The Group of 20 will announce new funding for the International Monetary Fund’s European reserves that will “satisfy” requests from Managing Director Christine Lagarde, Russian Deputy Finance Minister Sergei Storchak said.
Lagarde, who has called Europe the “epicenter” of risks to the world economy, is seeking more than $400 billion in new funding from member countries. She said before meetings with Group of 20 finance ministers in Washington yesterday that she had landed pledges for about $320 billion.
“I can assure you that the G-20 will announce the final amount” today, Storchak told reporters in Washington late yesterday. “This will be the sum that will suit the leadership of the International Monetary Fund.”
The IMF is pressing Europe to intensify efforts to quell two years of turmoil as it threatens to engulf Spain. Lagarde has said European governments should consider using their rescue funds to inject cash directly into Spanish banks. The IMF has also suggested the European Central Bank cut interest rates again, as well as for governments to issue joint debt and a restructuring of banks.
The G-20 pledge “will be an obvious completion of an important phase in the construction of not just European, but global firewalls,” Storchak said. Russia will contribute $10 billion, in line with earlier commitments, though the BRIC group, which includes Brazil, Russia, India and China, have insisted that the G-20 not reveal the breakdown of how much in additional funding each provides, he said.
“It’s a very delicate moment for public opinion in emerging markets countries,” Storchak said. “Incomes and living standards are significantly lower in many of these countries, compared with European Union countries,” he said. “BRIC ministers have noted an important fact -- good news outweighs negative news for the first time in the past year.”
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