6 November 2011 Last updated at 08:29 ET

UK could give £40bn to the IMF, Danny Alexander says

 

Chief Secretary to the Treasury Danny Alexander: Britain 'could put £40bn into IMF'

The UK could potentially give up to £40bn to the IMF to help the global economy, Treasury Chief Secretary Danny Alexander has said.

That contribution would be split across two funds, but both would be guarantees not actual cash transfers.

David Cameron has said the UK will give more to the IMF, but the money must not support a eurozone bailout.

Labour said the IMF could not be a substitute for the European Central Bank "recognising its responsibility".

In July, MPs voted to raise the UK's International Monetary Fund quota from £10.7bn to £20.1bn. That contribution is topped up with bilateral loan arrangements, known as new arrangements to borrow (NAB).

The BBC's political correspondent Ross Hawkins says that as the quota goes up, the loans are due to come down, to a total combined amount of £29.4bn.

However, he says the government could choose to leave the loan untouched, thereby allowing it to contribute up to £40bn without a further vote in Parliament.

'Promise to pay'

The UK currently contributes £4.9bn, of which £3.3bn is from the quota and the rest from NAB.

Mr Alexander told the BBC's Andrew Marr programme that MPs had already agreed to both elements of the UK contribution.

He said the £40bn commitment would be a "contingent liability".

"In other words, we're not actually handing over cash, it is a promise to pay, to back up the IMF's lending if things go wrong," he said.

"It's worth pointing out that no government has ever lost money in terms of resources made available to the IMF.

"The IMF was a British invention - that's why we should be supporting it. That's why it was so wrong for the Labour Party back in July to vote against make additional resources available to the IMF."

Asked whether he was happy that additional UK contributions would go to Greece, he replied: "I am, in fact that's already been agreed."

The prime minister has said any additional resources for the IMF must be available to all countries, not just those in the eurozone.

And he insisted he was "not asking British taxpayers to contribute to the IMF because European taxpayers aren't doing enough".

For Labour, shadow foreign secretary Douglas Alexander said the European Central Bank (ECB) should be the lender of last resort for the eurozone and "does need to be delivering more fire power".

"We have always supported the IMF as the United Kingdom, but the question is, what is that money used for?" he told the BBC.

"We don't want to see a situation where the IMF's recapitalisation becomes a pretext or an excuse for the ECB not recognising its responsibility."