WASHINGTON — An infusion of hundreds of billions of dollars will give the International Monetary Fund a much-needed boost to tackle Europe’s prolonged debt crisis. But global finance officials sent a strong message Saturday that struggling governments must speed reforms or risk spooking jittery markets and raising the economic danger.
The lending agency said in a statement after its weekend meetings that financially strapped European countries must put in place bold changes to resolve their debt problems. The IMF received $430 billion in pledges from individual countries, nearly doubling the agency’s reserves available for loans to almost $1 trillion.
“It is nice to have a big umbrella,” said managing director Christine Lagarde at a news conference. She and other officials said the new money should reassure financial markets troubled by the prospect that Spain could come next to the IMF for emergency loans to escape a default.
The 188-nation IMF, working with European governments, has provided rescue programs already for Greece, Portugal and Ireland. Spain, however, is a much bigger economy and would require much more financial assistance were it unable to sell its government debt to private investors.
Europe’s problems dominated the discussions of finance officials who assembled in Washington for the spring meetings of the IMF and the World Bank. Those gatherings were preceded by talks among the Group of 20 major economic powers.
In past years, thousands of demonstrators have turned out to protest against the ills of globalization. This year, only a handful of protesters showed up. Police said they had made three arrests by Saturday afternoon.
Treasury Secretary Timothy Geithner told the IMF panel that Europe needs to be more creative and aggressive in fighting its debt crisis, using all the resources at its disposal, including the European Central Bank, the lender for the 17 nations using the common euro currency.
“The success of the next phase of the crisis response will hinge on Europe’s willingness and ability … to apply its tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets,” Geithner said Saturday.
