UK Politics

Eurozone crisis: Right to boost IMF funds, Cameron says

David Cameron and Nicolas Sarkozy in Cannes
Image caption Mr Cameron is in Cannes with other G20 leaders

It is "right" to consider boosting funds to the International Monetary Fund at a time of crisis, the prime minister has told the BBC.

David Cameron, in Cannes for a meeting of the G20 industrialised nations, said there was "no risk" to UK taxpayers.

BBC political editor Nick Robinson says it could mean eurozone nations like Greece are indirectly helped by the UK.

Labour said IMF funds should not be used to plug a gap in the eurozone bailout fund.

The eurozone crisis featured in the House of Commons on Thursday with Treasury Minister Mark Hoban fielding questions from MPs.

When asked if the government had contingency plans for the euro breaking up, he replied: "Every good government would have plans in place for a whole range of eventualities and this government is well prepared for any eventuality."

'Very destabilising'

He was then asked if those contingency plans included any prospect of the UK adopting the euro. Mr Hoban replied: "I don't think that there's any intention for us to join the euro at a time when it's breaking up."

Later, Chief Secretary to the Treasury Danny Alexander called the collapse of the euro an "extremely unlikely" scenario.

He told the BBC contingency measures were in place, although he would not go into details.

In Cannes, Mr Cameron told the BBC: "I'm here to support the British economy. When the world is in crisis, it is right to consider boosting the IMF."

He added: "No government lost money by lending money to the IMF. There is no risk to British taxpayers of seeing the IMF perform its proper role. That's what we have always supported."

His spokeswoman said the UK would not contribute "directly or indirectly" to the eurozone bail-out fund.

The UK currently provides £29bn ($46bn) of the IMF's £600bn ($950bn) lending capacity.

About £4.9bn of UK money is held in the IMF's fund but it can draw down up to £29.4bn from the Treasury in certain circumstances.

In a statement to MPs - sparked by an urgent question from Eurosceptic Conservative backbencher Peter Bone - Mr Hoban said that "at no point have we committed any British taxpayers' money, not to Greece, not to the bail-out fund".

He said there "may well be a case for further increasing the resources of the IMF to keep pace with the size of the global economy".

'Stop obfuscating'

But he added the government wanted to see an increase in the resources the IMF made available to all its members and not just those in the eurozone.

Asked how the government could guarantee that no extra UK money for the IMF would bail out the eurozone, Mr Hoban said all contributions go towards its "general resources" and of 53 IMF programmes worldwide at the moment, only three were in the eurozone.

Shadow chancellor Ed Balls said any additional funding should be held back until the details of the permanent eurozone bailout fund had been agreed.

"The IMF's job is to support individual countries with solvency crises, not to solve a structural problem caused by eurozone countries being unable to agree the necessary steps to support and maintain their monetary union," he said.

"So instead of obfuscating and hiding behind fudged words in communiques, David Cameron and George Osborne should be clear about what's really going on.

"They must clarify, as we have consistently said, that there should be no IMF funding to plug the gap in the bailout fund and do the job the [European Central Bank] should be doing."

Call for unity

As the G20 summit is taking place, Greek PM George Papandreou has faced calls for his resignation, amid opposition within his own party to his surprise referendum call on the EU bailout plan.

He said on Thursday he was ready to drop the plan and called for unity in his party ranks ahead of a confidence vote on Friday.

The Greek opposition New Democracy party has said it will accept taking part in a coalition government if Mr Papandreou agrees to stand down.

Nigel Farage, leader of the UK Independence Party, which campaigns for Britain's exit from the European Union, said: "For a few days there, the people of Britain were jealous of Greece - after all they were going to get a referendum.

"But of course now we can only feel empathy with them. They are in a similar boat. No referendum and a government that nobody ever voted for."

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