Japan pledges $60B to IMF for Europe firewall
TOKYO (UPDATE) - Japan said Tuesday it would pledge $60.0 billion to the International Monetary Fund, saying it was a critical part of the organisation's bid to boost a global firewall against Europe's debt crisis.
Finance Minister Jun Azumi said he hoped the move would spur other nations to kick in funds, which he said were "crucial not only to the eurozone but also to Asia and Japan if we are to ensure that the crisis is completely over."
The announcement comes several days before a Group of 20 finance chiefs' meeting in Washington that is expected to focus on Europe's debt, with the spotlight now on Spain as its is borrowing costs spike.
Azumi said Tuesday that the $60.0 billion, which will come in the form of emergency loans using Japan's foreign-exchange reserves, was "important to make public our attitude if we are to help forge an early agreement".
IMF chief Christine Lagarde late Monday welcomed the pledge and urged other member states to follow suit.
"This is an important step forward... to prevent and fight crises and to promote global economic stability," she said.
The Washington-based fund earlier this year said it would likely need an additional $500.0 billion to help European countries strengthen their defences against the crisis, but Lagarde has recently said the figure may now be lower.
Tuesday's effort makes Japan the first non-eurozone country to announce a pledge, which will be formally announced at the G20 talks starting Friday, and was expected to be among the largest contribution by an IMF member.
Eurozone contributions have so far hit $200.0 billion, with Beijing and others also expected to kick in as part of the global effort.
Lagarde added that "Japan has a longstanding record of helping others, and of supporting the IMF in its core mission of helping to support economic stability in all its member countries."
Last month eurozone finance ministers agreed to increase their bailout funds to 700 billion euros ($917 billion) from 500 billion, a move that was welcomed by Tokyo at the time.
Europe's debt crisis has come sharply into focus again as dealers grow concerned Madrid will have trouble closing its huge public deficit after an austerity budget that included swingeing cuts to services.
Yields on Spain's benchmark 10-year bonds jumped above 6.0 percent for the first time since late last year, stoking fears it could follow Greece, Ireland and Portugal in needing a bailout.
"We can never be optimistic about the situation in Europe, even though the area is almost set to exit the crisis thanks to (government) policy efforts," Azumi was quoted as saying at regular press briefing in Tokyo.
While Azumi also said Europe has not done enough to tackle its financial crisis, he has previously credited the European Central Bank for its moves to tackle the simmering issue.
Japan's move comes as a strong yen and sinking demand in key European markets dented its export-oriented economy, with Tokyo a regular buyer of debt issued by the European Financial Stability Facility bailout fund since last year.
The ECB has chopped eurozone borrowing costs to an all-time low of 1.0 percent and embarked on a hotly contested programme of buying up the bonds of debt-mired countries.
In two so-called long-term refinancing operations in December and February, it pumped more than 1.0 trillion euros ($1.31 trillion) into the banking system in a bid to avert a credit squeeze in the 17 countries that share the euro.
© 1994-2012 Agence France-Presse