London, April 2 (ANI): Prime Minister Dr. Manmohan Singh has said that there is a need to substantially increase the existing resources for the International Monetary Fund (IMF) to the tune of 500 billion dollars in the next two years as an interim step and also to double the IMF quota in near future for the developing countries.
"We must declare our resolve to increase the resources available with the IMF substantially, by around 500 billion dollars over the next two years. This can be done initially through bilateral arrangements, an expansion of the NAB and other borrowing by the Fund. However, we should also signal that these are interim steps pending an increase in Fund quotas. The next quota review, normally due in 2013, should be advanced as much as possible, and we should aim at a doubling of IMF quotas at the very least," Dr. Singh said during the official dinner hosted by British Prime Minister Gordon Brown.
Dr. Singh said that the conditions for use of resources should be made more flexible than they are at the present.
"In addition to increasing resources with the IMF, we should also signal that the conditions associated with the use of Fund resources are made more appropriate and flexible. Unless this is done, countries will prefer to build foreign exchange reserves which would be counter-productive in current circumstances," Dr. Singh observed.
"We should also agree on a fresh allocation of SDRs (special drawing rights) of around 250 billion dollars. This would provide the developing countries with about 80 billion dollars of usable resources at a time when liquidity is exceptionally tight," said Dr. Singh.
"We support the sale of a part of the Fund's gold to support concessional lending to low income countries thorough the Fund's concessional windows," Singh added.
Dr. Singh stated that the multilateral development banks could play an important role in maintaining the flow of resources to developing countries over the next two years. "As an immediate step, we must endorse a 200 per cent increase in the capital of the Asian Development Bank which can be approved by its Board of Governors in May," Dr. Singh said.
"The World Bank should also expand its lending in the next two to three years in a manner which helps to fill the gap left by the withdrawal of private capital flows. By directing its lending to infrastructure development and recapitalisation of the banks, it would help to support contra-cyclical policy in a manner which stimulates an early resumption of growth in these economies," said Dr. Singh while suggesting that to perform this role, the Bank's present single borrower limits need to be urgently reviewed.
"We must also take concrete steps to revive trade finance which has been badly hit in part, I regret to say, because of financial protectionism. Export credit agencies can expand their lending.
The IFC pool to support trade finance can be substantially expanded, with bilateral assistance from countries in a position to contribute," Dr. Singh said. (ANI)