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IMF Seeking Additional Funding From Member Nations

The International Monetary Fund wants its members to pledge an additional $500 billion to help tackle financial problems around the world.  And it's urging its largest shareholder, the United States, to give more.

Despite a slowly improving outlook, the global financial system remains fragile.
The IMF's Christine Lagarde uses a weather analogy to describe the risks.

"We are seeing a light recovery blowing in a spring wind, but we are also seeing some very dark clouds on the horizon," said Lagarde.

To combat future threats, Lagarde is asking finance ministers attending the IMF and World Bank meetings in Washington to pledge additional funds to the global lending institution she heads.
Lagarde says boosting the IMF's resources will help contain the debt crisis in Europe and increase the IMF's lending capacity to economically troubled nations.

"As part of the outcome of this meeting, we expect our firepower to be significantly increased," she said.

The IMF has already collected $320 billion in pledges from member countries, including $60 billion from Japan.

But absent from the new pledges is the IMF's largest shareholder. Treasury Secretary Tim Geithner defends the U.S. position, saying the United States has never shied away from supporting its trading partners in Europe.

"It is a mistake to see this and suggest that the United States is holding back from, and standing apart from, this broad effort," said Geithner. "We have been, as you know, central to the broad effort by the world to help reinforce what Europe is doing, and we are doing it in ways that are more effective for what Europe needs right now."

The United States has set aside $171 billion  in available loans to the IMF but has yet to ratify a 2010 commitment to increase funding by $60 billion.  Agreement could prove difficult in an election year - but given the interconnected nature of the financial system, Lagarde says, if the European economy falters, so would the American recovery.

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