Numbers trick

30 March 2012 By Pierre Briançon

Finance chiefs are fiddling figures in an attempt to boost the nominal firepower of Europe’s bailout fund. The compromise is necessary to persuade the IMF to pledge more money as well. But the developing countries that have growing clout within the fund are unlikely to be fooled.

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Euro zone finance ministers agreed to temporarily almost double their financial backstops on March 30 as one of the final moves to end the sovereign debt crisis, although Germany continues to favour a smaller increase.
A statement by the ministers showed that in case of an emergency over the next 15 months, the euro zone could raise the combined firepower of its two bailout funds to 940 billion euros from 500 billion today.
The leaders of Brazil, Russia, India, China and South Africa said after their summit meeting in New Dehli on March 29 that the “ongoing effort to increase the lending capacity of the International Monetary Fund will only be successful if there is confidence that the entire membership of the institution is truly committed” to reforms that would increase emerging countries’ influence in both institutions.

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