Emerging powers join forces for finance reform

By Todd Benson and Elzio Barreto

SAO PAULO (Reuters) - Emerging economies staked their claim to a bigger role in the world's financial system on Friday, saying the crisis that has hammered rich countries showed it was time for them to take a seat at the big table.

The "BRIC" nations of Brazil, Russia, India and China, meeting ahead of broader talks this weekend, for the first time forged a joint position that called for reform of institutions like the International Monetary Fund to reflect the growing importance of developing economies.

"Emerging countries are ready to shoulder the financial consequences of a bigger participation at the IMF," Brazilian Finance Minister Guido Mantega told a news conference in Sao Paulo. "There is no point in us increasing our participation if the big countries keep their veto powers."

With the United States and Europe reeling from the global financial crisis, faster-growing emerging economies are being asked to play a bigger role in helping the IMF protect small countries from fallout from the credit crunch.

In return, new heavyweights like the BRIC nations want more influence at the global financial institutions which have long been the preserve of the 20th Century powers.

"We called for the reform of multilateral institutions in order that they reflect the structural changes in the world economy and the increasingly central role that emerging markets now play," finance ministers from the BRIC countries said in a joint statement after their meeting on Friday.

The statement also said the Financial Stability Forum, which groups the G7 and some other major economies, should be immediately expanded to include big emerging countries.

The show of unity came as finance ministers and central bankers began arriving in Sao Paulo for an annual meeting of the G20 group of the world's biggest economies which will be dominated by discussions of how to respond to the crisis.

The IMF voting shares of large emerging markets including Brazil, India, China, Mexico and South Korea were increased in March, but many complained it did not go far enough to influence decisions in the global lender.

CALL FOR GREATER REGULATION

Any progress at the G20 gathering and a meeting of the Bank of International Settlements also in Sao Paulo could be taken to a G20 heads of state summit in Washington on November 14-15.

The leaders' meeting has been billed as a chance to redesign the global financial architecture although officials from the soon-to-end U.S. administration of President George W. Bush have played down the prospect of major changes.

In Brussels earlier on Friday, after a meeting of European leaders, French President Nicolas Sarkozy said Europe would head to the Washington summit next week united behind a French-inspired plan for revamping the financial system.

As chair of the G20 finance officials' meeting, Brazil is under pressure to seize the opportunity to bolster its standing as an up-and-coming global heavyweight and hammer out a consensus for the Washington summit.

Coming off its biggest burst of growth in decades, Brazil has braved the turmoil better than previous crises. But Brazilian officials are frustrated with the United States for not doing more sooner to contain the financial fallout, which is now putting the brakes on Brazil's economic boom.