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Japan to offer IMF up to $100 billion from fx reserves
(Agencies)
Updated: 2008-11-13 14:35 TOKYO -- Japan is ready to offer up to $100 billion to the International Monetary Fund to assist emerging economies, a Japanese government source said on Thursday, ahead of a global summit on the financial crisis this week.
Prime Minister Taro Aso will make the proposal when leaders of the Group of 20 industrialised and emerging nations meet in Washington on Friday and Saturday, the source said. Tokyo has previously said it was ready to tap its foreign reserves if the IMF needed more money to help countries facing financial meltdown but Aso's new proposal is more specific. With growth faltering in many big developed countries, continued growth in emerging markets is seen by analysts as key to pulling the world out of the crisis. "Aso will say we are ready to lend up to $100 billion from our foreign reserves to the IMF if it finds itself with insufficient funds to help emergency economies," the source told Reuters. A Japanese foreign ministry official stopped short of confirming details but said Japan was keen to see well-off countries, such as oil-rich Middle Eastern nations, join efforts to help economies facing problems due to the financial crisis. "Japan is very keen to engage non-G8 countries in this endeavour," the foreign ministry official told reporters. "The prime minister will encourage other countries with some comfortable level of reserves to contribute to the IMF or other international financial institutions or support directly those countries who have some difficulties." Under Aso's draft proposal, Japan would lend funds from its $980 billion in foreign currency reserves to the IMF for loans to emerging economies. Selling US government bonds held by Japan to provide cash to the IMF would affect US bond yields so Tokyo may consider lending US government bonds to the IMF as collateral for it to raise funds, the Nikkei business daily said. Crisis Rolls On The financial crisis continues to roil markets around the world. Tokyo's Nikkei share average slid more than 5 percent after global aversion to more risky currencies sent the yen sharply higher to around 95 per dollar. Debate over how best to bail-out US banks spooked investors, who worry that massive capital injections and other emergency measures had failed to end a freefall in markets. Analysts say much of the rich world is in recession and Bank of Japan policy board member Seiji Nakamura said on Thursday there was a rising risk of a further slowdown. "There's the risk that growth expectations in emerging economies and resource-rich countries, which have been propping up the world economy, will ebb, which could further push down the economy in the Western developed countries," Nakamura said in a speech to business people in southern Japan. |
