New Delhi: In a sign of their rising cooperation on key international economic issues, members of the BRICS grouping (Brazil, Russia, India, China and South Africa) have decided to disclose their contributions to the $430 billion global fund that was created by the International Monetary Fund (IMF) to shield the world economy from the European debt crisis.
The contributions will be disclosed at the June G-20 Summit in Mexico, a senior finance ministry official said, requesting anonymity.
Countries including Brazil, Russia, India, China, Indonesia, Malaysia and Thailand did not disclose their contribution to the fund created in April during the IMF-World Bank spring meeting. IMF had, however, said that the amount put together by the emerging economies was close to $68 billion. Finance minister Pranab Mukherjee had told Mint in an interview at the time that India had decided how much to contribute, without disclosing the exact amount. In his opening remarks at the BRICS finance ministers’ meeting in Washington in April, Mukherjee had said BRICS nations should demand more time before deciding on their contribution to the fund.
“We (BRICS countries) have been strategizing together on key international economic issues. This is a sign of that,” the finance ministry official said.
Larger role: Pranab Mukherjee had in April said BRICS nations should demand more time before deciding on their contribution. Photo: PTI
Emerging nations declined to reveal the exact amount of their contributions, apparently because of their dissatisfaction over the poor progress in quota and governance reforms at IMF as agreed two years ago.
Once the quota reform is carried out, India’s stake in IMF is set to rise to 2.75% from 2.44%, making it the eighth-largest shareholder in the multilateral agency from its current 11th position.
The implementation of the quota reforms has been delayed as some countries, including the US, have failed to ratify the proposal.
IMF in its communiqué released during the spring meeting had urged members to ratify the pending reforms expeditiously and asked the Fund to monitor the progress more frequently.
Mint’s Asit Ranjan Mishra says the BRICS nations have decided to reveal their contributions to the IMF’s $430 billion firewall fund during the G-20 Summit next month.
“We reaffirm the urgency of making the 2010 quota and governance reforms effective by the 2012 annual meetings, to enhance the Fund’s legitimacy and credibility. We look forward to an agreement, by January 2013, on a simple and transparent quota formula that better reflects members’ relative positions in the world economy,” it said.
IMF further reiterated that the $430 billion will be made available to all members of IMF and not earmarked for any particular region. “The resources would be channelled through temporary bilateral loans and note purchase agreements to the IMF’s General Resources Account. Should it become necessary to use these resources, adequate risk mitigation features, conditionality, and adequate burden sharing among official creditors would apply, as approved by the IMF board,” it said.
Biswajit Dhar, director-general at Research and Information System for Developing Countries, said BRICS countries have been working together at several multilateral forums on issues ranging from trade to climate change. “BRICS countries coming together is going to augur very well for developing countries,” he said.
The G-20 represents nearly 90% of the world’s gross domestic product, 80% of global trade and two-thirds of the earth’s population. It is considered to be a key informal forum for economic coordination.
The agenda for the Mexico summit includes economic stabilization and structural reforms as foundations for growth and employment, strengthening the financial system and fostering financial inclusion to promote economic growth, improving the international financial architecture in an interconnected world, enhancing food security and addressing commodity price volatility, besides promoting sustainable development, green growth and the fight against climate change.