The 24 nations that comprise the International Monetary Fund's policy-making committee agreed Saturday to an immediate $250 billion increase in the lending agency's resources. The decision is in line with the recommendation made by world leaders at their G20 summit in London earlier this month.
The decision was announced after a day-long meeting at IMF headquarters in Washington. Finance ministers of the 24 advanced and developing economies said the funding increase takes effect immediately with the money coming from the agency's 185 member nations. The new money will bolster the IMF, enabling it to quickly respond to the financing needs of member countries in financial distress.
The meeting chairman, Egyptian Finance Minister Youssef Boutros-Ghali, says participants are cautiously optimistic that the worst of the global recession may be over. "We have serious problems. We are taking very serious measures. But things are beginning to look up. Carefully, cautiously, we can say that there is a break in the clouds," he said.
IMF Managing Director Dominique Strauss-Kahn said participants are satisfied with the fiscal stimulus measures taken by several countries to prevent further declines in economic output. He said more needs to be done to clean up the banking system. Strauss-Kahn was not that optimistic about the outlook for the world economy. "What is important in the new set of economic forecasts is not that much the level of the forecast, but the fact that we see a deterioration since the last set of forecasts last October," said the director.
The IMF is predicting negative growth for the world economy this year, its worst performance in over 60 years. Strauss-Kahn said the pace of global recovery depends significantly on the effectiveness of measures to dispose of bad loans currently on the books of major banks.
The $250 billion increase is part of a plan to triple IMF resources over the next few years.