TOKYO: Japan said on Tuesday it will provide $60 billion in loans to the International Monetary Fund, becoming the first non-European nation to commit new money to boost the fund's firepower to contain the euro zone debt crisis.
Finance Minister Jun Azumi said Japan hoped Tokyo's contribution, which will be formally announced at a Group of 20 meeting in Washington later this week, will encourage other countries to follow suit.
"I am confident that many other countries will pledge contributions to the IMF," Azumi told a regular news conference after a cabinet meeting.
"Following a series of euro zone's policy responses, it is important to strengthen IMF funding and pave the way for ensuring an end to the crisis not only for the euro zone but also for Japan and Asian countries," Azumi said.
The IMF, which acts as a lender of last resort for governments, said in January it would need $600 billion in new resources to help "innocent bystanders" who might be affected by economic and financial spillovers from Europe.
But last week, IMF Managing Director Christine Lagarde said it might not need as much money as it had thought because economic risks had waned and G20 officials told Reuters the world's major economies were likely to agree to provide between $400 billion and $500 billion.
Euro zone countries have committed about $200 billion and other European Union nations additional $50 billion.
But other major economies, including leading emerging countries such as China, Brazil and Russia, have been holding off from making firm commitments, saying they were willing to chip in, but were looking to get more voting power in return.
Japan's announcement comes just days ahead of the IMF and World Bank Spring Meeting and a G20 meeting in Washington. Financial markets are once again showing increased concern about the euro zone debt crisis, highlighted by soaring Spanish borrowing costs.
Spain's 10-year government bond yields rose above 6 percent on Monday for the first time since the beginning of December, fuelling concerns that Madrid could fail to meet budget deficit targets as the country acknowledged it has probably tipped into its second recession since 2009.
That would raise the risk that the euro zone's fourth-largest economy might need an international bailout.