Sweden and Denmark pledge new IMF loans
by Daniel Mason
Sweden and Denmark have joined Japan in pledging increased contributions to the International Monetary Fund as the Washington-based organisation looks to strengthen its financial firewall.
After Japan said it would lend an extra $60bn to the IMF, Sweden and Denmark committed additional loans of $15bn and $7bn respectively. It followed Norway's announcement in December that it would put forward $9.6bn. Both Sweden and Denmark said they hoped their commitments would encourage other countries to follow suit.
Christine Lagarde, IMF managing director, said the support from the three Scandinavian nations "clearly demonstrates these countries' enduring commitment to multilateralism". She added: "Ensuring that the fund has sufficient resources to tackle crises and to promote economic stability is in the interests of all our members."
Eurozone countries earlier pledged €200bn in extra loans to the IMF as part of their response to the sovereign debt crisis. The urgency of shoring up the euro area's firewall has increased in recent days as rising borrowing costs in Spain have led to speculation – denied by the country's government – that it might be forced to follow Greece, Ireland and Portugal in seeking an international bail-out.
In addition, Portuguese Prime Minister Pedro Passos Coelho, writing in the Financial Times yesterday, admitted his country might have to ask for additional support. While insisting he remained "confident" that Portugal's first €78bn European Union and IMF bail-out would be sufficient, he wrote: "In an age of uncertainty there are no guarantees. There are so many factors outside our control that no one can make predictions with any certainty."
Meanwhile Lagarde said there had been "decisive progress" ahead of the IMF's spring meeting in Washington later this week, at which the fund aims to win new commitments of more than $400bn. The IMF has long called for a boost to its lending power to help deal with the eurozone crisis, alongside the euro area's new permanent bail-out fund, the €500bn European Stability Mechanism.