BRICS in favor of IMF recapitalisation for Greece

Most BRICS economies favour bolstering the capital base of the International Monetary Fund as a way to contribute to a financial rescue package for Greece, G20 sources told Reuters on Thursday.

The sources, speaking as Group of 20 finance deputies met in Paris ahead of finance chief talks on Friday and Saturday, said the idea would be to avoid altering the IMF’s voting structure in a bid to bring on board the United States, which has shown little appetite for boosting the IMF’s resources.

“We have said this before and have conveyed this again, that if emerging economies and the BRICS are called upon to contribute, we can do it via the International Monetary Fund,» one of the sources said.

“India is open to it, China and Brazil are also okay with the idea as well,» he said.

A second G20 official in an emerging economy delegation said an IMF recapitalisation should not lead to any dilution of the current voting structure at the global lender.

The officials did not give details of how big a recapitalisation could be or what form it could take.

Greece, trapped in a deep recession and fighting to control a public debt expected to reach 162 percent of gross domestic product this year, is struggling to overcome a crisis which many economists now predict will end in default.

The BRICS grouping consists of Brazil, Russia, India, China and South Africa, five emerging economies that are increasingly influential because of their size and their relatively fast pace of growth compared to rich world economies.

European powers such as France and Germany have dithered over how to rein in a debt crisis that is spreading from peripheral nations to the euro zone’s core, driving worldwide market jitters and raising the possibility of a major fallback into recession.

The United States is piling pressure on the euro zone to get its fiscal house in order, but Washington’s position is that Europe should raise its own resources to save Greece from default, rather than boosting IMF resources.

The second official, who is involved with drafting the G20 communique in Paris, said the BRICS proposal may not win support from the United States and other key powers.

Euro zone leaders are working to come up with a convincing plan to stem the bloc’s debt crisis in time for an October 23 European Union summit.


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