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  • Russia's Deputy Finance Minister Sergei Storchak

Storchak: G20 forms working group on expanding capital

The International Monetary Fund (IMF) has stated the need to increase its resources by $500 billion, including the $200 billion that European countries have promised to contribute, to meet the growing global demand for financing.

According to the IMF estimates that prompted the decision, the overall global demand for financing will reach $1 trillion over the next few years.

"The IMF remains at the center of the effort to overcome the debt crisis plaguing most European countries. The Fund needs resources, which should be added to the amounts that European governments themselves are providing to countries experiencing the biggest financial difficulties," Russia's Deputy Finance Minister Sergei Storchak said in the interview with RIA Novosti.

He said the planned increase of the IMF capital was discussed at the meeting within the context of a larger reform of the international monetary and finance system and settlement of the European countries' debts. "The IMF has provided a large private report explaining this whole range of complicated issues," Storchak added.

Representatives of the G20 discussed possible ways to expand IMF capital and amounts needed, but no final decision was made except the decision to set up a working group, he said. "We need a compromise, and this working group will help eliminate the current disagreements between the European and non-European countries, which are fairly serious," the Russian official noted.

He believes that the most important achievement is a common understanding of the global nature of the potential consequences in the event that the eurozone debt problems are not remedied that the G20 managed to formulate. "We have reached absolute consensus here, so, much will now depend on how successful the negotiators will be in persuading the sovereigns to move their positions closer together," Mr. Storchak added.

As for Russia's position, that consensus would have been impossible without Russia's consent, he emphasized. "The President of Russia said during the previous G20 meeting in Cannes that Russia was ready to contribute financial assistance to ailing European economies if there is a comprehensive program in place to address the eurozone's financial problems," he said.

As it is difficult to assess this issue in all of its complexity, a decision was made to act step by step, he explained. In any case, there is a general awareness of the expediency of participating in the effort. "For the first time in post-war history the developed countries, rather than the emerging countries, find themselves in a deep crisis. The amounts being cited as reasonable and necessary to overcome the consequences of the debt crisis are actually 10 times the sums used to overcome similar crises in South America, Russia and Asia, which is also a first," Storchak emphasized.

According to his estimate, in Russia's case $25 billion would have been enough, but much higher figures are being discussed now.