You're reading: EU finance chiefs seek money to lend to IMF

BRUSSELS — European ministers will try to come up with €200 billion ($261 billion) in new loans to the International Monetary Fund on Monday to boost a firewall against the debt crisis and make up for Britain's refusal to pitch in.

Even if the European Union finance ministers manage to cobble together the promised sum in their afternoon conference call, that amount is widely seen as insufficient to calm market worries that the eurozone does not have the funds to rescue large economies like Italy and Spain.

The president of the European Central Bank once again dampened hopes that the bank could provide the currency union with the firepower needed to fight off the crisis. Mario Draghi, who will be quizzed by members of the European Parliament later Monday, in an interview with the Financial Times repeated that large-scale government bond purchases were outside the ECB’s remit.

Draghi also said that the eurozone should raise the capacity of its own bailout funds, on top of the additional loans promised to the IMF.

Reaching the €200 billion target for loans to the IMF may be difficult after the U.K., the largest economy among the 10 EU states that don’t use the euro, said it won’t contribute. Hungary, Romania and Bulgaria have also ruled out sending any additional money to the Washington-based fund.

Earlier Monday, Poland’s finance minister Jacek Rostowski said his country plans to lend around €6 billion ($7.8 billion) to the IMF by committing reserves of the National Bank of Poland. Denmark, which will take over the EU presidency from Poland in January, has said it will contribute €5.4 billion, while Sweden, another non-euro state, has promised to contribute an as yet unspecified amount.

Olivier Bailly, a spokesman for the European Commission, indicated that the EU may need more time to decide exactly how to reach the €200 billion, but said the EU’s executive still hoped a solution could be found Monday.

In their afternoon conference call, the ministers will also compare notes on a first draft for a new treaty meant to tighten fiscal discipline within the eurozone, which was circulated Friday, said Kacper Chmielewski, spokesman for the Polish delegation to the EU.

Of the 27 EU states, only the U.K. has said it will definitely not join the new accord, while the nine other non-euro states have indicated their support as long as their parliaments agree.

The preliminary deals to set up a new treaty and provide up to €200 billion in new loans to the IMF were the main outcomes of an EU summit 10 days ago, which has so far failed to convince financial markets that Europe can exit its escalating debt crisis.

Investors were disappointed that the eurozone did not agree to commit more money to its own bailout funds or open the door for large-scale intervention by the ECB.

But ECB chief Draghi repeated Monday that funding struggling governments or boosting economic growth were not among the bank’s tasks.

"The important thing is to restore the trust of the people — citizens as well as investors — in our continent," Draghi was quoted as saying in the FT. "We won’t achieve that by destroying the credibility of the ECB."

The ECB chief acknowledged for the first time the possibility of a country leaving the eurozone, though he immediately stressed that a euro exit would not be a solution to any nation’s financial troubles.

"Leaving the euro area, devaluing your currency, you create a big inflation, and at the end of that road, the country would have to undertake the same reforms that were due to begin with, but in a much weaker position," he said.