IMF chief calls for US$400bn in funding

US$400 billion plus (305 billion euros).
“My hope is that we will get a critical mass this week,” added Lagarde in comments published in German.
She had previously called for an additional US$500 billion to boost the Fund’s war chest in case more debt-ridden eurozone states fall victim to the crisis.
“We are determined to do whatever is in our power, and I’m open to leaving the issue open for a few weeks, as some countries need more time to get approval through parliamentary procedures,” Lagarde said in a separate interview published by the Italian daily Il Sole 24 Ore.
At a meeting of finance ministers and central bank chiefs from the IMF in Washington starting on Friday, officials will discuss the extra financing the Fund needs to combat the debt crisis. The eurozone had appealed to the IMF to bolster its financial firewall against the crisis but emerging economies and the United States demanded the 17-nation bloc first put its hand in its own pocket.
After a month of wrangling and some German resistance, the eurozone last month clinched a deal it claimed was worth more than one trillion dollars, even though 300 billion euros of that was in loans already pledged.
Lagarde said last week that this action, as well as the European Central Bank offering more than one trillion euros to banks at ultra-cheap rates, had reduced the Fund’s financing needs.
In other comments to the German daily, Lagarde said she was worried about the state of Spanish banks, as markets turn their attention towards Spain, pushing up borrowing costs to near unsustainable levels.
“What worries me most is that Spanish and European bank regulators are concerned that Spanish banks have sufficient capital, have enough of a buffer and have valued their assets appropriately,” she said.
Nevertheless, she added that investors and markets are “by nature almost always scared and worried”.
While cautioning against a rush towards austerity in Spain, Lagarde called for a “steady and fiscally stable effort to give enough room for budget-neutral growth impulses”.
To Il Sole 24 Ore, Lagarde praised efforts by Italy to overcome the crisis.
“Italy has undergone an enormous chapter of change under (Prime Minister) Mario Monti and there are more on the way. This is very positive. There are improvements in Spain as well. They have to continue this way. The markets want stability,” she said. — AFP.