* Japan, Sweden, Denmark commit to IMF emergency funds
* Japan says hopes others will follow suit
* IMF chief says hopes for 'decisive progress'
* IMF resources to dominate meetings of finance chiefs
By Lesley Wroughton and Glenn Somerville
WASHINGTON, April 17 The International Monetary
Fund appeared to be inching toward a deal on increasing its
financial firepower on Tuesday, with Japan, Sweden and Denmark
committing a total of $77 billion to help contain the euro
zone's debt crisis.
The pledges were made ahead of meetings of global finance
chiefs in Washington this week that will focus on additional
funds for the IMF, an issue that has taken on fresh urgency,
given a jump in borrowing costs in Spain and Italy this week.
Their renewed borrowing woes have reignited fears that the
euro-zone crisis is about to flare again.
While a deal may not be fully fleshed out by the time the
meetings wrap up on Saturday, it is possible that the G20
developed and emerging nations could agree on the amount of
funds needed and leave it to a leaders' summit in Mexico in June
to hammer out details.
In an interview with Reuters, German Finance Minister
Wolfgang Schaeuble played down concerns that Spain could be the
next euro-zone country to seek a bailout. He expressed optimism
that the G20 will increase IMF resources by $400 billion by the
time the meetings conclude.
U.S. Treasury Under Secretary Lael Brainard said Europe must
commit to do whatever it takes to address its debt problems, but
should be careful to avoid a "downward spiral of austerity and
recession." She reiterated that Washington has no intention to
throw more money in the IMF's pot.
A number of emerging market economies, including China,
Brazil and Russia, are also being cautious about ponying up
money, although the funds would be designated to help countries
outside of Europe. These economies want firm commitments that
any new resources will be accompanied by more voting power in
the global lender.
They have been frustrated with the slow pace of governance
reforms. The United States is holding up approval of vote
reforms agreed in 2010 that would make China the IMF's
third-largest shareholder and boost voting shares for Brazil and
India. Negotiations have already begun on the next stage of
voting reform, which is expected to be completed in 2013.
Brainard said the United States would seek congressional
approval for the quota reform "at an appropriate time."
WILL OTHERS FOLLOW?
On Tuesday, Japan pledged $60 billion to the IMF, becoming
the first non-European nation to commit to strengthen the fund's
financial arsenal. Sweden said it was ready to immediately
commit $10 billion and increase the amount to $14.7 billion
later, while Denmark said it would give $7 billion. Norway
pledged $9.6 billion in December.
"Together, they set the stage for decisive progress to be
made by the time of the spring meeting of our global membership
later this week," IMF Managing Director Christine Lagarde said
in a statement.
In an interview with Italy's main financial newspaper Il
Sole 24 Ore, Lagarde said she hoped to "reach the critical mass
of more than $400 billion," although she said sealing a deal
might take longer.
The IMF has scaled back estimates for its funding needs in
recent weeks, saying that the risks to the global economy it
foresaw last year had not materialized. Still, on Tuesday it
warned that the world economy faced an "uneasy calm" and was
In January, the IMF said it needed an additional $500
billion to lend and another $100 billion for reserves to
comfortably guard against risks posted by the euro-zone crisis.
Euro-zone countries have already committed to provide 150
billion euros ($200 billion) and they hope other European Union
countries, notably Britain, will pledge up to 50 billion euros
G20 sources said China and Saudi Arabia were expected to
commit funds, with smaller amounts coming from Brazil, Russia,
Mexico and Poland.
The United States, heading into a presidential election in
November and facing internal political opposition to putting up
money for wealthy European nations, has said it will not
participate in the fundraising effort.
Brainard said the United States believed the IMF had "very
adequate core resources" to deal with global challenges.
Canada has also said it would not contribute.
Japanese Finance Minister Jun Azumi said Tokyo's
contribution, which will be formally announced at the G20
meeting, would encourage other countries to follow suit.
Azumi said he consulted with Chinese Vice Premier Wang
Qishan on Monday and that there were no gaps between the two
countries on IMF funding.
Analysts said Japan's commitment may be motivated partly by
fears that an unruly euro-zone crisis could lead to a surge in
safe-haven demand for the yen.
"It remains to be seen how much the other major economies,
which are less exposed to the euro zone, will contribute,"
economic research firm Capital Economics said on Tuesday.
Germany's Schaeuble said it would be wrong for countries to
withhold new funds in an effort to secure a deal on quota
reform, saying this would amount to going back on a promise.
"That's what we've agreed, and I assume it will happen,"
Schaeuble said. "There are some voices that apparently want to
set new conditions. That would go against what we've agreed."