WASHINGTON – The International Monetary Fund wrapped up meetings in Washington with its coffers to fight crises $430 billion richer Saturday. But the emerging nations that contributed to the fund said that the IMF should not rashly throw more money into Europe and that they want more say in how the body is run.
There was some clear relief in the air after the IMF and Group of 20 major economies came out of their meetings Friday with commitments from Brazil, Russia, India and China — known as the BRICS — to contribute to the fund’s “global fire wall.”
With worries now that Spain and Italy are on the verge of needing rescues, the funding boost is aimed at preventing new financial crises from ripping through global markets.
The IMF had already cut its goal for the fire-wall funding from $500 billion to $400 billion, with its major shareholder, the U.S., declining to contribute and the BRICS clearly nervous that their contributions might end up in a European black hole.
Early on, eurozone countries ponied up $200 billion and Japan $60 billion. But it was only at the financial summit Friday that the IMF was able to pull in the balance. Britain, South Korea and Saudi Arabia each pledged $15 billion. Smaller amounts came from other European governments, and the BRICS and three Southeast Asian countries promised a collective $68 billion.
The amount doubled the IMF’s resources for intervening in crises. Together with the eurozone’s own recently assembled $1 trillion fire wall, it was close to what IMF analysts say is necessary to prevent financial contagion from spilling out of Europe.
But the money came with warnings from IMF members that are not part of the U.S.-Europe-Japan axis that dominates the Washington-based international lender.
First, they worried that after committing some $130 billion already to rescues of Greece, Portugal and Ireland, the IMF board would too easily give in to another bailout of a foundering eurozone economy.
The rising economies laid on pressure for the IMF to get moving on promises of substantial reforms to fund quotas — shareholder voting rights — that reflect the newfound economic power of the BRICS.