Brazil, Russia Trade Treasury Bills For IMF Clout

Brazil and Russia are set to unload US Treasury bonds as they acquire $10 billion each of new International Monetary Fund (IMF) securities designed to bolster the institution's aid programs, officials in the countries said Wednesday. The moves are part of a bid by the so-called BRIC nations -- Brazil, Russia, India and China -- to play a bigger role at the IMF and other international institutions...." [The Wall Street Journal/Factiva]

Xinhua writes that "...Brazilian Finance Minister Guido Mantega...said the [IMF] loan will be made in the form of bonds, thus it will not affect Brazil's foreign exchange reserves, which currently total about $200 billion. With the loan, Brazil will join the group of 47 countries which regularly finance the IMF's operations. 'In the past, the IMF helped Brazil. Now, Brazil will loan to the IMF to make the international trade viable,' Mantega said...." [Xinhua/Factiva]

AFP adds that "...IMF Managing Director Dominique Strauss-Kahn welcomed the move, saying 'Brazil once more reaffirms its strong role as a leading emerging market economy.' He added, in a statement: 'The Brazilian authorities have shown great leadership and engagement in the whole process of IMF reform and expansion of our funding, and I am pleased that Brazil is clearly showing its strong support to the international economic and financial system.'..." [Agence France Presse/Factiva]

US Lawmakers Back Increased Funding For IMF

Lawmakers on Wednesday said they support US Treasury Secretary Timothy Geithner's call to significantly increase funding for the International Monetary Fund (IMF). Senate Foreign Relations Committee Chairman Senator John Kerry said there was bipartisan support on the panel for providing additional resources. He spoke at a press conference following a meeting with IMF Managing Director Dominique Strauss-Kahn and World Bank President Robert Zoellick.

The US share of the IMF's New Arrangements to Borrow (NAB) is about 20 percent, meaning the US could contribute about $100 billion to the facility under the proposed expansion. In addition, Kerry said there was general agreement at the committee meeting for some amount of increase in IMF funding.

Strauss-Kahn said he supports not only the increase in resources but also more voting power within the IMF for emerging economies. Zoellick expressed concern about trade protectionism and warned senators about the negative effects of countries restricting imports. 'The danger of protectionism, whether of a creeping or overt type, would really make a situation that is very bad much worse,' said Zoellick.

IMF Sees An Even Deeper Recession

The International Monetary Fund (IMF) is poised to reduce its global economic outlook for the fourth time since October.

Speaking in Lisbon Tuesday, Teresa Ter-Minassian, an adviser to IMF Managing Director Dominique Strauss-Kahn, said the Fund now expects the world's gross domestic product to contract by 0.6 percent this year, compared with a January forecast for growth of 0.5 percent.

The eurozone economy was forecast to contract by 3.2 percent in 2009, she said. The US would shrink by 2.6 percent and Japan 5 percent, making it the worst-hit big economy. The IMF in Washington said the figures cited by Ter-Minassian were 'unofficial' and 'out of date'.

Until now, the IMF has only said it will cut its global 2009 growth forecast to 'below zero' after worse-than-expected fourth quarter data. Strauss-Kahn told Reuters last week that advanced economies were moving too slowly in ridding banks of problems assets, which could jeopardize a global recovery in 2010. "The scenario will be worse, but the managing director has already said this" Ter-Minassian said.

Global Growth Could Dip Below Zero In 2009: IMF Chief.

Global economic growth could dip below zero for the first time in decades in 2009, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn said today Tuesday.

The global financial crisis that has slashed international trade can now be termed the "Great Recession," Strauss-Kahn said in a speech to African central bank governors and finance ministers in Dar es Salaam, Tanzania today. "The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes," he also said "Continuing deleveraging by world financial institutions, combined with the collapse in consumer and business confidence is depressing domestic demand across the world."

The IMF had forecast in January that the global economy would expand 0.5 percent this year. The World Bank said in a March 8 report that the international economy was likely to shrink for the first time since World War II, and trade will decline by the most in 80 years.

In related news, it was also reported that "The International Monetary Fund (IMF) has urged donor countries to honor their commitment to African countries in the face of the global economic downturn".

The IMF chief pledged that it was not only a moral obligation but also a legal obligation for developed world to assist Africa and to form a new partnership with Africa through which the developed and developing worlds work together but led by African countries to better achieve the potential of the continent.

The gains of the past decade, during which many countries in sub-Saharan Africa saw sustained high rates of economic growth and rising income levels, are at risk,' IMF Africa Department Director Antoinette Sayeh said. The continent was relatively spared by the first phase of the global downturn last year but a bitter cocktail of dwindling remittances, shrinking export markets and looming investment cuts are beginning to cripple the world's poorest continent.

"It's a big shock," Sayeh told the FT, adding that the IMF's growth forecast of 3.25 percent could be revised down further if the world economy appeared set to contract.Even at its current level the forecast was below the population growth rate of many places, she pointed out. "So you won't see an increase in real per capita growth in some countries. You may see a decline. That's a major change from the recent past."