By Dipankar De Sarkar, IANS,
London : Finance Minister Pranab Mukherjee began meeting with his counteparts from the G20 group of countries here Friday, as two key European leaders said India should help replenish a massive funding gap in the International Monetary Fund (IMF).
European Union funding for the IMF is a major issue at the Sep 4-5 G20 finance ministers’ meet, which could also see India, China, Brazil and Russia demand being given a greater say in the running of the IMF, including a bigger share of voting rights.
G20 leaders, including Prime Minister Manmohan Singh, agreed at their London summit in April to add $500 billion to the IMF, particularly to help poor countries grapple with the credit crunch – part of a massive $1.1 trillion rescue package announced by British premier Gordon Brown at the summit.
The EU had then offered to provide about $100 billion, but France and Germany earlier this week said that sum should be raised to $175 billion.
“Other countries like India, Saudi Arabia and other emerging markets can be expected to make pledges and we should continue to call on them to join the international effort,” the German and French finance ministers wrote in a joint letter.
“However, we believe that Europe should not wait for these pledges and should announce rapidly the amount of its own contribution,” they added.
Germany and France, who have both registered economic growth in the last quarter, are asking for bailout measures to be scaled back, saying they do not want to burden their economies with too much debt.
But Britain, still in the midst of a recession, is reported to be irritated with these proposals and has argued for caution.
Britain has urged Europe to set an example and do more to meet the target of $500 billion pledged to the IMF. Britain has agreed to lend up to $15 billion to poorer economies and is willing to provide up to $11 billion more as part of an EU package.
So far, none of the extra credit has been called in by the IMF, but The Times quoted “government insiders” as saying the money will be needed before long to prop up struggling economies.
British finance minister Alistaire Darling said Thursday that the biggest risk to global economic recovery was complacency and that it was too soon to withdraw stimulus measures.
“My view is that the biggest single risk to recovery is that people think the job is done,” he said.