Strong IMF Backing from EU Plus Lifeline

Last Friday, the European Union had pledged to provide new loans worth one hundred billion dollars to IMF or the International Monetary Fund. This will be used to help bail out some countries that are hit because of the global recession. They are also urging the G20 group of countries’ economic powers to come up with a way to double its funding.

Use of Funds

The leaders of the European Union had also agreed with one another during their last summit that it would be good to double the budget. They will be working on fifty billion Euros (roughly sixty eight point five billion US dollars) as a crisis fund that they will dole out to their struggling member states. These are the countries that do not also use the euro as their currency. Already, the countries of Latvia and Hungary have been tapped for this. As they have expected, they also ignored the pressure coming from the United States to increase the size of the plans for the economic stimulus.

It was stated that the first priority was to maintain a sense of budget restraint as well as tighten supervision of the financial markets, centers and products. Nicolas Sarkozy, the president of France, had also told reporters that the entire political leadership of Europe had instead chosen to look for ambitious results during the last London summit. It was clear that the bloc, which was composed of twenty seven nations, had already gone through two whole days of making difficult decisions during their summit. It was also reported that there was very little impact when it came to the financial markets. The president of France also mentioned that they are in a clear position, and at first he was not sure if they would ever get there.

Major Contributions to Stability

The International Monetary Fund has long been making several loans to a lot of countries. These countries include Pakistan and Ukraine and this was during a really bad financial crisis that happened ever since 1930. They have also been requesting for some funds which it will use for their bailouts, for a total increase of around five hundred billion dollars. Such a move is a major contribution in order to maintain the sense of stability for a lot of capital and financial markets, says Dominique Strauss-Kahn, who is the chief of the IMF. This is what he said during a statement. He also mentioned that Japan and the European Union had also pledged around one hundred billion dollars to the International Monetary Fund as a way of showing leadership. Kahn also went on to say that they are hoping other countries are also going to provide their own sense of support as a contribution to their efforts of restoring the stability of the entire global economy.