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Singapore has pledged S$5 billion (US$4 billion) to the International Monetary Fund (IMF) “War Chest”. This increases its capability to provide money to fight future economic crisis and for the IMF to draw down should the need arise. According to insider, the amount represents only 2% of Singapore’s S$243 billion foreign reserves.
The US$4 billion is less than 1% of the US$430 billion already pledged by countries like China, Russia, Australia and Japan. The US$430 billion is only a contingent loan, which will only be drawn down if needed. Until then, the money will remain in the respective country’s foreign reserves.
The European sovereign debt crisis has resulted from a combination of complex factors, including the globalization of finance; easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices. The current ongoing financial crisis which started in 2009 has made it difficult or impossible for some countries in the euro area to re-finance their government debt without the assistance of third parties. Concerns intensified in early 2010 which led Europe’s finance ministers on 9 May 2010 to approve a rescue package worth €750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility. In October 2011 and February 2012, the eurozone leaders agreed on more measures designed to prevent the collapse of member European economies.
IMF is an international organization came into existence in 1945 when 29 countries signed the Articles of Agreement. The IMF goal was to stabilize exchange rates and assist the reconstruction of the world’s international payment system post World War II. Countries contribute money to a pool through a quota system from which countries with payment imbalances can borrow funds on a temporary basis. Through this activity and others such as surveillance of its members’ economies and policies, the IMF works to improve the economies of its member countries. IMF describes itself as an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty. IMF headquarter is located in Washington D.C., USA.