Row with emerging nations threatens IMF's cash call

Russians warn that the IMF must deliver on its power-sharing commitments

A row over giving more say in the running of the International Monetary Fund to countries such as China threatens to jeopardise the lender's bid to raise an additional $500bn to deal with the global economic crisis.

The IMF spent much of its annual summit in Washington, which ended last night, discussing how it will raise the new funds, but the developing countries on which it is depending for much of the money repeatedly warned that they would not contribute more without being given greater control of the organisation.

The $500bn (£340bn), which was agreed upon at last month's G20 meeting in London, is seen as a crucial weapon in the armoury of the international response to the credit crisis and economic downturn. A failure to secure the extra money could have serious implications for the growing number of countries that are dependent on IMF loans and aid.

However, representatives of some of the developing countries most likely to help reach the $500bn target are not yet convinced that the IMF's more powerful members are serious about ceding any control.

Alexei Kudrin, Russia's finance minister, warned yesterday that developed countries were proving reluctant to offer concessions. "We already meet a cool attitude and even resistance [to reform of the IMF]" Mr Kudrin said. "The leading countries are not in a hurry ... this was the main discussion, the nerve of the IMF meeting."

Dominique Strauss-Kahn, the IMF's managing director, has so far secured commitments of around $324bn from members for the top-up in the len- der's funding, including $100bn promised by the US.

Mr Strauss-Kahn said yesterday that a bond issue was one of the ways in which the IMF was hoping to make up the shortfall in funding, with countries including Brazil and China already having indicated that they would consider subscribing for such bonds.

"I'm sure this vehicle will be used," Mr Strauss-Kahn said. "Now we're discussing with different creditors the way to implement it and the amount that we put in."

However, Guido Mantega, the Brazilian finance minister, described the IMF's plans as "premature" and "insufficient". Mr Mantega, who yesterday met with finance ministers from Russia and China, as well as India, the fourth member of the so-called Bric group of leading developing nations, said that contributions made by these countries would be "provisional", implying that support might be withdrawn if the IMF's decision- making process is not reformed to their satisfaction.

The Brazilians are also anxious to see more of the IMF's lending directed towards emerging nations.

The IMF has already promised to change the shareholding and voting power of members by January 2011, but negotiations on the terms of such reform have only just begun. Firm proposals on many of the key issues around the management of the IMF are unlikely to be made before October.

Tensions at the IMF summit, which, like the G20 meeting, was disrupted by a wide variety of protesters, were heightened by a separate row over the forecasts made by the organisation about the next stage of the banking crisis. European governments are furious about the IMF's assertion that the continent's banks will be forced to write down the value of their assets by $750bn over the next year.

The British Government last week succeeded in having the IMF withdraw some of its forecasts about its borrowing and France yesterday joined the lender's critics. Finance minister, Christine Lagarde, said: "Many of us expressed our greatest reserve on the methodology adopted by the IMF."

Mr Strauss-Kahn is also attempting to defuse a potential argument between some European countries, which are increasingly focusing on how government intervention in the banking sector might be withdrawn once the crisis passes, and more cautious members, including the US, who insist it is too early to begin discussing an "exit strategy".

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor