Convinced that a fracturing of the eurozone is in no ones interest,India today pledged $ 10 billion for a plan to boost by $ 460 billion the International Monetary Funds war chest for the troubled monetary union. New Delhi did not,however,hide its unease over IMF resources going largely to rich countries,and the depletion of funds with development financial institutions like the World Bank.
Indias decision to put a figure on its promised support for the IMFs eurozone effort triggered a chain reaction at the G20 summit,with other BRICS countries following suit. China announced $ 43 billion,Russia and Brazil $ 10 billion each and South Africa $2 billion. Eight other countries including Mexico too made new pledges.
The support will not,however,be in the form of upfront payments. The monies will be made available to the Fund as bilateral loans or note purchase agreements.
IMF has said it would not use the new funds until it has nearly exhausted its customary quota resources and the facility of new agreements to borrow (NAB). From these and other resources,IMF has some $ 380 billion currently available for lending. The plan is to augment IMFs total capacity to over $ 1 trillion.
Addressing the G20 plenary session and earlier during informal talks with other BRICS leaders Prime Minister Manmohan Singh made the following points: that the eurozone crisis is more serious than previously thought,that the available firewall may prove inadequate to prevent a possible contagion beyond Greece,and that austerity in the debt-ridden members of the eurozone can work only if surplus members were willing to expand to offset contraction elsewhere in the currency area.
The Prime Minister argued that the G20 is overburdened,and needs to focus more on sustained and rebalanced global growth,its prime and original agenda. The resource base of multilateral development banks should be expanded,he said,so that they have the firepower to help developing countries pursue their development goals.
Liquidity support to countries like Spain might not be of great help as their solvency is in question; rather,adjustment programmes should lead to an acceleration of growth,he said.
Singh and other BRICS leaders also insisted on timely implementation of the IMF quota reform which aims at increasing the voting power of dynamic emerging-market countries in the Fund by over 6 per cent,as per the November 2010 Seoul summit formula.
Singh said that the quota reform was progressing slower than resource mobilisation,that the quota must reflect economic weights of members,and that the review schedule for January 2013 must be completed in time.These objectives can be best achieved by recognising the predominant role of GDP on purchasing power parity basis in the formula without going into other variables, he said.
Singhs call for bolstering multilateral development financing found resonance with not only developing countries but also World Bank president Robert Zoellick,an official privy to the prime ministers interactions with world leaders here said. BRICS unity was also evident in the groups re-assertion of the decision to set up an exclusive development bank for their five countries.
On the sidelines of the G20 summit,Singh met German Chancellor Angela Merkel,Russian President Vladimir Putin and Mexican President Felipe Calderon. He also had a short meeting with President Barack Obama,and was scheduled to meet several other heads of state.