Busan, South Korea: The IMF needs more funds after supporting Greece's bailout and should "very significantly" increase the amount of special drawing rights, the head of the fund's policy-steering committee said yesterday.
Egyptian Finance Minister Yousuf Boutros-Gali told Reuters that Greece's problems were not over yet and there were doubts about its ability to implement the reforms demanded by the IMF and European Union in return for a 110 billion euro (Dh496 billion) aid package.
"We are not out of the woods," he said in an interview. "The measures they have been required to implement are fairly tough. And there are in some areas doubts whether they are able to continue implementing such tough measures."
Boutros-Gali is the first official from an emerging economy to head the IMF's International Monetary and Financial Committee, and said the fund should raise money from members by issuing more SDRs, its de facto currency, instead of borrowing.
"If we are going to start including funds made available to Europe, then the IMF is not properly resourced," he said.
"We need to increase SDRs very significantly. But we also need to shift the structure of resources from mostly borrowing and some SDRs to mostly SDRs," he continued, adding that members had been talking about a doubling of the SDR allocation.
Two allocations of SDRs last year — the first in 30 years — increased the International Monetary Fund's stock of SDRs almost 10-fold to total about SDR 204 billion. China has suggested emerging economies buy more SDRs in return for increased voting rights.
G20 finance ministers and central bank chiefs are meeting in the South Korean port city of Busan to lay the groundwork for G20 leaders' meetings in Toronto on June 26-27 and in Seoul in November.
Unlikely deal
Boutros-Gali said that he was working on boosting emerging economies' voting rights in the IMF, but that it was unlikely a deal would be reached by the Seoul summit — an informal deadline set by world leaders.
"It's not easy and it's not straightforward. Given the problems I think there's a slightly less than 50 per cent chance that it will succeed," he said.
SDRs are made up of a basket of dollars, euros, yen and pounds, and Boutros-Gali said diversification was needed over the long run.
