WASHINGTON (Reuters) - Major emerging nations on Thursday said they may lend money to the International Monetary Fund or other global financial bodies to increase their firepower for fighting financial crises.
The commitment by the so-called BRICS nations -- Brazil, Russia, India, China and South Africa -- fell short of expectations for more direct support to debt-crippled European countries.
Finance ministers of the group, meeting on the sidelines of an IMF gathering in Washington, called on the G20 nations to act swiftly and decisively to ease the euro-zone debt crisis, the same way they fought the global financial crisis in 2008.
The G20 group, which includes both emerging and developed economies, is the right forum for those discussions and should be strengthened, the ministers said.
Their call underscores a growing concern of major emerging economies about the escalating economic crisis in the developed world.
It also highlights a dramatic change of fortune between the two groups of nations, with developing countries offering financial help that could be used to ease the economic crisis of traditional powers.
Failure to act now could turn the euro zone's debt problems into another global financial crisis that would engulf emerging economies, Brazil's Finance Minister Guido Mantega warned.
"There is a risk that the sovereign debt crisis of some countries becomes another financial crisis," Mantega told reporters in a joint news conference with other BRICS finance ministers and central bank chiefs.
"We eased the 2008 crisis by fast and coordinated actions within the G20. We need to do the same now."
SHORT OF EXPECTATIONS
It is not clear how the BRICS could provide funds to multilateral institutions nor how much money they plan to lend. Earlier this month, sources in the Brazilian government said Mantega would propose the group make billions of dollars available to the IMF.
In a statement issued after the meeting, the ministers said financial support would depend on individual country circumstances.
"There is (an) enormous amount of demand for resources at home for poverty reduction, so there is going to be a big, big tension between giving money to a multilateral institution for the purpose of restoring global stability and meeting our own aspirations at home," said India's central bank governor Duvvuri Subbarao.
Direct financial support to troubled European countries, another idea floated by Brazilian officials in the past few days, was not discussed in the meeting, South Africa's Finance Minister Pravin Gordhan told Reuters in an interview.
That type of support, according to the Brazilian sources, could come through the purchase of bonds jointly issued by euro-zone members, the so-called eurobonds.
But Russia shot down the idea.
"It's impossible, I am absolutely convinced about that," Russia's Deputy Finance Minister Sergei Storchak told reporters.
"Our state procedures do not allow for that. We don't have a mechanism (for that), not in Russia, not in China, not in India. We all have different ways of making decisions, we cannot syndicate our money."
WANTED: A STRONGER VOICE
Any financial contribution to the IMF would probably come with conditions. The BRICS would most likely take the opportunity to increase their voting power in the institution.
The next review of member countries' quotas is scheduled for January, 2014.
"We are concerned with the slow pace of quota and governance reforms in the IMF," the countries said in the same statement where they offered to help the fund. "This is needed to increase the legitimacy and effectiveness of the fund."
The group also called on developed countries to adopt "responsible" policies that avoid creating excessive global liquidity -- a growing complaint from countries such as Brazil, which has suffered from excessive dollar inflows since the United States started its aggressive monetary easing.
In exchange, the BRICS promised to do what is necessary to secure economic growth, maintain financial stability and contain inflation.
However, they did not mention any steps in foreign-exchange markets -- a delicate issue for China, which has resisted calls from the United States to let its currency appreciate faster.
(Additional reporting by Pedro da Costa, Jason Lange, Lesley Wroughton, Randall Palmer, Lidia Kelly, Editing by Andrea Ricci and Jan Paschal)
Source
yahoo news
No comments:
Post a Comment