| WASHINGTON, April 12
WASHINGTON, April 12 China said on Saturday it
backed IMF financial support for Ukraine, but expressed concern
about the global lender's funding capacity given the failure of
the U.S. Congress to ratify a program of reforms for the
Chinese Vice Finance Minister Zhu Guangyao told a small
group of Western journalists on the sidelines of the IMF-World
Bank spring meetings in Washington it was a "worry" that more
than 85 percent of IMF lending was currently focused on Europe.
Zhu highlighted the importance of reacting quickly to any
problems that arise in regions outside Europe, adding: "That is
why IMF financial capacity has become so important."
Zhu said China was worried about the potential impact of the
Ukraine crisis, especially on Europe, which was already facing
risk from deflation.
"This is a geopolitical issue too. We hope that event of
geopolitical risk won't cause a big shock for the global
economy, particularly for ... Europe's economy."
"That's why we support any action necessary to calm down the
tension and to stabilize the economy, including Ukraine's
economy," Zhu said.
Russia and the European Union have exchanged recriminations
since Russia annexed Ukraine's Crimea region in March and
financial aid to Ukraine became a hot topic at a meeting of
finance ministers from the Group of 20 leading nations.
In addition to supporting the IMF program for Ukraine, which
Zhu said was subject to finalization by the IMF board, China was
keeping in close bilateral contact with Kiev, with which it had
many areas of cooperation in agriculture and industry.
"We will continually expand our cooperation," Zhu said.
Zhu gave no details of how much China would contribute to
the program for Ukraine, but said "voting support for the
program means financial support because China is a key member
of the IMF."
The IMF has pledged to cover Ukraine's financing needs of
$27 billion over the next two years and the head of the IMF's
European department, Reza Moghadam, said on Friday that the Fund
was able to lend to Ukraine because the country's debt was
Moghadam said the exact size of the IMF program would depend
on how much other international lenders like the EU would
contribute to the government in Kiev.
NEED TO STRENGTHEN IMF
Zhu said the crisis showed the need to strengthen the
financial capacity of the IMF and that China hoped the U.S.
Congress could move quickly to break an impasse on the issue.
IMF members agreed reforms in 2010 that would double the
Fund's resources and give more say to emerging markets, but the
U.S. Congress has failed to ratify the changes.
Some U.S. Republicans have complained the changes would cost
too much at a time Washington is running big budget deficits.
The reforms also ran afoul of a growing isolationist trend among
the party's influential Tea Party wing.
Zhu said there was "deep disappointment and frustration"
expressed at the impasse by all participants in Friday's G20
meeting, which set a year-end deadline for U.S. ratification.
"During the period before the end of the year, we are
certainly continuing very full cooperation with the IMF and we
hope this difficult time - particularly Ukraine - the IMF plays
quick and strong action," Zhu said. "We support that."
Some G20 officials have suggested moving ahead on IMF
reforms without the United States, although U.S. approval would
be necessary for any major decision to go forward because of
Washington's controlling share of IMF votes.
Zhu did not respond when asked what China thought should be
done if the issue was not resolved by the year end.
(Reporting by David Brunnstrom; Editing by Paul Simao)