✂ Fed’s first rate cut since 2020: Use our free Stock Screener to find new opportunities fastExplore for FREE

UPDATE 1-US lawmaker: No IMF money unless Europe steps up

Published 05/21/2009, 11:42 AM
Updated 05/21/2009, 11:56 AM

(Adds Geithner comments, background)

WASHINGTON, May 21 (Reuters) - A key U.S. lawmaker said on Thursday he would not support a request for $108 billion in funding for the International Monetary Fund to help other crisis-hit economies unless Europe stepped up its own stimulus spending.

"I am very, very reluctant to support any additional funding for the IMF... so long as the Europeans continue to be as modest as they are in terms of their actions on the stimulus front," Representative David Obey, chairman of the House Appropriations Committee, said at a subcommittee hearing.

"We don't want Uncle Sam to be Uncle Sucker," Obey said at the hearing, where U.S. Treasury Secretary Timothy Geithner was testifying.

The United States has pledged $100 billion to help support a special IMF lending program, and $8 billion to expand the U.S. contribution to the fund.

The new funding for the IMF is aimed mainly at struggling poorer countries, notably in Eastern Europe.

However, some in Congress have expressed concern about putting up more money when domestic troubles are already straining public finances.

Geithner said European countries recognized that they were not insulated from the financial crisis and had committed to "very substantial" stimulus, although they were constrained by budget and deficit rules.

"Our efforts to pull a recovery here will be less effective if we did not get other countries moving with us to support demand and growth in their economies," Geithner said.

"The president went to London about six weeks ago and got broad agreement among the major economies, including the Europeans, to provide the largest most coordinated approach in terms of fiscal policy that we have ever seen. The major European countries are doing very substantial stimulus in 2009."

Stimulus packages in Europe, however, are smaller relative to their economies than the measures undertaken by the U.S. government.

Germany's stimulus plans entail $110 billion in two packages, which works out to about 3.25 percent of gross domestic product. Plans in Britain and France represent a smaller percentage of GDP. By comparison, the U.S. package of $787 billion is about 5.5 percent of GDP. (Reporting by Emily Kaiser; Editing by Leslie Adler)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.