Give us more clout at IMF, say BRIC nations

By Sarah Arnott

Wednesday, 17 June 2009

The first formal summit of the four emerging "BRIC" powers concluded in Russia yesterday with calls for reform of international economic institutions and a curb on protectionism.

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The Presidents of Russia, China and Brazil and the Prime Minister of India met in Yekaterinburg, nearly 900 miles east of Moscow, to thrash out ways to rebuild the world economy.

Between them, the BRIC nations account for 22 per cent of the £42trn global economy and have bankrolled a large proportion of the developed world's attempts to repair its balance sheet. In a joint communiqué issued yesterday, the leaders called for a stronger role in the world's shared financial institutions.

They have already secured a louder voice on the Financial Stability Board, the internatinoal college of regulators and central bankers. But the main beef is the International Monetary Fund (IMF), where BRIC countries have few votes proportional to their influence.

"We are committed to advance the reform of international financial institutions, so as to reflect changes in the world economy," the communiqué said. "The emerging and developing economies must have greater voice and representation in international financial institutions, and their heads and senior leadership should be appointed through an open, transparent and merit-based selection process."

Russia and China have both been outspoken critics of the dollar's role as the world's reserve currency, and even proposed its replacement by the IMF's "special drawing rights", a basket of currencies created in the late 1960s to facilitate international trade.

Although overt mention of the dollar was notably absent from yesterday's statement, there were strong hints. "We also believe there is a strong need for a stable, predictable and more diversified international monetary system," the communiqué added.

Alongside its calls for a bigger role, the BRIC is also pushing for a clampdown on protectionism. "We recognise the important role played by international trade and foreign investments in the world economic recovery," they stated. "We urge the international community to keep the multilateral trading system stable, curb trade protectionism, and push for comprehensive and balanced results of the World Trade Organisation's Doha Development Agenda."