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G20 to confirm IMF loan pledge despite reform delay
LOS CABOS, Mexico |
LOS CABOS, Mexico (Reuters) - Leaders of the world's major economies are set to confirm they will make new crisis-fighting loans to the International Monetary Fund even though some emerging nations are frustrated with the slow pace of winning more power at the global lender.
The Group of 20 summit in Mexico on Monday and Tuesday will be overshadowed by Europe's debt crisis that threatens to stretch Europe's own rescue funds, underscoring the need for a bigger war chest at the IMF.
It remained unclear, however, whether all leaders attending the summit would sign off on the specific size of their contributions to the Fund.
China's Vice Finance Minister Zhu Guangyao said on Sunday that Beijing will contribute to the $430 billion in new resources for the IMF, which was agreed by finance ministers in April, but he did not offer a specific sum.
"We are fully confident that the IMF will realize its aim of increasing its funds by $430 billion and China will surely pitch in," Zhu told reporters in the Mexican resort of Los Cabos.
Japanese Finance Minister Jun Azumi said he expected China to say how much it will give during the G20 summit, a move that could prompt other developing countries to follow suit.
Leading emerging nations China, Russia, Brazil and India did not say in April how much extra they would contribute to the IMF and sought to tie any new money to further IMF voting reforms that would give them more clout at the Fund.
The bulk of the extra IMF money will come from Europe. The Fund has stressed it is not earmarked for helping European countries exclusively but was for countries affected by the euro zone turmoil.
A G20 official told Reuters that China was expected to contribute around $60 billion, with Russia, India and Brazil providing $10 billion each.
Two G20 officials, involved in negotiations on the wording of the final G20 summit statement, said the commitment to further voting reform in the IMF "continues to be contentious," but leaders were likely to agree on the $430 billion figure with a commitment to further governance reforms in the IMF.
Mexico's president on Saturday suggested the extra resources might be larger than $430 billion.
The funding is aimed at helping the IMF respond decisively to the euro-zone debt crisis. Greece, Ireland and Portugal have turned to the IMF for help after being locked out of debt markets. This month's offer of up to 100 billion euros to Spain to help its banks would come from Europe's own rescue funds.
Emerging economies have long demanded more say in international institutions like the IMF to reflect their growing clout in the world economy. Their frustrations have grown with the likely delay in the implementation of an agreement in 2010 that would boost their voting power and make China the third-largest voting member of the IMF.
The 2010 reforms are subject to approval by the deeply split U.S. Congress, with any change unlikely before the November presidential and congressional elections.
The United States is not participating in the IMF funding drive, saying the Fund has sufficient resources.
Without mentioning countries by name, China's Zhu said "certain countries are not moving fast enough on this issue, but as long as we have this consensus, we should complete the quota reform as scheduled.
"That is the demand of China and the other emerging economies, and that is the demand of the world economic situation today," he added.
Brazil has said it will not contribute new funding until the 2010 reforms have been completed.
Emerging economies like China, Brazil and India, which are all faced with high rates of poverty, have had to tread carefully around perceptions at home that the money is being used to bail out rich countries in Europe.
IMF chief Christine Lagarde said on Sunday the rise of emerging economies in the world economy needed to be reflected in the makeup of the IMF.
"Clearly the IMF has to look more like the economies of the world are like today. As a result, our quota system has to be changed to make more space, more room, more voice, at the table for emerging economies.
"That is a realignment that is painful because no one likes to concede, no one likes to make a bit more space, and the 2010 reform that has been decided in principle needs to be implemented before next October," Lagarde added.
(Reporting By Lesley Wroughton and Paul Eckert; Editing by William Schomberg and Padraic Cassidy)
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