Emerging economies are stepping forward after the IMF issued a call for contributions to a eurozone safety fund. Brazil, Russia, India and China have all expressed a willingness to pitch in to the pledge drive spearheaded by IMF chief Christine Lagarde, who hopes to raise at least $400 million in new funding.
Reuters reported Friday, based on information gleaned from an anonymous international diplomat, that developing countries will commit about $100 million to the fund. Russia has already committed $10 billion. “Trust me that the G20 will announce the final amount. This will be an amount that will satisfy the management of the International Monetary Fund,” Russian deputy finance minister Sergei Storchak told Reuters.
But there are also conditions attached to their support: the so-called BRIC countries want voting reform within the organization. Brazil is seeking assurances that the IMF will follow through on an agreement that would lessen Europe’s clout and pull China up to the organization’s number three voting slot.
Conversely, the U.S. and Canada have been more hesitant to throw more cash into a eurozone fund. “Clearly, the Europeans need to step up to the plate much more than they have,” Finance Minister Jim Flaherty told reporters in Toronto this week. “We think that the Europeans, the eurozone countries, have not yet made the contributions they ought to make with their own resources.”
Analysts say this is a sign of the changing power balance in the global economy, with a wider array of countries gaining influence over the world’s financial architecture. “(The emerging economies) want to wrest control of the IMF come the next leadership change,” Eric Lascelles, chief economist of RBC Global Asset Management told the Financial Post. “They were somewhat close to doing it last time. You have to imagine that next time around, it’s their turn.”