Japan pledges 60 billion US dollars in loans to the International Monetary Fund

Japan pledged 60 billion US dollars in loans to the International Monetary Fund today in an effort to ensure that the debt crisis in some European economies will not spread.

Japanese finance minister Jun Azumi announced the emergency loan, which will use the nation's foreign exchange reserves, his ministry said.

IMF Managing Director Christine Lagarde welcomed the move and encouraged other fund members to do the same.

“This is an important step forward in the ongoing international effort to strengthen the adequacy of the global resources available to prevent and fight crises and to promote global economic stability,” Ms Lagarde said in a statement.

IMF lending is expected to be on the agenda when finance chiefs from the Group of 20 leading economies meet in Washington later this week.

Greece, Ireland and Portugal had to seek bailouts after their borrowing costs rocketed and there are concerns Spain might be next.

Spain has the fourth-largest economy among the 17 nations that use the euro and is widely considered too expensive to rescue.

The yield on Spain's benchmark 10-year government bond jumped above 6% yesterday for the first time since November. Rising yields are a sign that investors are less confident in the country's finances.

“We can never be optimistic about the situation in Europe, even though the area is almost set to exit the crisis, thanks to policy efforts,” Mr Azumi was quoted by Kyodo as saying.

AP