WASHINGTON:
The IMF raised $430 billion in new funds
for crisis intervention Friday, with China and other emerging economic giants
taking part despite worries the money will be used for more eurozone bailouts.
After
weeks of seeking pledges for its "global firewall", the International
Monetary Fund said the BRICS group -- China, Russia, India and Brazil -- had
helped put it over its goal.
"We
have commitments that are north of $430 billion. That almost doubles the
lending capacity of the fund," IMF managing director Christine Lagarde
said after meetings of the IMF and the finance chiefs of the Group of 20
economic powers.
The
figure "signals the strong resolve of the international community to
secure global financial stability and put the world economic recovery on a
sounder footing."
The
BRICS and a handful of middle-sized economies came in with $68 billion at the
end, though specific amounts were not mentioned.
That
came on top of $200 billion promised by the eurozone, $60 billion from Japan,
and $15 billion each from Britain, South Korea and Saudi Arabia each pledged
$15 billion.
Smaller
amounts from the Nordic countries, other European governments and Singapore
filled out the total.
"We
all agreed it was absolutely essential to have the firewall put up at this
time," said Tharman Shanmugaratnam, chairman of the IMF's policy-making
body and Singapore's Deputy Prime Minister and Minister for Finance.
But, he
added, "the real solution to the crisis does not have to do with
firewalls."
"The
firewall is a necessary but far from sufficient condition to resolving the
crisis. The real solution has to do with the fiscal and structural reforms that
address the real causes of this crisis, particularly in Europe."
The
fundraising, coming after the IMF has committed tens of billions of dollars to
rescues of Portugal, Ireland and Greece, was seen as a test of BRICS support
for an organization they feel is overly dominated by Europe and the United
States.
It came
at a time when worries were mounting again that Spain and Italy could flounder
and require international support.
In
meetings, according to an official at a Group of 24 emerging economies
gathering Thursday, Lagarde stressed that the new funds were not dedicated to
Europe but were there to help all IMF members.
That
was reiterated in the IMF statement Friday.
"These
resources will be available for the whole membership of the IMF, and not
earmarked for any particular region," it said.
The
need for the funds, which can be used to protect vulnerable countries from the
kind of financial markets turmoil that has spun out of the teetering eurozone,
has given the BRICS room to flex their newfound power on the global economic
and political stage.
Brazil's
Finance Minister Guido Mantega gave voice to that when he complained stridently
over the IMF quota system, which gives Europe and the US dominant voting power.
In an
official statement, he pointed out that Brazil, the world's sixth largest economy,
has half the voting rights of smaller Britain in the IMF, and said the IMF
needs to remain "even-handed and unbiased" if it is to retain
legitimacy.
"This
will only be achieved after the institution implements reforms to enhance voice
and representation of emerging market and developing countries."
Even
so, it was unclear whether the BRICS had extracted any commitments for reforms
of IMF quotas, which determine voting power on the board.
There
were sighs of relief after the $400 billion target was topped -- itself sharply
lower than the original $500 billion the IMF said was necessary, together with
the eurozone's $1 trillion firewall, to forestall any crisis contagion effects.
"Well
this is it, and it's good. Because of the debate about European firewall, IMF
resources had been taking up a lot of time, and I think it was about time that
that conclusion was taken here," Danish Finance minister said Margrethe
Vestager.
"We
think that this is what we need."
The
process was also hurt by Washington's refusal to contribute -- it maintained
that IMF and European resources were adequate, but also faced Congressional
resistance to committing more cash to the IMF.
-
AFP/fa/ck
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