborne has ruled out UK backing for any specific IMF vehicle to support the eurozone but he said boosting general resources available to the IMF was among the issues being discussed at the summit.

"Alongside our international partners, we have to make sure that the international institutions of the world like the IMF, which help countries across the globe, are ready to withstand global shocks.

"It potentially means an increase in resources for the IMF, not just from Britain but from many other countries."

The chancellor said Britain was not "unique" in having to finance the IMF.

"I am not suggesting that Britain should contribute disproportionately, in other words out of kilter which what the kind of contributions it has made in the past.

"I am not saying Britain should go out on a limb. Britain will be acting in concert with other countries."
'Traumatic'

Britain must "face up its responsibilities" in dealing with the current global financial instability, he added, as it had a direct impact on the country's prosperity but eurozone members had to do the same by "standing behind" their currency.
Continue reading the main story
“Start Quote

We are planning and prepared for whatever the world or whatever the eurozone throws at us”

End Quote George Osborne UK chancellor

The BBC's political editor Nick Robinson said Mr Osborne faced a fight if he agreed to increase UK contributions with Conservative Eurosceptics potentially joining forces with Labour.

Shadow Chancellor Ed Balls said on Friday that it "is not the IMF's job to plug the gap in the euro bailout fund and do the job the European Central Bank should be doing".

Ministers point out that the UK's subscription is in the form of loan guarantees that are only called upon when needed and members have the power to oppose specific IMF programmes.

They also insist lending to the IMF is secure as no government has lost money by lending to the IMF.

They also say subscription increases do not increase the UK's deficit as the UK is paid interest on the loans, made via its currency reserves.

Mr Osborne acknowledged that eurozone members were "talking openly" about Greece being forced to leave the eurozone but he warned that this would be a "pretty traumatic event" and he favoured Greece accepting the debt package announced at last week's eurozone summit.

But he told BBC Breakfast that the government was preparing for all contingencies.

"You would expect us to do that. That is our responsibility to the British people. What we have got to do is to make sure Britain is protected, Britain is as safe as possible. We are planning and prepared for whatever the world or whatever the eurozone throws at us."

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