BRASILIA Major emerging economies favour bolstering the International Monetary Fund's resources through bilateral loans to help Europe deal with its debt crisis, a senior Brazilian government official said on Friday.
Support from the BRICS economies through such loans would be a relatively quick way to raise the IMF's funding capacity compared to other approaches that have been discussed, Brazil's Finance Ministry's secretary of international affairs Carlos Cozendey told Reuters.
European leaders are scrambling to avert a euro zone meltdown with Italy moving to approve austerity measures amid global calls for quick action to contain the spread of the debt crisis.
The BRICS, the powerful emerging market economies of Brazil, Russia, India, China and South Africa, have said they are open to investing in the euro zone through the IMF.
The emerging economies have an interest in preventing contagion from a European sovereign debt meltdown but are wary of putting hard-earned capital at risk and some have political demands in return for supporting Europe.
"If Europe is able to act promptly I believe that Brazil and other countries will agree to reinforce the IMF to help either Europe or other countries if needed," said Cozendey, who is a negotiator for Brazil at the G20.
"There are worries over Europe's stability and its impact on the world economy. The IMF is the key instrument to try to maintain international stability."
Cozendey said emerging-market nations had not yet agreed on the possible amount of funds to support the IMF with as Europe's own rescue package remains unclear.
But he said BRICS nations were less favorable toward two other options to boost the IMF -- contributing to a special IMF-administered account and issuing Special Drawing Rights, or SDRS. SDRS are an international reserve asset created by the IMF to supplement members' official reserves.
Other BRICS nations have not publicly expressed their preference.
Bilateral agreements -- in which the IMF is allowed to draw up funds from a lender directly to a troubled country – would be the fastest way to help contain the fallout of the crisis, Cozendey said.
The IMF gets most of its resources from quotas paid by member nations and a number of bilateral and note purchase agreements.
Dominant shareholders of the IMF like the United States and some European heavyweights have frowned upon the idea of increasing the global lender's funding via bilateral deals or debt sales, which could ultimately dilute their influence.
Brazil and other BRICS nations, flushed with international reserves as their economies continue to grow robustly are seeking to boost their influence over the IMF, which has long been dominated by wealthy nations.
(Editing by Stuart Grudgings and Andrew Hay)
Trending On Reuters
A ferry carrying 189 passengers and crew capsized off the central Philippines in heavy waves on Thursday, killing at least 36 people but the majority of those on board were rescued, the coast guard and police said. Full Article
- More than 100 dead as militants, Egyptian army clash in North Sinai
- Thousands evacuated after freight train derails, catches fire, in Tennessee
- Eight dead in new Saudi-led strikes on Yemen's Sanaa - agency
- North Korean defector lifts lid on world's most secret state
- "Wow, pulled back wrong throttle" - captain of crashed TransAsia plane
India to spend $8 billion to boost irrigation, reduce dependence on monsoon Full Article
"Wow, pulled back wrong throttle" - captain of crashed TransAsia plane Full Article