Tuesday, December 20, 2011

Czech Central Bank Governor raises doubts on security for IMF Loan

The article quoting Miroslav Singerin in considerable detail was issued at lunchtime today in Prague.

This must be the most startling disaster of recent weeks for the International Monetary Fund, which has been visibly floundering since it was weakened by the circumstances of the departure of its former French head, Dominique Strauss-Kahn and his replacement by the exceptionally light-weight former French finance minister, Mme Christine Lagarde The following quotes will provide an idea of the grave damage now being inflicted on the IMF, one of the world's two main international organisations ( with the World Bank,) for defending against the growing EU related international economic crisis:

Writing in the business paper Hospodářské noviny (HN), Singer said in a two-page article that the risks attached to the Kč 89 billion (€3.5 billion) loan had to be seriously weighed up even though the IMF could be considered “an exceptionally safe” financial institution.

Singer warned that, if agreed, the new loan would double the Czech central bank’s loan exposure to the IMF from the current Kč 92 billion to almost Kč 180 billion, or from around 12 percent of the bank’s reserves to around 23 percent of them.

“I am convinced that at a time when unprecedented doubts have been cast over what were previously regarded as certainties, such an exposure to whatever institution should be cause for reflection over the risks,” he added
Thus should George Osborne think again before providing more UK funds for the IMF, even under the umbrella of the G20, in today's corrupt ansd chaotic situation, nothing is what it may once have seemed, as Mr Singerin says "unprecedented doubts have been cast over what were once regarded as certainties"!

How else can Spain and Italy be contributing so much to the €150 Billion new IMF loan, everybody surmises is partly for their future benefit?

On the prospects for new funding being repaid, the newspaper reports the following:

The IMF’s cast iron, or rather gold, risk-free loans reputation was also built on an unwritten rule that it gave priority to paying back creators, Singer said. “But that priority does not have any basis in the documents related to the [bank] agreements and is based on the usual practice between members of the IMF,” he added.

If the IMF started facing problems and had to call for increased contribution, around half of the burden of stumping up more money would fall in its main shareholders, the already heavily debt-burdened Japan, the US, and Britain, Singer said.

“I am convinced that if the IMF wants to increase its means and at the same time safeguard its exceptional financial trustworthiness, it should, rather than seeking new sources of loans, concentrate on boosting its capital, which in the end would mean increasing contributions,” Singer added.



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