IMF reserves pumped up by Chinese pledges

The size of the International Monetary emergency fund to rescue bankrupt economies will rise to $456bn, thanks to a $43bn pledge from China at the G20 summit in Los Cabos, Mexico, this week.

China and the rest of the so-called Brics group of nations – which include Russia, Brazil, India and South Africa - will also contribute a $10bn each to the multi-lateral institution's regular coffers. In return for these pledges, the Brics are demanding more voting rights on the IMF's governing board.

The managing director, Christine Lagarde, said yesterday that the additional funds are not specifically earmarked for assistance for any part of the world. "These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members" she said. "They will be drawn only if they are needed as a second line of defence." But it is well known that the drive to bolster the IMF's emergency resources has been prompted by fears over the threat the eurozone crisis poses to the global economy. That danger was underlined again yesterday as Spain was forced to pay the highest price since the birth of the euro back in 1999 to raise funds for 12 and 18 months today as the government tapped investors for €3 billion (£2.4 billion). While Madrid's benchmark 10-year debt costs edged down slightly yesterday, Spain paid an average 5.07 per cent to raise money for 12 months — significantly higher than the 2.99 per cent paid at a similar auction a month earlier.

The unsustainable borrowing costs add to fears that Mariano Rajoy's beleaguered centre-right government will soon have to seek a full-blown international bailout after seeking €100 billion to prop up its struggling banks.

"It now appears virtually inevitable that Spain will require a sovereign bail-out – possibly very soon" said Jonathan Loynes of Capital Economics.

Spain's banks have been laid low by a property crash leaving them with almost €200 billion in "problematic" loans, according to the Bank of Spain.

A detailed audit of Spain's banks has been delayed until September to gather more information on lenders' loan books, although an initial estimate of how much extra capital the bank ing system needs will be published this week.

The auction came amid more signs that even Germany is being dragged down by the crisis. Investor confidence fell at its fastest rate since October 1998 in June with Spain's banks and uncertainty over the Greek election to blame.

Analysts warned that the price paid by Spain today could herald further intervention from the European Central Bank to soothe debt markets after its €1 trillion injection of cheap loans last December.

Sport
Radamel Falcao
footballManchester United agree loan deal for Monaco striker Falcao
Voices
A man shoots at targets depicting a portrait of Russian President Vladimir Putin, in a shooting range in the center of the western Ukrainian city of Lviv
voicesIt's cowardice to pretend this is anything other than an invasion
Arts and Entertainment
The eyes have it: Kate Bush
music
Arts and Entertainment
booksNovelist takes aim at Orwell's rules for writing plain English
PROMOTED VIDEO
Arts and Entertainment
Al Pacino in ‘The Humbling’, as an ageing actor
filmHam among the brilliance as actor premieres two films at festival
News
Fifi Trixibelle Geldof with her mother, Paula Yates, in 1985
people
Sport
Mario Balotelli in action during his Liverpool debut
football ...but he can't get on the scoresheet in impressive debut
Environment
Pigeons have been found with traces of cocaine and painkillers in their system
environmentCan species be 'de-extincted'?
Arts and Entertainment
booksExclusive extract from Howard Jacobson’s acclaimed new novel
News
i100
Arts and Entertainment
A Pilgrim’s Progress is described by its publisher as “the one-and-only definitive record” of David Hockney's life and works
people
Sport
Loic Remy signs for Chelsea
footballBlues wrap up deal on the eve of the transfer window
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

C# .NET Developer (PHP, Ruby, Open Source, Blogs)

£40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...

Data Analyst/Developer (Good education, Data mining, modelling,

£40000 - £70000 per annum + benefits+bonus+package: Harrington Starr: Data Ana...

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Day In a Page

Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor