✂ Fed’s first rate cut since 2020: Use our free Stock Screener to find new opportunities fastExplore for FREE

INTERVIEW 1-Brazil expects IMF funding decision at April G20

Published 03/14/2009, 02:45 PM
Updated 03/14/2009, 02:48 PM
FLG
-

By Axel Bugge

HORSHAM, England, March 14 (Reuters) - Leaders from the G20 leading economies will decide at their meeting next month on the amount of new funds that will be given to the IMF, Brazilian central bank head Henrique Meirelles said on Saturday.

Meirelles said G20 finance ministers did not discuss specific amounts needed to bolster the International Monetary Fund during a meeting in southern England this weekend but there was general agreement it needs to happen.

"We didn't reach numbers here," Meirelles told Reuters during the meeting. "Now, evidently the specific decisions on numbers and so on will be taken at the (April 2) meeting of heads of state."

IMF officials have said the international lender needs to double its resources to $500 billion to strengthen its ability to help developing nations facing funding crises during the global downturn. Japan has offered $100 billion and the European Union is considering a loan to the IMF of $100 billion, leaving a shortfall of $50 billion.

Meirelles said that in addition to more funding from IMF members, the lender's ability to take on more debt should rise, through a mechanism such as the issuance of $250 billion more Special Drawing Rights.

"This would have another advantage as well; it would consolidate another reserve currency," he said.

SDRs, whose value is based on a basket of major currencies, are allocated by the IMF to its member countries and are backed by member countries' governments.

Meirelles repeated statements that leading emerging nations would not raise their contributions to the IMF unless their voting rights at the lending agency were also increased.

But he said that the G20 meeting this weekend in southern England had marked a key shift in transferring global economic power to emerging nations, something he said was crucial to repairing the global economic downturn.

"There is a conclusion that has been reached in recent years, which is that the resolution to today's global problems is only possible with the participation of emerging countries," Meirelles said.

"There is a natural evolution of the decision-making process, which many important countries agree on, that decisions move from the G7 to the G20," he said.

Reflecting that, the Financial Stability Forum announced just before the meeting that it would expand to include the major emerging economies of Brazil, Russia, China and India and all other G20 members.

The FSF is made up of central bankers and finance ministers, up to now mainly from the older economic powers, and looks at financial market supervision and surveillance.

Meirelles said he believed there was broad understanding at this weekend's meeting that the key to hauling the world economy out of its crisis is to resolve the toxic assets clogging up the balance sheets of banks.

"There is no doubt that it was understood that in the first place the problem of toxic assets has to be resolved," he said.

(Reporting by Axel Bugge; Editing by Ruth Pitchford)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.