The BRICS group of emerging-market economies may set up an anti-crisis fund if their demand for a greater say in the International Monetary Fund is rebuffed, said Russian Deputy Finance Minister Sergei Storchak.
Brazil, Russia, India, China and South Africa, which together make up the BRICS, 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 nations 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.
“Practical steps will depend largely on the extent to which the BRICS’ position will be taken on board concerning the allocation of new quotas” in the IMF, he said. “BRICS states have reached a level of development that gives them the right to insist on getting their interests respected.”
The new BRICS anti-crisis fund would function as a “parallel” mechanism that would show there is alternative source of financial support to the IMF, Storchak said.
In return for providing aid to the 17-member euro region, BRICS nations are seeking sufficient voting power to “influence key decisions” at the IMF, Russia said in November at the last G-20 summit in Cannes, France.
Emerging nations have urged an end to the convention of naming the IMF’s head from Europe and World Bank presidents from the U.S. Christine Lagarde, a former French finance minister, was appointed to the IMF job in June 2011 after her countryman, Dominique Strauss-Kahn, quit.
The IMF was formed after World War II to help stabilize the currencies and economies of member states and lends to countries in financial difficulty.