IMF Contributions To Be Discussed April 19
Published Saturday, 14 April 2012 16:30 | Written by Amwal Al Ghad
World financial leaders gathering in Washington next week will focus on proposals for countries to contribute more money to the IMF so it is better prepared in case of fallout from any further escalation of Europe's debt problems.
Emerging market countries like China, Brazil and Russia are willing to provide more money for the IMF, but they want something in return: greater voting power.
It has become a hot issue given negotiations formally began this week on the next phase of IMF voting reforms to be completed in 2013. The emerging-market push means Europe's voting share will likely be further diluted.
In January, the IMF said it would need $600 billion in new resources to help "innocent bystanders" who might be affected by economic and financial spillovers from Europe.
Earlier this week, IMF Managing Director Christine Lagarde said it might not need as much money as it had thought because economic risks had waned. On Friday, officials from the Group of 20 nations told Reuters the world's major economies were likely to agree to provide the IMF with somewhere between $400 billion and $500 billion.
A G20 official said the fundraising effort would likely raise about $50 billion from Japan and a similar amount from China and Saudi Arabia, in addition to the $250-300 billion already committed by EU countries. Smaller amounts will likely come from countries such as Russia, Mexico and Brazil.
IMF funding will be discussed by the Group of Seven wealthy nations on April 19, jointly by the G20 and G7 that evening, and at a lunch the following day among the G20 and the Fund's steering committee, G20 sources said.
Lagarde said she hoped to make progress on the issue at next week's meetings but said an agreement could take time.
G20 sources said Beijing was being cautious given internal opposition to providing money for wealthy Europeans, even though the funds are meant to protect non-European nations.
Beijing, together with other emerging economies like Brazil and India, wants any funding commitment eventually tied to greater IMF voting power.
The United States, which is heading into a presidential election in which its hefty budget deficits are a key topic, has insisted it will not be part of the fundraising effort for the IMF. Canada is also unlikely to give money.
U.S. officials say they are already helping Europe by providing swap lines to the European Central Bank to ease dollar-funding strains among European institutions.
Related newsSome senior IMF officials say that not having Washington's participation had changed the dynamic of the fundraising effort since the United States is the largest IMF shareholder and its leadership is often sought on such issues.
IMF sources said an agreement on new IMF resources would likely be postponed until a G20 leaders' summit in June.
"The Americans have to be part of this, perhaps not quite as much as they would've been in the past, but through some significant gesture," said Uri Dadush, director of the International Economics Program at the Carnegie Endowment for International Peace. "They have to be part of the leadership group that makes it happen."
"They are in a position to exert the greatest bargaining power they can and extract concessions from the advanced economies," said Lombardi, who is also president of the Oxford Economic Policy Institute, Reuters reported.
The Market Quotes Powered By Forexpros, the Forex, Futures, and Stock Markets Portal.
Most Popular »
- Naguib Sawiris’ Latest Large Project is worth €220 million in Cyprus
- Facebook suffers widespread outage
- Arab Contractors delivers its First Project in Morocco in Mid-April
- Naguib Sawiris to bring Cyprus’ Ayia Napa Marina to ‘Fruition’ – Minister
- 19 Cement Firms applied for Coal Usage in Egypt – Minister