By Dipankar De Sarkar, IANS,
London : Officials from India and other Group of 20 (G20) countries began meeting Thursday amid a call by the US Treasury Secretary to increase the IMF’s borrowing pot by a massive $500 billion to help developing countries cope with the fallout of the global financial crisis.
Finance Secretary Ashok Chawla, Alok Sheel, joint secretary in the Department of Economic Affairs, and Reserve Bank of India Deputy Governor Rakesh Mohan joined officials and central bankers from around the world ahead of an April 2 summit of G20 leaders who will declare an action plan to combat the financial crisis.
The Indian delegation will be joined by Planning Commission Deputy Chairman Montek Singh Ahluwalia Friday.
The meeting follows a call by US Treasury Secretary Timothy Geithner for G20 countries to significantly increase the International Monetary Fund’s New Arrangements to Borrow (NAB) by up to $500 billion.
“As the crisis has spread from advanced economies, emerging markets and developing countries are experiencing a severe economic slowdown and sharp declines in capital inflows and exports,” Geithner said Wednesday.
“The G20 countries, working with the international financial institutions, should mobilise substantial resources that can be deployed quickly and in innovative ways to help emerging market economies and developing countries restore growth and begin recovery,” Geithner said in a statement.
Geithner also backed an IMF call for countries to put in place fiscal stimulus of two percent of aggregate GDP each year for 2009 and 2010, declaring: “This is a reasonable benchmark to guide each of our individual efforts.”
However, analysts feel the US push for a fiscal stimulus package that is tied to the GDP may be resisted by some European countries, who see the current financial crisis as something that began in the US and have blamed it on US capital market deregulation.
Meanwhile, the absence of any senior American official other than Geithner has contributed to an element of uncertainty around the meeting of the policy sherpas, who are to try and come up with the draft of the communique that will be adopted by G20 leaders, including Prime Minister Manmohan Singh, at the April 2 summit.
The thin American delegation is explained by the fact that the new Obama Administration is yet to nominate key Treasury officials, who would normally be leading behind-the-scenes deliberations in the run up to the summit.