WASHINGTON - An infusion of hundreds of billions of dollars will give the International Monetary Fund a badly needed boost to tackle Europe's prolonged debt crisis. But global finance officials sent a strong message Saturday that struggling governments must speed reforms or risk spooking jittery markets and raising the economic danger.
The lending agency said in a statement after its weekend meetings that financially strapped European countries must put in place bold changes to resolve their debt problems. The IMF received $430 billion in pledges from individual countries, nearly doubling the agency's reserves available for loans to almost $1 trillion.
"It is nice to have a big umbrella," managing director Christine Lagarde said at a news conference. She and other officials said the new money should reassure financial markets troubled recently by the prospect that Spain could come next to the IMF for emergency loans to escape a default.
The 188-nation IMF, working with European governments, has provided rescue programs already for Greece, Portugal, and Ireland. Spain is a much bigger economy and would require much more financial assistance were it unable to sell its government debt to private investors.
The IMF policy committee's statement said it was important for European countries to commit to bold reforms and put them into practice.
Europe's problems dominated the discussions of finance officials who assembled in Washington for the spring meetings of the IMF and the World Bank. Those gatherings were preceded by talks among the Group of 20 major economic powers; the G-20 includes traditional economic powers such as the United States and Germany and developing nations including China and Brazil.
The meetings concluded Saturday with a final statement from the committee that sets policy for the World Bank.
"Policy adjustments and improved economic activity have reduced the threat of a sharp global slowdown," the World Bank committee said. But the panel said poor countries still faced challenges and remained in need of programs to reduce poverty and promote economic reforms.
In past years, thousands of demonstrators have sometimes turned out to protest against the ills of globalization. But this year only a handful of protesters showed up.
Treasury Secretary Timothy Geithner told the IMF panel that Europe needed to be more creative and aggressive in fighting its debt crisis, using all the resources at its disposal, including the European Central Bank, the lender for the 17 nations using the common euro currency.
"The success of the next phase of the crisis response will hinge on Europe's willingness and ability . . . to apply its tools and processes creatively, flexibly, and aggressively to support countries as they implement reforms and stay ahead of the markets," Geithner said Saturday.
The additional $430 billion in resources was announced by Lagarde after the G-20 meeting Friday. The United States and Canada were two rich countries that did not make pledges. The United States would face problems winning support for increased funding for the IMF, and Canada expressed the view that Europe, as a rich continent, had sufficient resources to deal with its debt problems.
"They need to step up to the plate and overwhelm this issue with their own resources," Canadian Finance Minister Jim Flaherty said.