Lagarde: IMF needs less new funds than thought

The International Monetary Fund said Wednesday it probably needs less new money for crisis intervention than previously thought, crediting action by the eurozone for the change. "The needs now may not be quite as large as we had estimated earlier this year. It's only because action was taken by the European institutions," IMF chief Christine Lagarde said in a Washington speech. Lagarde comments come a week before the IMF and the G20 finance ministers and central bankers hold meetings, with a key aim of boosting the IMF's resources for intervening in financial crises. With the European economy on the brink, for months the Fund has said it needs some $500 billion in ready funds, and has asked member states to say how much they could put up. In December the euro area itself offered 150 billion euros ($189 billion) for the funding round. But the United States, the IMF's largest shareholder, has indicated it will not participate. Lagarde stressed the continued need to collect funds, even if the amount is less than expected. "To be as effective as possible, we need to increase our resources," Lagarde insisted. "We are, of course, continuously assessing and reassessing global risks." "I am hopeful that, during the upcoming Spring Meetings, we will see developments, we will make progress, and we shall seize the moment." Lagarde also told the audience at the Brookings Institution think tank, that the world and Europe had seen "some" improvement in the economic climate, after months of crisis. "We have earned a bit of time to think through and to actively pursue what still needs to be done." However, she underscored, "the risks remain high; the situation fragile." "Clearly, the risk that looms largest is that sovereign and financial stresses return with renewed force in Europe." She said the IMF and its members need to construct a "stronger global firewall" to prevent a region's problems from infecting healthy economies elsewhere. "In today's global economy, with its dazzling array of instant interconnections, a stronger European firewall can only ever be part of the solution. A stronger global firewall will help complete the 'circle of protection' for every country."