George Osborne said that Britain will be adamant to see the ‘color of Europe’s money’ before it allows taxpayers put cash £636bn International Monetary Fund war chest so as to cope up with the financial crisis in Eurozone. The chancellor set four conditions in view of this Britain’s compliance to provide guarantee of £16bn to allow Washington-based fund to protect the future of Euro.
George Osborne also said that the Britain’s partners in G20 group of developed and developing countries listed in the name of debtor nations are required to fulfill terms in return for loans. This includes no new special IMF funding vehicles and full IMF conditionality.
Another important thing the chancellor stated was that IMF resources aimed at supporting countries is by no means a substitute for credible steps by eurozone to support their currency that means the world should see the color of their money before contributing further. He proposed a deal aimed at providing more resources for the IMF was coming together and main barrier being at Europe’s willingness to raise more money.
Olli Rehn, economic and affairs commissioner of Europe expressed concern for Eurozone crisis and said Europe’s needs stronger firewalls. Hopefully we can get a positive solution and we need the support of American and British people to increase IMF resources, he added. Tim Geithner, US treasury secretary cam up in support of extra funds but that this is surely not be a substitute for any change in Eurozone.
George Osborne admitted that eurozone countries have got a lot over last one and a half year like giving up power in a fiscal deal, collecting resources in central fund and structural reforms in many nations. Although these are no easy decisions but fortunately these have helped a great way. These are very appreciable achievements but at the same time it is to be acknowledged that these are not sufficient. It is required by Eurozone countries to affirm financial market that they can deal with any consequences.
Christine Lagarde, IMF’s managing director wants to double the fund’s resources to cope up with financial crisis to double to $1tn ($500bn coming from eurozone and remaining $500 from rest part of the world). Osborne seemed little discontented as he thinks British economy will be boosted up if eurozone crisis gets resolves but it will be back on track only if domestic problems are rectified biggest of which is debt.
The chancellor also said that of major economies of the world Britain is the only one that has experienced the biggest increase in debt over the decade with total of corporate, household, financial and public sector reaching 500% of GDP. The past cannot be changed but it can be controlled or even rectified if we manage deleveraging in the best possible way. Osborne said that he had inherited an economy that was predicted to undergo largest budget shortage in the G20 and thereby all his decisions regarding tax and spending had been justified by events.