Saturday, September 5, 2009

India to give IMF $10 billion boost

Sarju Kaul London Union finance minister Pranab Mukherjee, attending his first G-20 meeting, on Friday afternoon announced that India would contribute $10 billion from its reserves in the Bric combined contribution of $80 billion to supplement the resources of the International Monetary Fund. China has already contributed $50 billion and the remaining sum will be divided between Russia and Brazil. Despite American insistence that the Bric governments provide new resources to the IMF through its New Arrang-ement to Borrow (NAB), the Bric nations made it clear that demand for added resources should not be used to put off quota reforms in the international financial institutions. "The Bric nations are not too happy with NAB," Brazilian foreign minister Guido Mantega said and added that the Western nations "should change rules to reflect the new economic scenario in the world". The Bric nations also agreed to a joint stand on the issue of IMF and World Bank quota reforms and proposed that a target to the order of a seven per cent shift in the IMF quota and six per cent in the World Bank quota should be set up. US treasury secretary Timothy Geithner attended the meeting of Bric nations on Friday afternoon, but did not participate in the deliberations of Mr Mukherjee and his counterparts Guido Mantega of Brazil, Alexey Kudrin of Russia, Xie Xuren of China and their central bank governors. "He just came at the end of the meeting and discussed the US stand on the issues discussed the Bric countries," Mr Mantega said. "It is too early to declare the end of the crisis," the Bric nations said. Making it clear that the global economy had not recovered fully, Mr Mukherjee reiterated the Bric stand that "this is not the time to talk about exit strategies". Although the world economy had shown signs of improvement, he said it was not the time to think about implementing exit strategies. "The G-20 nations must continue the fiscal reform and stimulus packages to help in the complete economic recovery," Chinese foreign minister Xie Xuren added. India and the Bric nations are leading the economic recovery, Mr Mukherjee said, adding that India should grow by six to seven per cent both this year and the next. He also raised the issue of climate change and said the Western nations would need to take the lead on the issue. Raising the issue of protectionism, Mr Mukherjee and all his Bric counterparts discussed the issue in thei- r statements and urged the Western nations to avoid pitfalls in order to help the global economy recover. Russian finance minister Alexey Kudrin, who said his country was the worst affected amongst the Bric nations by the global slowdown, said it was "fine to talk about exit strategies, but not the right time to use one". The Bric nations, however, made it clear they did not discuss the issue of replacing the dollar as the dominant currency in the global market. Source : The Asian Age

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