Largest emerging-market nations will make additional contribution to IMF
The world’s largest emerging-market nations will announce contributions to the IMF’s financial firewall at the Group of 20 summit meeting in Mexico, Brazil’s Finance Minister Guido Mantega announced.
“We’re going to make an additional contribution to the IMF that will be announced at the leaders’ meeting,” Mantega told reporters Monday in the Mexican resort of Los Cabos.
He said the sum will be similar to the amount announced by the IMF in April, when the Washington-based lender said it received total pledges of 430 billion dollars from members. Other countries including Brazil, Russia, India and China agreed to contribute about 70 billion to that total without detailing their pledges.
The G-20 agreed earlier this year to boost IMF resources that could be channelled to Europe if the crisis there spreads. The leaders of the so-called BRICS group, including South Africa’s President Jacob Zuma, met in Los Cabos on the first day of the G-20 summit and reaffirmed their decision to add to IMF resources, according to an e-mailed statement.
“It’s going to be the first time the IMF is capitalized without the US, which reflects the importance of emerging markets,” Mexican President Felipe Calderón said.
Even while emerging markets answer Germany’s call to do more to help Europe, the BRICS will continue to push for faster reform of the IMF, Mantega said. Brazil (and China) have threatened to withhold contributions until Europe grants the BRICS a bigger say in how the multilateral lender is run.
As Europe’s debt crisis spreads, nations that have powered the global economy since 2007 are seeing their outlook worsen. China reduced its growth target this year to the lowest since 2004, Brazil is on pace to grow less than 3% for a second straight year and Standard & Poor’s threatened to cut India’s investment-grade credit rating. The Brazilian Real, Russian Rouble and Indian Rupee are the three worst-performing emerging market currencies this quarter
BRICS leaders in their meeting also instructed finance officials to develop a plan to swap national currencies. The plan will be presented at a BRICS summit next year in South Africa. Mantega said that countries would potentially be able to tap into a joint fund when facing liquidity shocks.