G20 To Call For Doubling of IMF Budget: UK
The members of the G20 are likely to call for at least a doubling of the International Monetary Fund's budget, if not more, UK Chancellor of the Exchequer Alistair Darling told CNBC Thursday.
Monetary and developing country sources told Reuters the latest draft summit communique provided for a $500 billion boost to the IMF's resources, raising to $750 billion the funds it can make available to countries worst hit by the global crisis.
"I certainly hope we can get a doubling of the (IMF) budget and I hope we can get more than that," Darling told CNBC in an interview on the sidelines of the G20 summit.
"We've got to make sure we help these countries… it's in our own self interest to look after all of world," he added.
He did not want to comment on continental Europe's rejection of more stimulus measures, but said pumping cash into economies was the right choice for some countries.
"Putting money into the system to get credit to kick start again, that's something you need to look at," Darling said.
The UK is ready for reforms of the IMF and the World Bank that would give more say to developing countries and end Western hegemony at the helm of the two institutions, UK Business Secretary Lord Peter Mandelson told CNBC earlier on Thursday.
- Watch the full CNBC interview with Alistair Darling above.
Developing countries should also be able to access more resources from the IMF to boost their economies, which in turn would benefit developed nations, Mandelson said.
"We are certainly prepared to go along not just with more resources but with reform of these institutions, that means a more representative governance," he told CNBC during the G20 meeting in London.
"And it also means not assuming that one organization will automatically be led by an American and another one will automatically be led by an European. We've also all got to move on and into the 21st century," he added.
Traditionally, the heads of the two institutions have come from Western Europe and the US since they were created at the Bretton Woods conference at the end of the Second World War.
Brazil and other developing countries have asked for this tradition to be broken, and for the allocation of more resources and more clout for developing nations. Mandelson did not specify whether the UK would agree to a cut in its voting rights within the IMF.
The IMF would also be able to borrow money on international markets if needed, sources told Reuters. Another British minister said leaders would discuss possible sales of IMF gold reserves, which could raise yet more cash, although he did not expect an immediate decision.
The real test of the G20 leaders' determination to fight the recession will come in the future, when they will have to put into practice decisions that will be taken during Thursday's London meeting, he said.
"They've then got to spend the next year and beyond implementing them and that's where the real test will be," Mandelson said.
Two main decisions are paramount for the success of the effort, common standards applying to all players in the financial markets and an international body that would check and make sure that the standards are respected, according to Mandelson, who thinks one problem is that regulators from different countries did not communicate enough.
But it will be a long process to reach those goals as the world economy is facing big shifts.
"Rome is not built, or rebuilt in this case, in a day," Mandelson said.
The G20 were also close to agreeing a trade finance package worth $250 billion to support global trade flows, a source at the summit in London told Reuters. UK Prime Minister George Brown had been targeting at least $100 billion to help reverse the decline in trade following the credit crunch.
-- Reuters contributed to this story