IMF Receives $456 Billion Funding Boost
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The International Monetary Fund has raised $456 billion in new firepower after major emerging economies pledged new funds to shore up the global financial system.
IMF chief Christine Lagarde revealed yesterday that 37 member states had pledged to contribute to the Fund – a commitment that ensures the IMF “has access to adequate resources to carry out its mandate in the interest of global financial stability.”
Speaking at the sidelines of the G20 summit, she said:
The International Monetary Fund has raised $456 billion in new firepower after major emerging economies pledged new funds to shore up the global financial system.
IMF chief Christine Lagarde revealed yesterday that 37 member states had pledged to contribute to the Fund – a commitment that ensures the IMF “has access to adequate resources to carry out its mandate in the interest of global financial stability.”
Speaking at the sidelines of the G20 summit, she said:
[quote] Countries large and small have rallied to our call for action, and more may join. I salute them and their commitment to multilateralism. As a result, total pledges have risen to $456 billion, almost doubling our lending capacity. [/quote]
However, the IMF said that the resources “are being made available for crisis prevention and resolution and to meet the potential financing needs of all IMF members.”
According to Lagarde, the funds will only be drawn when necessary, “as a second line of defence.”
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In particular, the BRICS agreed to “enhance their own contributions to IMF” in exchange for a greater say at the fund, including a comprehensive reform of voting power and reform of quota shares.
Japan tops the list with $60 billion in pledges, while China, the largest BRICS and world’s second largest economy, will contribute $43 billion to the Fund, official state agency Xinhua confirmed today.
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Two other BRICS nations, India and Russia, said they will increase their contribution by $10 billion each.
The BRICS, consisting of Brazil, Russia, India, China and South Africa, represent 43 percent of the world’s population and almost a fifth of global economic output. Collectively, BRICS hold about $4 trillion in combined reserves, and China alone holds $3 trillion of that sum.
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According to Goldman Sachs, the BRICS are expected to collectively eclipse the world’s richest economies by 2050, and the BRICS have long demanded more say at institutions like the IMF to reflect their growing clout.
But their frustrations have grown with the delay in implementing the 2010 Reform deals that would have boosted their voting power.
At the BRICS summit this year, BRICS leaders accused developed countries of destabilising the world economy, with Brazil’s President Dilma Rousseff saying that the developed world’s monetary policy “brings enormous trade advantages to developed countries and results in unfair obstacles for other countries.
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