Russia says seeks reduced IMF role at G20 summit

MOSCOW Fri Nov 7, 2008 11:37am EST

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MOSCOW (Reuters) - Russia will push for a diminished role for the International Monetary Fund (IMF) at the summit of G20 industrial and developing economies in Washington next week, a senior Kremlin official said on Friday.

"We are ready for a serious dialogue about it (the IMF role). We believe an overhaul of functions of the IMF as well as other international institutions is necessary," Arkady Dvorkovich, the Kremlin's top economic adviser, told a news conference.

Russia, which reaped the benefits of record high oil prices in recent years and accumulated the world's third largest gold and forex reserves, wants to change the existing global economic order and have more say in decisions.

Dvorkovich said the IMF could continue to play a role in what he described as an "anti-crisis early warning system" performing analytical functions but said Russia "lacked clear understanding of the IMF's role as the lender of last resort."

"The IMF should work as a bank, not as a project finance institution. It should not act as a manager in countries it lends to. It should put forward financial conditions on loans, not political ones," Dvorkovich said.

He said Russia wanted to create new global as well as regional institutions, which in future may take over the lender's role but in the next few months there was no immediate alternative to the IMF.

This year falling oil prices have hit Russia's resource- based economy but the government has pledged more than $200 billion to support it. It says plans to diversify, float the rouble and liberalize trade are still on track.


Dvorkovich said any country willing to participate in global financial management should be allowed to play a role in new institutions, in contrast with the IMF, which Russia views as dominated by the U.S. and other G7 nations.

Russia's other proposals for G20 summit include more powers for global financial institutions, new global risk management system, more advanced information disclosure, harmonization of accounting rules and capitalization of financial institutions.

Russia bears a longstanding grudge against the IMF, which provided advice for many ill-fated market reforms in the 1990s and decided against bailing Russia out in the wake of the 1998 financial meltdown.

Russia's relations with the West soured following a war with Georgia in August over a rebel province and many U.S. and European politicians have called for barring Russia from international groups.

Russia, the world's tenth largest economy, formally joined the G7 group of industrialized nations in 1997, forming the G8, but was always kept at arms length in discussions on economy and currencies.


At the last G7 finance ministers' meeting in Washington Russia's Alexei Kudrin was invited to join his counterparts at the dinner but was absent alongside President George W. Bush during his televised address on anti-crisis measures.

Dvorkovich said Russia was still satisfied with the G8 format, suggesting it may not join a push for the group's immediate enlargement to include China, India and Brazil.

"The G8 has not exhausted its potential on a variety of issues yet," Dvorkovich said, adding that Russia instead wanted to devote up to 50 percent of G8 summits to discussions with other countries.

Dvorkovich said Russia also hoped to resume talks on a new partnership agreement with the European Union but the nature of such agreement would depend on the progress in the ongoing accession talks for the World Trade Organisation.

(Editing by Michael Roddy)

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