China promises US$43b to boost IMF crisis fund
Source: Agencies |
June 20, 2012, Wednesday
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Print Edition
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China has offered US$43 billion to the IMF's crisis-fighting reserves, rounding off a global push to nearly double the fund's war chest to US$456 billion to help protect countries from fallout from the eurozone debt crisis.
China's contribution on Monday was part of a pledge by Group of 20 countries made in April to supply the International Monetary Fund with extra firepower.
"These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members," said Christine Lagarde, its managing director.
"They will be drawn only if they are needed as a second line of defense" when other IMF loans have been depleted, she said during a G20 summit in Mexico, which wraps up later yesterday.
Leaders of the BRICS nations - Brazil, Russia, India, China and South Africa - said earlier they "agreed to enhance their own contributions to the IMF" but had insisted the money be used only after existing funds were depleted.
The IMF said Brazil, Russia and India each pledged US$10 billion, while South Africa offered US$2 billion. G20 host Mexico also contributed US$10 billion.
"Countries large and small have rallied to our call for action, and more may join," Lagarde said.
BRICS leaders sought to tie the loans to delayed reforms that would give the developing world more say at the Washington-based fund by boosting their voting power.
"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," BRICS leaders said.
Chinese officials declined to discuss sums and stressed the need to implement IMF quota reforms agreed in 2010.
"If the quotas are not commensurate with the relative economic weight of the different countries, then it has to be changed," said He Jianxiong, director general of the People's Bank of China's international department.
Growth of the emerging countries, which has far outstripped that of the rich world in recent years, made it "only natural that the quotas should be shifted from developed economies to developing economies," he said.
The five BRICS nations represent 43 percent of the world's population and about 18 percent of global economic output. They have about US$4 trillion in combined reserves, with the lion's share held by China.
Emerging economies have long demanded more say at institutions such as the IMF to reflect their growing clout. Their frustrations have grown with the likely delay in implementing the 2010 deal that would boost their voting power and make China the third-largest voting member.
Describing money loaned to the IMF as an investment and a useful foreign reserve management tool, He said: "It is actually a good investment in terms of safety, liquidity and yield."
The central bank emphasized on its website that such pledges would not necessarily be drawn down. The comments appeared aimed at addressing criticism that China should not be helping out richer countries.
China's contribution on Monday was part of a pledge by Group of 20 countries made in April to supply the International Monetary Fund with extra firepower.
"These resources are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members," said Christine Lagarde, its managing director.
"They will be drawn only if they are needed as a second line of defense" when other IMF loans have been depleted, she said during a G20 summit in Mexico, which wraps up later yesterday.
Leaders of the BRICS nations - Brazil, Russia, India, China and South Africa - said earlier they "agreed to enhance their own contributions to the IMF" but had insisted the money be used only after existing funds were depleted.
The IMF said Brazil, Russia and India each pledged US$10 billion, while South Africa offered US$2 billion. G20 host Mexico also contributed US$10 billion.
"Countries large and small have rallied to our call for action, and more may join," Lagarde said.
BRICS leaders sought to tie the loans to delayed reforms that would give the developing world more say at the Washington-based fund by boosting their voting power.
"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," BRICS leaders said.
Chinese officials declined to discuss sums and stressed the need to implement IMF quota reforms agreed in 2010.
"If the quotas are not commensurate with the relative economic weight of the different countries, then it has to be changed," said He Jianxiong, director general of the People's Bank of China's international department.
Growth of the emerging countries, which has far outstripped that of the rich world in recent years, made it "only natural that the quotas should be shifted from developed economies to developing economies," he said.
The five BRICS nations represent 43 percent of the world's population and about 18 percent of global economic output. They have about US$4 trillion in combined reserves, with the lion's share held by China.
Emerging economies have long demanded more say at institutions such as the IMF to reflect their growing clout. Their frustrations have grown with the likely delay in implementing the 2010 deal that would boost their voting power and make China the third-largest voting member.
Describing money loaned to the IMF as an investment and a useful foreign reserve management tool, He said: "It is actually a good investment in terms of safety, liquidity and yield."
The central bank emphasized on its website that such pledges would not necessarily be drawn down. The comments appeared aimed at addressing criticism that China should not be helping out richer countries.
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