20 April 2012

Reuters: Emerging powers ready to give IMF billions

Major emerging powers stood ready to pledge money to bolster the International Monetary Fund's crisis-fighting war chest, though Brazil was holding out for promises that their voting power at the global lender would increase.

Russia said that G20 advanced and emerging countries were ready at a meeting on Friday to commit enough new funds to fulfil IMF chief Christine Lagarde's request for at least $400 billion to draw a line under the eurozone crisis. Russia itself, he said, would offer $10 billion.

"Trust me that the G20 will announce the final amount. This will be an amount that will satisfy the management of the International Monetary Fund", said Sergei Storchak, Russia's deputy finance minister.

Support from Russia, China and Brazil is crucial to achieve the doubling of the IMF's war chest the global lender is seeking. Europe and Japan already have pledged $320 billion.

Enlarging the IMF's coffers could offer solace to nervous investors that any widening of the crisis could be contained. Lagarde said on Thursday she expects to seal a deal on fresh funds at the World Bank/IMF meetings this weekend.

But Brazil said that as a condition for funds, emerging powers want fresh pledges to recognise their fast-growing global economic weight written into the G20 communiqué. They are frustrated over delays - particularly by the United States - in implementing an agreement to lessen Europe's sway at the IMF and lift China into the No 3 voting slot.

"What we want and demand in every meeting is that this commitment be reaffirmed", Brazilian Finance, Minister Guido Mantega, said Thursday after a meeting of officials from the so-called BRICS nations - Brazil, Russia, India, China and South Africa.

Mantega drove the point even more forcefully in a speech prepared for delivery on Saturday to the IMF's steering committee, saying it was no longer enough simply to repeat that voting reforms are crucial for the effectiveness of the IMF. "Progress on this front has been limited and slow", he will say, according to the text.

Canada, meanwhile, is pushing against Europe's dominance on the IMF's 24-member board. It wants to hold two votes when the IMF decides on how to use its new resources - one by eurozone  countries and another by others. The idea would be to dilute Europe's power on eurozone-related issues.

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© Reuters