FMs of BRIC say protectionism would retard global recovery
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Last Updated: Saturday, September 05, 2009, 00:00
  
London: India on Friday said protectionist moves in the name of regulatory and financial reforms would retard global economic recovery at a time when 30 member-countries of WTO decided in New Delhi to resume the stalled Doha Round of negotiations for a global trade agreement.

A joint communique, issued after a two-hour meeting of finance ministers of BRIC nations ahead of G-20 Finance Minsters' conference here, said the ongoing regulatory reforms in the financial sector should not impede cross-border capital flows and investments.

Failure to do so would risk compromising on the expected recovery of the world economy, they said and added that protectionism remains a real threat to the global economy and should be avoided both in direct and indirect form.

“We believe that governments should work towards prompt and successful conclusions of the WTO Doha Round in a way that ensures an ambitious, comprehensive and balanced outcome."

Later talking to reporters, Indian Finance Minister Pranab Mukherjee said in the name of fianacial reforms, protectionism should not be allowed to creep in.

Meanwhile in New Delhi, trade ministers of 30 nations today in an informal WTO ministerial meeting decided to resume global trade talks, which ended in a deadlock over farm subsidies in Geneva in July last year.

Mukherjee and his counterparts from Russia, China and Brazil asserted that this is not the time for operationalizing an exit strategy, which means that stimulus packages for slowing down economies must be continued.

Mukherjee also said India will lend up to USD 10 billion to IMF to make funds available to countries in need. It will not load the government and will not stretch its resources, already hit by a slowing down economy.

India said that such bilateral financing are only a "temporary bridge" and IMF should reform the quota process in favour of emerging and developing countries.

Mukherjee told reporters that "what is needed now is reform of international financial institutions taking into account the ground reality".

"The reform of international financial institution is crucial to insure a stable and balanced global economy. For the IMF and the World Bank Group, the main governance problem, which severely undermine their legitimacy, is the unfair distribution of quotas, shares and voting power."

Priority should be given to substantial shift of quotas and shares in favour of developing countries, he said.

"The big countries proposed setting up of a target for that shift of order of 7 per cent in the IMF and 6 per cent in the World Bank group so as to reach an equitable distribution of voting power between advanced and developing countries."

"This would lead the overall share of emerging market and developing countries in the IMF and World Bank to correspond roughly to their share in the world GDP," Mukherjee said.

Bureau Report


First Published: Saturday, September 05, 2009, 00:00


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