Japan said on Tuesday it will provide $60 billion (37 billion pounds) in loans to the International Monetary Fund, becoming the first non-European nation to commit money to boost the fund's financial 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.
However, securing an agreement on new IMF funding at meetings this week of the institution and G20 financial leaders may be difficult.
The United States has insisted it will not be part of efforts to boost the IMF's funds by $600 billion and other economies, including emerging powers China, Brazil and Russia have been holding out as well.
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 told a regular news conference after a cabinet meeting.
I am confident that many other countries will pledge contributions to the IMF, he said, while acknowledging it will be difficult for all countries to commit to a contribution this week.
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.
IMF Managing Director Christine Lagarde said last week it might not need as much money as it had thought because economic risks had waned. G20 officials told Reuters the world's major economies were likely to agree to provide between $400 billion and $500 billion.
I am grateful for Japan's leadership and strong commitment to multilateralism, and I call on the broader fund membership to follow Japan's lead, Lagarde said after Japan's announcement.
Euro zone countries have committed about $200 billion and other European Union nations an additional $50 billion.
China, Brazil and Russia have said they are willing to chip in but were looking to get more voting power in return.
The United States, heading towards a presidential election in November in which the country's hefty budget deficit is a key topic, has said it won't offer new funds.
Canada has insisted it is not interested in contributing to a fund to bail out Europe, which it says has enough resources of its own to deal with the debt crisis.
Japan's announcement comes ahead of the IMF and World Bank Spring Meeting and a G20 finance leaders' meeting in Washington. Both run from Friday through to Sunday.
Financial markets are 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.
(Writing by Tomasz Janowski; Editing by Neil Fullick)