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Los Cabos - Led by China, emerging economies pledged huge
sums to the International Monetary Fund's (IMF's) global firewall Monday, helping it
raise $456bn in resources as the eurozone crisis rages.
In a clear statement of their new force in the world
economy, rising economic powers brought some $95.5bn in new money to the table
for the IMF during the G20 summit in Mexico, pushing it beyond its $430bn
target.
But the money also came with a warning that things had to
change at the fund, long dominated by the now troubled economic powers of
Europe and the United States, which itself has not contributed to the firewall.
In an announcement late Monday, the IMF said China was
offering $43bn, Brazil, Russia, India and Mexico $10bn each, $5bn from Turkey,
and smaller sums from a handful of other up-and-coming economies.
IMF managing director Christine Lagarde said that 12 more
countries offered money to the fund during the Group of 20 meeting in the
Mexican resort of Los Cabos, bringing the total number of donors to 37.
The contributions show "the broad commitment of the
membership to ensure the IMF has access to adequate resources to carry out its
mandate in the interests of global financial stability", she said.
"Countries large and small have rallied to our call for
action, and more may join. I salute them and their commitment to multilateralism,"
she added.
The announcement brought an end to the mystery of how much
the powerful Brics countries - Brazil, Russia, India, China and South Africa -
would provide.
They held back two months ago when the IMF solicited
commitments at its spring meetings in Washington and only gathered a firm
$340bn.
That was well below the $500bn the fund's own economists had
said would be an adequate expansion of its crisis intervention funding, given
the potential of more contagion in the troubled eurozone.
China's contribution was the most keenly awaited. The
world's second-largest economy has the largest pile of foreign reserves, $3.2
trillion.
Its contribution fell below only Japan's $60bn and German's
$54.7bn, but was ahead of France and all other donors.
The largest economy, the United States, on the other hand is
not contributing, despite its huge voting power on the IMF board.
While Washington has insisted Europe has enough resources to
resolve its problems itself, it is also clear that the deeply divided Congress
is in no mood, given the US economic problems, to contribute rescue funds for
others.
The contributions from the Brics came with warnings that
they want to see changes at the IMF, where their voting power is a fraction of
their power in the global economy, and that the money should not be reserved
for Europe.
Meeting earlier Monday in Los Cabos, the five Brics leaders
renewed their call for a greater say at the IMF and World Bank, both
historically 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," they said.
They also said the new funding would be tapped only after
the IMF's existing pool of resources - $380bn - is used.
"This would promote adequate burden sharing amongst IMF
creditors," they said, in an apparent dig at Washington for not joining
the fund-raising.
Both Lagarde and the G20, in a draft communique, agreed with
the demands of the Brics.
"These resources are being made available for crisis
prevention and resolution and to meet the potential financing needs of all IMF
members," Lagarde said.
The proposed G20 statement, seen by AFP, said the new funds
are "available for the whole membership of the IMF and not earmarked for
any particular region."
The draft communique added that quotas, or voting rights at
the fund, "should better reflect the relative weights of IMF members in
the world economy".
Even so, the Brics made clear that they all are also
concerned that, unstopped, the eurozone crisis could do much more damage to
their own economies.
"There is concern that the firewall available may not
be adequate to deal with contagion," said Indian Prime Minister Manmohan
Singh.
"The global economic situation is deeply worrying. Economic recovery is faltering and even fast growing emerging markets are slowing down," he said.
