EU to Channel €200 bln to IMF to Strengthen Global Safety Net

Lagarde welcomes progress made by EU to enhance fiscal discipline

Eurozone statement outlines plan to provide up to 200 billion euros to IMF

Says hopeful other countries will “do their part”

The Eurozone leaders also laid out a new “fiscal compact” to prevent future debt run-ups and accelerated the start of a planned permanent 500 billion euro rescue fund.

European leaders meeting in Brussels agreed to make bilateral loans to the IMF of as much as 200 billion euros ($270 billion. These resources are expected to come from individual countries' reserves when needed, mostly via their national authorities, to the Fund's general resources.

The exact contribution is expected to be finalized within the next 10 days. IMF Managing Director Christine Lagarde said the decisions taken by European leaders at their summit in Brussels “are an important contribution to helping address the crisis facing the euro zone and strengthening the global economic recovery.”

In a statement, the EU’s Council said “euro area and other Member States will consider, and confirm within 10 days, the provision of additional resources for the IMF of up to EUR 200 billion (USD 270 billion), in the form of bilateral loans, to ensure that the IMF has adequate resources to deal with the crisis. We are looking forward to parallel contributions from the international community.”

Progress made

Saying it was “a step in the right direction”, Lagarde said she welcomed in particular the progress made in three critical areas:

• the agreement reached to enhance fiscal discipline and strengthen economic policy coordination in the euro zone.

• the decision to accelerate the entry into force of the European Stability Mechanism (ESM) treaty, which will help bolster the firewall against financial contagion.

• the commitment in the euro area statement to provide...