MercoPress. South Atlantic News Agency

Brazil ready to support IMF but demands greater power for BRICS countries

IMF chief Lagarde (R) with Finance minister Mantega

Brazil conditioned the disbursement of more funds for the IMF to help countries in crisis to a greater say in the multilateral organization and the advance of European initiatives to solve the current Euro and debt crisis.

IMF managing director Christine Lagarde visited Brazil in her last leg of the Latinamerican round where on Thursday she met with President Dilma Roussef and Minister Guido Mantega.

“We agreed to more resources once the Europeans take the initiative” in the crisis situation said Mantega at a press conference following the meeting in Brasilia where the “potential contagion effects of the crisis were addressed”.

Brazil the largest economy in Latinamerica “is more immune and better prepared than other countries to contain the effects of the contamination, the consequences of the Euro crisis” because of the strength of “its domestic market and its good macroeconomic policies”, said Lagarde.

The IMF chief praised Brazil’s intention to further support the Fund with new resources and confirmed the downward review for global growth prospects for this year announced earlier by IMF.

“Prospects will be reviewed downwards undoubtedly”, admitted Lagarde.

During the meeting Mantega reiterated willingness to further support the IMF with more resources “when there are further advances in the restructuring” of the multilateral organization. “We have not mentioned figures”, said Mantega.

“BRICS members have agreed to inject resources to the IMF but this is conditioned to the continuation of the Fund’s reforms; that the Fund makes effective the quota reforms that were accepted in 2009 and 2010”, added Mantega.

However the Brazilian minister insisted that both the US and other European countries will also have to contribute with more funds for IMF.

Brazil became an IMF creditor for the first time ever in 2009 in the midst of an international economic crisis when it loaned 10 billion dollars from its reserves, plus SDRs.

President Rousseff discarded a month ago any form of direct support for the European countries and Euro zone and said any aid would be instrumented through the IMF.

The Brazilian proposal, with support from BRICS, is to increase the contribution in exchange for more voting rights in the IMF, for Brazil, Russia, India, China and South Africa.

Brazil with international reserves of 350 billion expects to become one of the ten most influential members of the IMF.

Mantega has also insisted on Brazil’s request that European countries make a major effort to solve their debt problems.

“The EU has the instruments to overcome the situation, but it is delayed in the implementation of such instruments, for example making the European Central bank a lender of last resort”.

Lagarde who has been in the post since last July concluded in Brazil its first official week-long visit to Latinamerica which also included Mexico and Peru, but not Argentina.

In her talks with the presidents and financial teams, the IMF chief praised the performance of the Latinamerican economy which is forecasted to expand 4.5% this year and 4% in 2012.