LOS CABOS (NNN-AGENCIES): India and Russia each pledged $10 billion on Monday for an IMF firewall meant to prevent future crises, marking a new level of commitment by emerging economies as they seek a greater voice.
At a summit of the Group of 20 major economies, Indian Prime Minister Manmohan Singh said that his government would contribute $10 billion to the fund meant to support nations at risk of contagion from the global crisis.
"The global economic situation is deeply worrying. Economic recovery is faltering and even fast growing emerging markets are slowing down," Singh, an Oxford-educated economist, told the summit in the Mexican resort of Los Cabos.
Russian President Vladimir Putin also announced a $10 billion contribution, a spokesman said. Putin criticized the response to woes in the eurozone, saying that nations were pumping liquidity rather than seeking a ‘systematic solution’.
The International Monetary Fund, hoping to prevent a worsening of the global economic turmoil, called last year for $500 billion in an emergency firewall. But the money has fallen short and it lowered its goal to $430 billion.
Singh and Putin earlier met with the leaders of Brazil, China and South Africa – the other members of the so-called BRICS group of emerging economies.
In a joint statement, the BRICS said they were ready to step up contributions to the new fund but expected their money only to be used after current resources ‘are substantially utilised’.
The five leaders also renewed call for a greater say at the IMF and World Bank, which have historically been dominated by the United States and Europe.
"These new contributions are being made in anticipation that all the reforms agreed upon in 2010 will be fully implemented in a timely manner, including a comprehensive reform of voting power and reform of quota shares," the BRICS said.
The emerging economies' willingness to contribute comes even though the United States, the world's largest economy, has refused to take part.
President Barack Obama is eager to fix the woes of the eurozone, which are clouding over the US economy and his own re-election hopes, but faces intense political resistance at home to new financial commitments.
China did not immediately announce a commitment. He Jianxiong, a senior central bank official, told reporters that China's contribution to the IMF was tied to its quota within the international lender.
"China is still a developing country, not an advanced economy, so we will do what we can to pitch in," said He, the director general of the international department at the People's Bank of China.
After Group of 20 finance ministers and central bankers met in Washington in April, the IMF said it had come up with only $340 billion of the $430 billion it had aimed for the firewall.
The eurozone is by far the largest contributor, promising some $200 billion, raising concerns by some potential contributors that the firewall would eventually turn into a new European bailout fund.
In a draft copy of the G20 summit's statement, the leaders promised the $430 billion firewall ‘will be available to the whole membership of the IMF and not earmarked for any particular region’.
The G20 draft also recommitted to reforms of the Washington-based lender, saying that they were ‘crucial to enhancing the IMF's legitimacy’.
Japan has contributed $60 billion, while Britain, South Korea and Saudi Arabia have each pledged $15 billion. Singapore and other European governments have also contributed smaller amounts.
Japan, speaking ahead of the BRICS statement, said that it made its contribution with the hope that other countries would follow suit.
"We also expect other countries, like our good neighbor China, to express its will to enlarge its credit line," Japanese foreign ministry spokesman Yutaka Yokoi told reporters. -NNN-AGENCIES
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