China will boost IMF resources

China is committed to fulfilling its obligation to boost the resources of the International Monetary Fund, said a Chinese senior finance official on the sidelines of the G20.

"China is confident the IMF will realize its $430 billion resources increase, and China will surely pitch in," Zhu Guangyao, vice-finance minister, told reporters on Sunday, without saying how much China will contribute.

Zhu Guangyao, China's vice-minister of finance.

In April, during a G20 meeting of finance ministers and central bank governors in Washington DC, the G20 countries said that in addition to the quota increase under the 2010 reform, there are firm commitments to increase resources made available to the IMF by more than $430 billion.

The G20 summit in London in 2009 agreed on a $500 billion increase in IMF resources. In the lending project, China invested $50 billion, said Zhu.

"This additional $430 billion is to help all members at risk of a (financial) crisis and it is not earmarked for any special region," Zhu explained, adding the amount will be raised through the lending and issuing of bonds, and will be considered an investment because countries who contribute will later receive interest.

The G20 leaders confirmed the 6-percent shift of quota shares to emerging market and developing countries (EMDCs) in the IMF during the G20 summit in 2010, and were committed to achieving the quota shifts by the annual meetings in 2012.

Through reform, China's quota in the IMF has increased to 6.394 percent, said Zhu.

"Since the IMF is an international financial institution based on quota, it is inevitable that the countries' positions will be closely related to the quotas they enjoy," said Zhu.

Chinese leaders have on many occasions said that China will not step back from boosting IMF resources, based on international consensus.

G20 host Mexico has said it will use this summit to push the world's largest economies to increase the resources of the IMF and build the fund's capacity to help the euro crisis.

Mexican president Felipe Calderon said last week that he wanted this summit "to strengthen and establish concrete commitments to strengthen international institutions, particularly the International Monetary Fund, so that it is a strong and flexible tool for confronting the economic crisis".

The BRICS countries made commitments in the April meeting on the IMF resources increase, "so during this summit a specific amount will be announced", said Zhu, referring to Calderon's remarks earlier about the $430 billion increase to be achieved in Los Cabos.

Countries can contribute to the IMF resources increase through three methods: general resources account, trust account and management account.

Zhu said China will invest through the general resources account, which is also the consensus of the G20. The US at first opposed this decision by China, saying it will increase the risk exposure of the IMF itself, but later it made some compromise.

"From the perspective of safety of investment, the general resources account is the safest one, since it enjoys the credit of IMF (while the trust account cannot)," Zhu said.

Contact the writer at yuweizhang@chinadailyusa.com