Brazil raises G20 stakes on IMF funding pledge

Tue Jun 12, 2012 7:30pm EDT
 
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By Luciana Otoni and Krista Hughes

BRASILIA/MEXICO CITY (Reuters) - Brazil raised the stakes ahead of next week's Group of 20 summit on Tuesday by saying it may cap its contribution to a planned funding increase for the International Monetary Fund unless there are firm promises to give emerging markets more say at the international table.

While summit host Mexico urged Europe to quickly finalize details of aid for Spain's banks, Brazil said it might contribute less than it had planned to the extra $430 billion promised to the IMF by member states in April to help fund heavily indebted euro zone countries.

The euro zone sovereign debt crisis is set to dominate the June 18-19 G20 leaders' meeting in Los Cabos as it did the last summit in Cannes, France, six months ago. The meeting starts a day after Greek elections which could decide whether the country stays in the euro zone.

The G20, created in 1999 after the Asian financial crisis as a way to forge stronger links between developed and emerging economies, was promoted to be the No. 1 global policymaking body after the 2008 financial crisis but its authority has been undermined since as countries pursued their own domestic agendas.

Brazil made it clear it would use the meeting to insist on more say at the IMF. Voting power at the IMF is currently dominated by the United States and other developed powers.

"We are frustrated because we see that countries that know they will lose influence are resisting the (quota) formula," said a senior Brazilian government official, who declined to be named to speak more freely. "The amount of additional resources remains open. It could be more than $10 billion or less."

The European Union has said it would reduce the number of seats it holds on the IMF board by two in the autumn this year, but G20 sources who spoke to Reuters on condition of anonymity were pessimistic about a firm agreement by then.

China, India, Russia and Mexico are among countries yet to say how much they will commit to lend the IMF, although final pledges are due at the Los Cabos summit.   Continued...