U.K.’s Darling Seeks More European Funding for IMF Before G-20

By Simon Kennedy

Aug. 31 (Bloomberg) -- U.K. Chancellor of the Exchequer Alistair Darling urged European governments to hand the International Monetary Fund more money than they previously pledged so as to support poorer countries buffeted by the global financial crisis.

Writing four days before he hosts a London meeting of counterparts from the Group of 20, Darling said the 27 European Union nations should provide the IMF $75 billion on top of the $100 billion they’ve already committed. That formed part of the G-20’s April plan to treble the Washington-based lender’s resources to $750 billion. The U.K. will make its case when European finance officials meet in Brussels on Sept. 2 to discuss their agenda for the international conference.

“Europe should set an example and do more to meet the target,” Darling said today in an e-mailed statement. The U.K. is ready to provide up to $11 billion more, having already promised $15 billion, he said. The IMF needs cash “to support those emerging markets and low-income countries most affected by the crisis,” he said.

The 186-member IMF has sought extra backing from its shareholders after the banking crisis and subsequent global recession forced it to mount financial rescues from Hungary to Pakistan. Darling’s call follows the lender’s Aug. 28 announcement that it had pumped about $250 billion into foreign- exchange reserves worldwide, acting on another effort by the G- 20 to boost global liquidity.

‘First Signs’

The G-20 will meet amid the “first signs” that their economies are emerging from recession, Darling said. He reiterated confidence that the U.K. will begin expanding again around the end of the year.

Data last week showed the U.K. economy contracted less than previously estimated in the second quarter as manufacturing, auto services and government spending helped mitigate the biggest slump in business investment in 24 years.

The G-20 governments “will step up their efforts to secure the economic recovery and repair the world’s financial system,” Darling said.

Seeking to win support for the ruling Labour Party ahead of an election that must be held by June, Darling said the willingness of the government to fight the crisis with greater spending was a “clear division” from the proposed policies of the opposition Conservative Party. He repeated his commitment to halve the budget deficit within four years.

‘Difficult Choices’

“Every country will face difficult choices as they see through the recovery,” Darling said. “Here, we must be clear about our priorities, underpinned by the values which will define where we stand.”

Darling said G-20 governments should not allow “any let up in the reform of the financial sector,” urging each country to return their banks to a sound-footing, restore confidence in the financial sector and go further to ensure pay and bonuses are restrained. He demanded nations cooperate in ensuring new financial rules are evenly applied.

“Neither the economy nor the banking system can flourish efficiently without international cooperation,” Darling said. “In this global world our markets are interdependent, and without strong international financial regulation one country’s financial system can be played off against another.”

To contact the reporter on this story: Simon Kennedy in Paris at Skennedy4@bloomberg.net.