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Simple maths, complex politics - UK funds for the IMF | Simple maths, complex politics - UK funds for the IMF |
(about 1 hour later) | |
By Ross Hawkins Political correspondent, BBC News | By Ross Hawkins Political correspondent, BBC News |
The government says it would be able to hand over as much as £40bn to the IMF without a vote in the House of Commons. | The government says it would be able to hand over as much as £40bn to the IMF without a vote in the House of Commons. |
That is more than three times as much as the annual budget for the police in England and Wales. | That is more than three times as much as the annual budget for the police in England and Wales. |
It is more or less the amount the Treasury raises in Corporation Tax in a year. | It is more or less the amount the Treasury raises in Corporation Tax in a year. |
And until the weekend, many at Westminster had no idea the figure was so big. | And until the weekend, many at Westminster had no idea the figure was so big. |
Yet Parliament has already agreed to what Chief Secretary to the Treasury Danny Alexander describes as a £40bn "ceiling". | Yet Parliament has already agreed to what Chief Secretary to the Treasury Danny Alexander describes as a £40bn "ceiling". |
Ifs and buts | Ifs and buts |
The maths are simple. | The maths are simple. |
In July 2010, MPs approved an expanded loan arrangement that could see the UK lend the IMF just short of £20bn. | In July 2010, MPs approved an expanded loan arrangement that could see the UK lend the IMF just short of £20bn. |
In June 2011, they approved an increase in the UK's IMF quota - the amount the IMF could call on in addition to that loan - worth just over £20bn. | In June 2011, they approved an increase in the UK's IMF quota - the amount the IMF could call on in addition to that loan - worth just over £20bn. |
This, though, is a story of ifs and buts. | This, though, is a story of ifs and buts. |
Firstly, the amount of UK taxpayers' money sat in IMF coffers is much, much smaller - around £4.9bn. The larger sums represent the amount the UK could lend if required. | Firstly, the amount of UK taxpayers' money sat in IMF coffers is much, much smaller - around £4.9bn. The larger sums represent the amount the UK could lend if required. |
Secondly, the government's plan has been to keep the UK's total liability steady at £29.4bn with the loan going down as the quota went up. | Secondly, the government's plan has been to keep the UK's total liability steady at £29.4bn with the loan going down as the quota went up. |
Thirdly, among those MPs who voted on this summer's increase, there were some who were not fully aware of the previous summer's decision. | Thirdly, among those MPs who voted on this summer's increase, there were some who were not fully aware of the previous summer's decision. |
The government is not explicitly saying it intends to push up the UK's guarantee to the IMF to the full £40bn. | |
But it is dropping some very heavy hints. David Cameron told the House of Commons: "If it comes to extra support for the IMF we want to do that within the headroom that's been set." | |
Put another way, he is willing to see the UK's maximum potential IMF contribution rise to £40bn. But the prime minister would almost certainly insist on seeing eurozone countries agreed on further measures to help their currency first. | |
Ministers also point out no country has ever lost money lending to the IMF, and that lending to the IMF does not count as public spending. | Ministers also point out no country has ever lost money lending to the IMF, and that lending to the IMF does not count as public spending. |
Brown government | Brown government |
Some Conservative backbenchers regard all this with considerable suspicion. | Some Conservative backbenchers regard all this with considerable suspicion. |
They are well aware that the Cannes G20 summit failed to place a figure on increasing the IMF's firepower, but the words of the organisation's managing director, Christine Lagarde - noting she left Cannes with an "unlimited no-cap, no-floor, no-ceiling on resources" - also ring in their ears. | They are well aware that the Cannes G20 summit failed to place a figure on increasing the IMF's firepower, but the words of the organisation's managing director, Christine Lagarde - noting she left Cannes with an "unlimited no-cap, no-floor, no-ceiling on resources" - also ring in their ears. |
The complex nature of the UK's contribution to the IMF may well have foxed some of its potential critics, but it is not a cunning coalition ruse. | The complex nature of the UK's contribution to the IMF may well have foxed some of its potential critics, but it is not a cunning coalition ruse. |
It was at the London G20 meeting of 2009 that an agreement to boost IMF resources by up to $500bn was agreed, a meeting chaired and driven by Gordon Brown. | It was at the London G20 meeting of 2009 that an agreement to boost IMF resources by up to $500bn was agreed, a meeting chaired and driven by Gordon Brown. |
This money was channelled in large part through the system of loans known as New Arrangements to Borrow that supplement contributions IMF members make through their quotas. | This money was channelled in large part through the system of loans known as New Arrangements to Borrow that supplement contributions IMF members make through their quotas. |
That is why Britain is committed to making substantial guarantees to the IMF through two different routes. | That is why Britain is committed to making substantial guarantees to the IMF through two different routes. |
Much has changed since 2009 though. Rather than trumpeting extra IMF spending, Labour voted against it in the summer. So too did 32 Conservative backbenchers. | Much has changed since 2009 though. Rather than trumpeting extra IMF spending, Labour voted against it in the summer. So too did 32 Conservative backbenchers. |
In a time of austerity, extra resources or fatter guarantees for the IMF will face stiff opposition in Parliament, whether there's a vote or not. | In a time of austerity, extra resources or fatter guarantees for the IMF will face stiff opposition in Parliament, whether there's a vote or not. |