Britain’s refusal to contribute to the IMF for a eurozone bailout fund has left the EU short of its 200 billion euro target.
The UK boycott leaves the eurozone more reliant than ever on major economies such China and on Russia, which are willing to lend more to the IMF.
IMF resources are to be boosted to 150 billion euros to ward off the debt crisis — with money from the Czech Republic, Denmark, Poland and Sweden.
The United States, meanwhile, has expressed concern about the IMF’s exposure to the euro zone.
European Union finance ministers had set an informal deadline of Monday to arrive at the 200 billion figure, which was agreed by EU leaders at a summit on December 8th and 9th and urged other nations to take part.
“Euro area member states will provide 150 billion euros of additional resources through bilateral loans to the fund’s general resources account,” the EU finance ministers said in a joint statement after a conference call on Monday to review progress.
While EU leaders agreed at their last summit on the desire to boost IMF resources, there are doubts about whether the scheme will work, with not just London and Washington unenthusiastic, but Germany’s Bundesbank too.
“Washington cannot make bilateral loans available to the IMF without Congress approving it,” German Finance Minister Wolfgang Schaeuble told German radio. “There’s no chance of that and the US government has always made that clear.”
The increase in IMF resources is seen as one pillar in a multi-pronged strategy to strengthen the euro zone’s fire-fighting capability and build better defences for the future. Another pillar is making the euro zone’s existing bailout fund, the EFSF, more flexible in how it tackles the debt debacle