G20 finance ministers’ agreement to give more money to multilateral development banks will play a strong role in dealing with the global recession, South Africa’s finance minister said.
The G20 finance ministers’ communiqué released on Saturday said there was urgent need to find ways of increasing the resources of multilateral lenders, although the finance ministers failed to come up with any concrete figures.
”This is positive for the world as a singleness of purpose of what we have to do,” South African Finance Minister Trevor Manuel told Reuters in an interview.
”It’s less about the amount of money pumped into the system, it’s a sense of responsibility and collegiality about how you deal with these issues going forward.”
The International Monetary Fund has asked for a doubling of resources to $500-billion, and G20 governments are looking to increase the capitalisation of the Asian Development Bank by at least 200%.
”There is concern about the speed of transmission of the financial crisis from the industrialised countries to the entire world,” Manuel said.
”The object of the exercise is to strengthen the IMF and its ability to do more.”
The IMF has lent $50-billion to a string of countries including Iceland, Hungary, Ukraine, Latvia, Belarus, Serbia and Pakistan.
It recently had a $100-billion loan from Japan, and the European Union may lend up to $100-billion.
”There needs to be a new focus of attention on the IMF, World Bank and regional development banks, including governance reform,” Manuel said.
The communiqué also said that development bank heads should be appointed through open, merit-based selection processes.
Emerging economies have felt frozen out of the selection process for the leadership of multilateral lenders such as the IMF, with these positions going to officials from G7 countries.
Emerging economies, described at the height of the global economic boom as decoupled from the fortunes or otherwise of developed economies, have shown their severe vulnerability to a developed market crisis.
”These institutions should have better resource availability to ensure that we can deal with the short-term disadvantage of this deep recession,” Manuel said. – Reuters