June 21 (Bloomberg) -- Vladimir Putin championed a bigger role for leading emerging-market nations in navigating the global economy, saying richer countries failed to contain the debt crisis through “half-measures” and indecisiveness.
Putin, re-elected to his third term as Russian president in March, said a $75 billion commitment to aid the International Monetary Fund by the so-called BRICS group meant the world’s largest developing nations should play a bigger role in steering global finances.
“We have to move from declarations to real reform of the IMF and other financial institutions, proceed to reform that takes into account the real balance of power,” Putin said at the annual St. Petersburg Economic Forum in his hometown, Russia’s second-biggest city.
Twelve emerging-market nations formalized funding pledges this week to the IMF, which is co-funding bailouts to Greece, Ireland and Portugal, to help almost double the fund’s lending power to protect the world economy from Europe’s debt turmoil.
With the addition of new pledges, the Washington-based lender said it has received funding commitments of $456 billion, up from the roughly $430 billion it had secured in April. The temporary contributions will add to the $380 billion the IMF currently has available for lending.
“It’s fair and justified to raise a question about strengthening the role of so-called developing nations and so-called new economic powers in the context of formulating steps that will determine the character of global economic order” Putin said.
The Russian leader spoke in St. Petersburg after a slump in oil prices extinguished gains in Russian equities and the ruble. The three-day event, which his predecessor Dmitry Medvedev spearheaded from 2008 to 2011, features foreign executives including Citigroup Inc.’s Vikram Pandit and Goldman Sachs Group Inc.’s Lloyd Blankfein.
Brent crude, the grade that underpins prices for Russia’s Urals export blend, has tumbled 16 percent this year as Europe’s debt crisis worsened and China’s economy slowed. Russia should cut the average oil price needed to balance the budget to $80 a barrel from $117 to lure investors and reduce risk, Citigroup Inc. strategist Kingsmill Bond said June 14. Energy exports generate about half of budget revenue.
Emerging-market stock funds ended five consecutive weeks of outflows in the week ended June 13, registering inflows of $919 million, according to EPFR Global. Total net investment into emerging-market funds has totaled $17.6 billion in 2012 compared with outflows of $13.84 billion for the same period of 2011.
Brazil, Russia, India, China and South Africa, which together make up the BRICS group, may set up an anti-crisis fund if their demand for a greater say in the Washington-based lender is rebuffed, said Russian Deputy Finance Minister Sergei Storchak.
The five nations pledged $75 billion at the Group of 20 summit in Mexico yesterday to bolster the IMF’s capacity to help limit contagion from the European sovereign-debt crisis. They said they expected IMF members to reciprocate their contribution by carrying out agreed changes that would bolster the voting power of emerging economies in the organization.
China and Russia, holders of the world’s biggest and fourth-largest currency reserves, and the other three BRICS countries have agreed on a system of currency swaps that could later be succeeded by an anti-crisis fund, Storchak told reporters on his way back from Los Cabos, Mexico.
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