UPDATE 1-China urges developed nations to maintain financial stability

Fri Sep 23, 2011 5:22pm IST

(Adds quotes, details)

By Aileen Wang and Ben Blanchard

BEIJING, Sept 23 (Reuters) - Major developed countries should maintain financial stability and properly handle their sovereign debt problems, China's Finance Ministry said on Friday.

In a statement issued after a meeting of finance ministers from the BRICS nations of Brazil, Russia, India, China and South Africa, the ministry also said these countries should take flexible, effective measures to curb inflation and cross-border capital flows.

"We should urge major developed countries to maintain financial stability and keep the momentum of economic recovery to strike a balance between realising short-term economic growth and making fiscal system adjustments in the mid-to-long term," the ministry said in a statement on its website (www.mof.gov.cn).

"Major developed countries should also properly handle the sovereign debt problem and reduce the negative spill-over impact resulting from their policies and channel more global financial resources to developing countries," it added.

The statement also urged the BRICS nations to coordinate on financial policies, and repeated a statement made on Thursday that the countries may lend money to the International Monetary Fund or other global financial bodies to increase their firepower for fighting financial crises.

"BRICS countries should adopt flexible, effective macro measures in a timely manner to curb inflation and fend off the effects of cross-boarder capital flows," the ministry said.

"All member countries should further improve communication in macro economic policies among themselves and deepen cooperation in trade, investment and finance ... to improve capacity for preventing external risks."

The five major emerging nations on Thursday said they may lend money to the International Monetary Fund or other global financial bodies to increase their firepower for fighting financial crises.

The commitment by the BRICS nations on Thursday fell short of expectations for more direct support to debt-crippled European countries.

Finance ministers of the group, meeting on the sidelines of an IMF gathering in Washington, called on the G20 nations to act swiftly and decisively to ease the euro-zone debt crisis, the same way they fought the global financial crisis in 2008. (Editing by Don Durfee, Ron Askew)

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