The world’s largest emerging-market nations will announce contributions to the International Monetary Fund’s financial firewall at a Group of 20 meeting in Mexico, Brazil’s Finance Minister Guido Mantega said.
“We’re going to make an additional contribution to the IMF that will be announced at the leaders’ meeting,” Mantega told reporters today in the Mexican resort of Los Cabos.
He said the sum will be similar to the amount announced by the IMF in April, when the Washington-based lender said it received total pledges of $430 billion from members. Other countries including Brazil, Russia, India and China agreed to contribute about $70 billion to that total without detailing their pledges.
The G-20 agreed earlier this year to boost IMF resources that could be channeled to Europe if the crisis there spreads. The leaders of the so-called BRICS group, including South Africa’s President Jacob Zuma, met in Los Cabos today on the first day of the G-20 summit and reaffirmed their decision to add to IMF resources, according to an e-mailed statement.
“It’s going to be the first time the fund is capitalized without the U.S., which reflects the importance of emerging markets,” Mexican President Felipe Calderon said two days ago.
Even while emerging markets answer Germany’s call to do more to help Europe, the BRICS will continue to push for faster reform of the IMF, Mantega said. Brazil had threatened to withhold its contribution until Europe grants the BRICS a bigger say in how the multilateral lender is run.
As Europe’s debt crisis spreads, nations that have powered the global economy since 2007 are seeing their outlook worsen. China reduced its growth target this year to the lowest since 2004, Brazil is on pace to grow less than 3 percent for a second straight year and Standard & Poor’s threatened to cut India’sinvestment-grade credit rating. The Brazilian real, Russian ruble and Indian rupee are the three worst-performing emerging market currencies this quarter
BRICS leaders in their meeting today also instructed finance officials to develop a plan to swap national currencies. The plan will be presented at a BRICS summit next year in South Africa.
Mantega said that countries would potentially be able to tap into a joint fund when facing liquidity shocks.