IMF Bailout Pool May Be More Than Doubled, G-20 Officials Say
By Brian Swint and Gonzalo Vina
March 14 (Bloomberg) -- Group of 20 finance ministers pledged to at least double the International Monetary Fund’s bailout pool as the economic crisis forces more countries to seek its support.
“My forecast was that we needed to double our resources,” IMF Managing Director Dominique Strauss-Kahn told reporters after a G-20 meeting near London today. “A commitment to do so has been made. It may even go further.
Strauss-Kahn has lobbied for the fund’s cashpile to rise to $500 billion from $250 billion after being inundated with loan requests from Pakistan to Hungary. A European government official said they agreed to “more than double” the pool, though ministers have yet to say how much they will increase it by.
“It takes months to get the technical details worked out,” said Strauss-Kahn and they may not be agreed by the time heads of government meet in London next month. Still, “the resources we have now are enough to wait.”
The U.S. Treasury has also sought an expansion of the IMF’s supplementary borrowing program by up to $500 billion.
“The G-20 supports our proposal for a substantial increase to emergency IMF resources,” Treasury Secretary Tim Geithner said.
The fund is currently able to borrow about $50 billion -- from 26 mostly wealthy member countries -- through these special financing arrangements. If that proposal won international support, the IMF could have the ability to lend $750 billion and possibly more.
In the past six months, the IMF has approved $16.4 billion for Ukraine, $15.7 billion for Hungary, $10.4 billion for Latvia, $2.5 billion for Belarus, $2.1 billion for Iceland, $7.6 billion for Pakistan and $516 million for Serbia -- a total of about $55 billion. Turkey is negotiating an IMF loan accord, and Romania has expressed an interest in borrowing.
The IMF and World Bank are essentially the same old central bankers that own and operate the central banks in the U.S. and U.K. Issuing debt to countries in trouble sounds like a nice, safe, and sane thing to do on the surface… helpful of them isn’t it? But when you consider the effects of the loans on the countries who take them, you may rethink those intentions.
Once a loan has been accepted, a country’s free-will and sovereignty are compromised. The productive efforts of their people and their natural resources are now under the control of the central bankers who skim interest and fees from money that they “lend” which has no backing, and was created from thin air. Are there actual reserves to back these loans up? Doubtful, very doubtful.
The fiat money game is one of confidence. As huge sums of money appear from thin air, the game of the central bankers will be revealed. Just look at the trillions in bailouts and how it is now doubled and tripled in an effort to keep the exponential math growing. Once confidence is lost it will not come back.