Lagarde Urges Britain To Boost IMF Funds
Christine Lagarde has issued a personal appeal to George Osborne to provide extra funds for the International Monetary Fund.
The Fund's managing director, who warned that there were "dark clouds on the horizon" for the world economy, said "it is in their interests" that Britain provides extra bail-out cash.
In an interview with Sky News, she said that she had now raised $320bn of the $400bn extra resources she wants to bolster the Fund by, but added: "We have more [funds] in the pipeline. They will be announced in the coming days and I hope that by the end of the spring meeting that we have reached critical mass."
She added that it was "in [Britain's] interests" to provide more resources for the fund.
"The UK is a founding father of the IMF. John Maynard Keynes was one of the two patrons. And the UK is there for international grave situations," she said.
"It's always been there. It's always been a very loyal partner when it's tough. But it's in their interest - because if the key partners of a country like the UK are in very bad shape they are bad clients. They can't pay their bills. They can't trade properly. And it's not in the interest of the UK to have a weak euro."
While many expect George Osborne to pledge extra money to the fund this week, Britain is still one of the few remaining hold-outs for the new money-raising round - the proceeds of which may be used in future euro bailouts.
The last time Mr Osborne went to Parliament to raise fresh IMF bailout funds, it triggered a Conservative backbench revolt.
Should the UK have to provide more than a further £10bn, the Chancellor would have to return to Parliament for permission.
Mme Lagarde said that she wanted the euro bailout funds to be able to channel money directly to troubled Spanish banks, rather than doing it indirectly through the country's government.
She said: "Spain is dealing with its issues. We wish it [recapitalisation] could happen more directly between the European pool of money rather than have to be channelled through the sovereign."
The comments come amid growing worries that the country, which is facing borrowing costs of over 6%, may need a bailout.
The fund has never lost its members' money in its previous bailouts, but given the scale of the current sovereign debt crisis, some economists suspect this could happen to it for the first time.
She refused to rule out the possibility of this occurring this time around, but added: "Our job is to look at risks. So when we put in place a programme we also look at mitigating the risks. And we don't like to have a huge concentration of risks..."
She continued: "Clearly the eurozone is a centre of concentrated risk which is why it justifies fully the burden sharing approach that we've had and that we'll continue to insist on having and the risk mitigation policy that I've just mentioned."
Asked whether she would consider resigning if the IMF were to lose money, she said: "Well that's an interesting proposition. I tell you something - we never leave the table of negotiations with our members and I would be the last one to leave the table.
"The captain of the ship has to stay on board until the last moment - and I'm not suggesting our boat is in bad shape. It's in pretty good shape actually, and I'm determined to do the job, thank you."