TOKYO, November 14 – Japan will offer to lend up to 100 billion dollars to the International Monetary Fund to help provide financial lifelines to crisis-hit emerging countries, the government said on Friday.,
Japanese Prime Minister Taro Aso will make the offer at a financial crisis summit of major industrialised and emerging nations in Washington due to begin later in the day, his office said.
He will also call on other member countries of the IMF to give more funds to the institution to help emerging nations, which are expected to be a key driver of global economic growth, it said.
"Until the increase in capital is realised, we are ready to offer up to 100 billion dollars to the IMF from our foreign currency reserves," the statement said.
At almost 980 billion dollars Japan has the second largest foreign exchange reserves in the world, after China, as a result of years of market intervention to keep the yen down against the dollar and help exporters stay competitive.
However, Japan\’s monetary authorities have not intervened since March 2004, allowing the yen to find its own level against the dollar.
The IMF is expected to extend large loans to countries such as Iceland, Hungary and Ukraine to help them weather the current financial crisis.
Aso will call for the IMF\’s total funding to be doubled from the current level of 340 billion dollars, the Yomiuri newspaper reported.
He will propose giving emerging economies such as China greater influence in the running of the institution to reflect the rapidly changing global economic landscape.
China currently has less voting power at the IMF than Belgium and the Netherlands combined.
Aso will propose a review of the voting powers of member countries in the IMF, the World Bank and other key institutional organisations, as well as increased funding for the Asian Development Bank.
The Japanese premier will also call for improvement in the IMF\’s monitoring and early-warning capabilities to avert financial crisis, as well as tougher supervision of credit rating agencies.
Aso, facing flagging popularity among voters, has said he wants to play a leading role in the G20 summit, sharing Japan\’s experience in beating its own banking sector crisis and economic implosion in the 1990s.
Tokyo is the second-largest donor after Washington to many global institutions, including the IMF, but its attempts to raise its voice on the world stage have often ended in failure.
At the Washington summit, Aso will express support for the dollar as a key currency.
"There exist concerns in the market about whether the dollar will remain the key currency, now that the economic power of the United States has declined with its debt growing to the world\’s largest," the statement said.
"However, we should pay efforts to support the regime of the dollar as the key currency on which the current international economic and financial system is built," it said.
French President Nicolas Sarkozy said Thursday the US dollar can no longer claim to be the world\’s sole major currency.
Raising the stakes ahead of the G20 meeting, data released Thursday showed a steep drop in US trade and a recession in Germany, while the European Union was expected to report Friday that the entire eurozone has plunged into recession.