internet technologies: UK's IMF subscription up by ?9bn

Wednesday, June 15, 2011

UK's IMF subscription up by ?9bn

The UK is to increase its subscription to the International Monetary Fund by more than £9bn a year - almost doubling the amount it lends the organisation.

It currently provides £10.54bn a year, reflecting the size of the UK economy.

The Treasury said taxpayers would not lose out as the UK was paid interest on the loan, made via currency reserves.

It said IMF members had made the decision, in principle, to raise its overall lending capacity before debt crises in Greece, Ireland and Portugal.

The scale of the increase emerged in a piece of secondary legislation from the government laid before Parliament on Tuesday.

Conservative MP Douglas Carswell said: "I'm appalled to see at a time of cutbacks at home, at a time when many constituents are worried about cuts in public services in the UK that we're doubling the amount of subscription that we pay to the IMF."

"I'm very concerned that the government tried to announce this, not by standing up in the Commons and telling us that it was spending the money in this way, not by having a debate to allow MPs to question the wisdom of doing this but by slipping it through when no-one was looking with a written statement.

"We're talking about an enormous sum of money. We're talking about the equivalent of 1.5p on income tax. I think a lot of people will be quite shocked to discover that we're increasing our subscription to the IMF in order to bail out the eurozone."

But the Treasury told the BBC that the IMF had never failed to pay back any loan and "any suggestion that the UK taxpayer faces additional costs is wrong".

"We are lending money from existing foreign exchange reserves to the IMF on which they pay interest to us," he said. "It has no impact on our borrowing whatsoever."

He added: "This gets all the facts wrong on the UK's membership of the IMF and seems to suggest that we should not be part of the IMF, which the government totally rejects."

The Treasury said IMF members had agreed, in principle, to double their contributions in April 2009 - well before the beginning of the eurozone debt crisis.

The move was part of reforms to the structure of the organisation which increased the financial share paid by emerging economies, it stressed. The agreement was finalised in November 2010 and the terms outlined in March's Budget, it added.

This article is from the BBC News website. ? British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.