Finance ministers from the group of rich and emerging countries (G20) meeting in Washington on Friday to close a deal on a new injection of money to the International Monetary Fund (IMF), the U.S. does not want to contribute.
The rejection of Washington has forced the Fund’s managing director, Christine Lagarde, to revise down their expectations. The IMF now expects to achieve around 400,000 million dollars, far from that evoked Lagarde 600,000 million in January.
“The G20 members have different problems (but) we are committed to multilateralism,” said Lagarde in a press conference Thursday at the opening of the biannual meeting of the Fund and the World Bank (WB) in Washington. Lagarde was convinced that a deal will occur before the end of the assembly.
However, U.S. Treasury Secretary Timothy Geithner said on his part this week that the IMF “has the ability to obtain additional financing from other countries very quickly if necessary”
Other members of the G20 as Brazil, China and Mexico have been very cautious on the request of the Fund and responsibility to the euro area countries. But these countries, which are the major financial headache for the international community pledged in December and 200,000 million.
With the current action at the G20 meeting the world markets were affected today. The benchmark index of blue chips Dow Jones Industrial Average closed Thursday’s session with a fall of 0.53% to end at 12,963.27 while the broader Standard & Poor’s 500 ended with a decline of 0.59% closing in 1376.90 points.
With regard to macroeconomic news, today they have released the following information: Initial unemployment claims April: 386,000 versus the 370,000 expected, home sales in March: 4.48 million versus 4.61 million expected, March leading indicators : 0.3% vs. 0.2% expected. Boston Scientifics company (3.59%) reported third-quarter results that exceeded analysts’ expectations for the tenth consecutive quarter.
The contract price of light crude oil future market close stood at 102.55 U.S. dollars of depreciating compared to $ 10.66 the previous session. Gold prices and investments today were at $1,639 / oz of gold according the latest gold investment prices provided by BullionVault.
The Fund currently has approximately 382,000 million loan, a sum which could easily become inadequate in case of further collapse of a European country like Spain.
Switzerland and other unidentified countries pledged the equivalent of 26,000 million dollars in new resources to the IMF, Lagarde said just before the start of the general assembly. Earlier, Poland had pledged 8,000 million.
Japan would provide 60,000 million dollars, Sweden 10,000 million, 9,300 million dollars Norway and Denmark 7,000 million.
In total the Fund in the medium term could capture a total of 320,000 million dollars, which would still leave a “hole” of 80,000 to meet the estimates of the IMF’s managing director.
Before the G20 meeting scheduled a group called BRICS (Brazil, Russia, India, China and South Africa) and G7 (industrialized countries) to define their respective positions.
China’s response could be key, but according to European sources, planned to doubt whether Beijing would prefer to wait for heads of state summit scheduled for June G20 in Los Cabos (Mexico).
The meetings of the Fund and the World Bank will also provide the opportunity for a hearing with the Argentine economy minister, Hernan Lorenzino, after announcing the controversial partial expropriation of oil company YPF Repsol Spanish prejudice.