Europe urged to quell crisis as IMF wins $430 billion boost

WASHINGTON: European policy makers were urged to be tougher and more agile in their efforts to end two years of debt turmoil as the International Monetary Fund won more than $430 billion to safeguard the world economy. IMF managing director Christine Lagarde's push for a doubling in lending power paid off despite complaints from emerging markets wanting more say in how the fund is run and calls from some richer nations for aid to be more tightly controlled.

That left finance chiefs from the Group of 20 stressing that Europe must now justify the show of solidarity by doing even more to restore fiscal health, help banks and spur economic growth. Failure to do so could make it harder for countries such as Spain to secure aid if they falter and imperil a global recovery the G-20 labeled modest and subject to downside risks. Europe's leaders and central bankers must deploy their "tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets," US treasury secretary Timothy Geithner said on Saturday in Washington at the IMF's spring meeting.

Although Geithner made no specific proposals, the IMF this week advised the European Central Bank to cut interest rates and inject capital directly into banks. Brazil yesterday pressed Germany, Europe's linchpin economy, to spend more and the UK backed a proposal for euro-area governments to issue joint debt. "The firewall is a necessary, but far from sufficient condition to resolving this crisis," said Tharman Shanmugaratnam, the FM of Singapore who chairs the IMF's policy panel. "The real solution has to do with the fiscal and structural reforms that address the real causes of crisis."

European officials chafed at criticism they have not done enough weeks after they bowed to overseas pressure by lifting their own rescue funds to the symbolic $1 trillion level. The ECB also lent banks more than that amount in long-term loans.