Japan is eyeing IMF help for emerging economies.

- 11 / 10 / 2008 09:15

Japan will propose creating a scheme under the International Monetary Fund to offer emergency loans to emerging nations to assist their efforts to deal with the financial crisis, Finance Minister Shoichi Nakagawa said Thursday night.

"Japan is prepared to exercise leadership and make a significant contribution to financially supporting (emerging) economies through the IMF so as to minimize chain reactions" in the global financial market turmoil, he said on arrival in Washington.

Separately in Tokyo on Friday, Prime Minister Taro Aso said Japan is ready to host a meeting of leaders from the Group of Eight major industrial countries and others if necessary to deal with the widening global financial crisis.

Nakagawa told reporters he will suggest the idea at the one-day meeting of Group of Seven finance ministers and central bankers Friday in the U.S. capital.

The G7 groups Britain, Canada, France, Germany, Italy, Japan and the United States. The G8 adds Russia.

Under the scheme, Japan plans to funnel money from foreign reserves worth about $1 trillion to create a cash pool, and provide emergency loans via the IMF to help emerging nations inject public funds into their troubled financial institutions, Japanese government sources said.

Tokyo is expected to seek financial support from other cash-rich countries, including China and oil-producing nations in the Middle East, to join the scheme, the sources said.

China has the world's largest foreign reserves and Japan ranks second.

The envisioned emergency loan scheme is expected to amass several hundred billion dollars, including $200 billion to be provided by the IMF, they said.

The Japan Times