Fund turns to BRICS economies for funding

International Monetary Fund Managing Director Christine Lagarde on Thursday again welcomed China's latest move to widen the yuan's daily trading band.

"It's not a baby step. It's a very good step in the right direction," Lagarde said at a news briefing before the start of the IMF/World Bank Annual Spring Meetings. "I certainly hope it's not the last step," she added.

Last weekend, the People's Bank of China said it would allow the renminbi to trade within a wider daily range against the US dollar on Monday.

The yuan's trading band against dollar will be 1.0 percent, an increase from 0.5 percent.

Lagarde responded instantly on the same day of the announcement, saying that it was an important step, and underlined China's commitment to rebalance its economy toward domestic consumption and allow market forces to play a greater role in determining the level of the exchange rate.

She noted that China traditionally does things "one step after another", and viewed the latest move as part of "a longer journey".

On the opening day of the Spring Meetings, Foreign Ministry spokesman Liu Weimin said in Beijing that China is willing to discuss means for funding the IMF with member states.

Fundraising is a top agenda of the IMF Spring Meetings this year, and Lagarde said she is expecting to receive a big boost in funding to help the lender contain the eurozone debt crisis.

So far, the IMF has raised $320 billion, all from European countries and Japan, and it wants to secure at least $400 billion, Bloomberg reported.

"We cannot sort of propose one-size-fits-all solutions and that everything we do has to be country-specific," Lagarde said.

Finance ministers from the BRICS economies - Brazil, Russia, India, China and South Africa - gathered in Washington on Thursday, and the prospect of further IMF financing was discussed.

Brazil and Russia expressed willingness to chip in but requested more voting power in the IMF in return.

Increasing IMF funding was a top agenda of an informal meeting of the G7 developed economies and a G20 dinner gathering on Thursday.

The United States, the IMF's largest shareholder, has declined to provide fresh funds, but on Wednesday, it threw its weight behind the effort to raise more capital from other nations. Previously, it had pressed for bolder action from Europe first.

US Treasury Secretary Timothy Geithner on Wednesday called for a "clean and unequivocal commitment" by European countries to ensure they can borrow at sustainable interest rates.

Calling the eurozone the "epicenter of potential risk" for a global economic recovery that is "timid and fragile", Lagarde also urged eurozone policymakers to directly inject some of their bailout funds into troubled EU banks.

Europe had taken "significant steps" to combat the crisis and erect a financial firewall to contain it, Lagarde said, adding that "there is a little bit missing here or there, but it shows significant determination to defend their currency zone".

"We expect our firepower to be significantly increased as an outcome of this meeting," she said.

Lagarde also tried to raise money for the Poverty Reduction and Growth Facility, which is an arm of the IMF that provides loans to heavily indebted poor countries.

"It is not as if the IMF was raising funds for (only) the eurozone. We are very keen to support all members and we know that there are crisis bystanders that might need help," she said.

World Bank President Robert Zoellick, who is stepping down in June, shared the same view with Lagarde, saying on Thursday that he wanted to build a "safety net" for all countries.

"Safety nets can transform people's lives and provide a foundation for inclusive growth without busting budgets. If you want to wait until the crisis coming, it's too late," he said.

Without progress toward structural reforms in developing and developed economies, the world will continue to stumble along, Zoellick said.

"Structural reforms and changing growth models fit with our recent major reports, such as China 2030 and the Golden Growth Report that looked at Europe," he said.

World Bank executive directors selected Jim Yong Kim, president of Dartmouth College, as the next World Bank president on Monday.

Reuters contributed to this story.

maliyao@chinadaily.com.cn