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WASHINGTON : Japan on Friday announced a plan to lend up to 100 billion dollars to the International Monetary Fund to help provide financial lifelines to crisis-hit emerging countries, officials said.
Japanese Prime Minister Taro Aso made the proposal in line with his earlier plans at a financial crisis summit of world leaders which began in Washington late Friday after unveiling the plan earlier in the day in Tokyo.
Aso also proposed doubling funds to the IMF and supported ideas to give emerging economies greater influence in the running of the institution to reflect the rapidly changing global economic landscape.
"In order to deal with the financial crisis, we need to make the role of the IMF fit to a new era," Aso said at dinner with his G20 summit partners, according to the Japanese government.
"In particular, it is necessary (for the IMF) to strengthen its early warning system and provide support for new emerging economies as well as small and mid-sized countries," Aso said.
"To achieve the goal, I would like to propose doubling funds from the current 320 billion dollars to 640 billion dollars," he said.
"While it will take time to realize the fund increase, Japan is ready to lend 100 billion dollars as a prompt relief."
IMF chief Dominique Strauss-Kahn welcomed the offer, saying: "This is a major contribution to maintaining the stability of financial and capital markets, and clearly demonstrates Japan's leadership and strong commitment to multilateralism."
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, 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.
In an interview with the Washington Post, Aso called for bigger influence by Asian countries, including its rival China, on the present frameworks of world politics formed after World War II.
"It is true that the Asian voice is somewhat limited at the IMF and other international institutions," Aso told the US newspaper published on Saturday.
"The economic clout of emerging economies is far different today than when the Bretton Woods system was established, in 1944," he said, referring to the world financial mechanism supervised by the IMF and World Bank.
"So not just the Chinese, but it is quite understandable that other Asian countries also would express that sort of view."
- AFP /ls
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