MILAN (Reuters) - The International Monetary Fund hopes to gain governments’ agreement this week to raise its funds by more than $400 billion, around two thirds of the amount it said it would need three months ago, fund managing director Christine Lagarde signaled on Tuesday.
Lagarde, who had already signaled the fund would need less than previously thought, said the success of some countries in raising funds on financial markets in the first quarter had eased the pressure on its crisis-fighting resources.
In an interview in Tuesday’s Il Sole 24 Ore, she praised reform efforts by Italy’s government and said market confidence had improved since Rome agreed to enhanced surveillance by the IMF. She also saw progress in Spain.
“I really hope this week we’ll reach the critical mass of more than $400 billion. We are determined to do all we can,” she was quoted as telling Italy’s main financial newspaper, though she also said finally sealing the funds might take a bit longer.
Finance chiefs meet in Washington on April 20-21.
“I am ready to leave the matter open for a few weeks: some countries need a little bit more time for parliamentary approval,” she added.
In January, the IMF estimated it would need $600 billion in new resources. Officials from the Group of 20 nations told Reuters last week the world’s major economies were likely to agree to provide the IMF with somewhere between $400 billion and $500 billion.
In the interview, Lagarde said credit crunch risks had receded.
“The overall risk evaluation is unchanged, but it’s April now and some countries have already raised on the markets more than half of what they need for 2012, so our estimate has shrunk,”
“In some countries, for small and medium enterprises, for households, credit may be more costly and difficult, but it is not as serious a threat as we feared in December.”
Lagarde said the IMF would keep pressing for the euro zone’s rescue funds to be allowed to lend directly to banks, in order to address the link between lenders and sovereign risk.
“I put the idea forward in July, it was not accepted. We insist.”
After a Lagarde said Spain must continue on its reform path after improvements achieved so far and praised Italy’s “enormous chapter of changes, with more to come.”
She said budget consolidation measures Rome had announced so far were sufficient. But parliament had to make sure the final version of a labor market reform now being discussed would tackle the dualism between protected and unprotected workers and remove uncertainties on lay-offs.
“We fully agree with what the government is doing,” she said, adding the IMF respected Italy’s “political” choice of relying more on revenues than spending cuts in its budget adjustment.
Reporting by Valentina Za; editing by Patrick Graham