Does the IMF have enough?
Brown has raised a disturbing question
British Prime Minister Gordon Brown, who briefly took the spotlight earlier this month, presenting the first example of a recapitalization plan for banks, has raised a disturbing if apt question about the International Monetary Fund: Does it have sufficient resources to back its commitments?
"The IMF has said it has $250.0 billion available, and new instruments, to lend to countries in crisis, but this may not be enough," Brown told reporters in London ahead of talks later on Tuesday with French President Nicolas Sarkozy.
The IMF has about $200.0 billion available for "immediate lending" and can draw on $50.0 billion in additional resources if needed, the multilateral lender says on its Web site. It has a total of $341.0 billion available from the combined "quota" payments of its members as of August 2008. The Fund sustains itself primarily through these quotas, which are assigned to each country upon entry, based on the size of its economy. The IMF could not be reached for comment by phone or e-mail on Tuesday afternoon.
The Fund has paid out a total $18.6 billion in the past five days to help shore up struggling economies. Iceland got a two-year, $2.1 billion loan last Friday, and Ukraine was granted $16.5 billion on Sunday. A loan for Hungary is expected to be announced within the next couple of days and could be in the range $12.5 billion if the country is granted a loan of similar proportion to Ukraine`s. (The loan for Ukraine was 800 times the size of its quota.)
Brown said that countries with "substantial reserves", such as China and the Gulf States, could help by contributing more to the Fund.