Finance Leaders Wrap Up World Bank, IMF Talks
JACKI LYDEN, host:
As governments around the world are reacting to this public health emergency, global finance ministers have been meeting in Washington this weekend. They're here for the spring meetings of the International Monetary Fund and World Bank.
And NPR's Tom Gjelten has been watching.
Welcome back, Tom.
TOM GJELTEN: Hi there, Jacki.
LYDEN: Tom, I know the Mexican finance minister was at these meetings. Has the IMF or the World Bank address the swine flu outbreak?
GJELTEN: Yeah, Jacki. Actually, the World Bank moved very quickly to approve a couple of loans for Mexico. One is $25 million. That'll be dispersed immediately to go for medicine and also for medical equipment, largely diagnostic equipment, that's needed to determine exactly what's going on medically with this disease.
And then in addition to that, another $180 million loan to help Mexico build up its medical capacity, its hospital capacity, its health capacity because they know that Mexico is going to have to be dealing with a serious health crisis here in the next few weeks.
LYDEN: Now, as we know, the main purpose of these meetings has been to work out the details of $1 trillion plan to bolster countries in economic difficulty. And we first heard about this plan three weeks ago at the G-20 meeting in London, and we discussed it here on this program. How is that coming together?
GJELTEN: Well, you know, Jacki, now, they're saying that that goal of $1 trillion is for the end of the year. In fact, I think that that figure was sort of thrown out there, in part, just to make a point that the International Monetary Fund is going to have a major new, much, much bigger role in turning around the global economy, potentially $1 trillion role. But we're still a long ways from seeing governments actually come up with that kind of money.
It will be a combination of existing funds and new money. Countries would have to kick in about $500 billion in new contributions. And so far, we're only about halfway there, Jacki. But when you ask officials about it, they sort of back off and say this is complicated and challenging and lots of negotiations are needed. And they say it's likely to be many months before they reach that goal.
LYDEN: What are the main obstacles?
GJELTEN: Well, there's been a kind of a interesting role reversal in the international financial world. Some developed countries that we think of being on - mainly on the donor side are now actually asking for help, while some of the developing countries are now being asked to contribute because their economies have been growing so rapidly and they've accumulated a lot of reserves, like China, Brazil, India, even Russia.
So, to an extent, Jacki, the relationship between developed and developing countries has slipped a little bit. The economic geography of the world has changed, but on the other hand, the political architecture has not. So, these new countries who are being asked to contribute to this $1 trillion fund feel that they're underrepresented politically at the IMF and the bank.
The developed countries, particularly Europe, meanwhile are overrepresented. Just to give you one example: China, which is now a huge part of the global economy, has less votes at the International Monetary Fund and the World Bank than Belgium does.
So, this imbalance makes some of these countries, like China, reluctant to make big IMF contributions until they see some real political change in these institutions.
LYDEN: How has that played out this weekend?
GJELTEN: Well, there's been a lot of negotiations, and some compromises are emerging. Some of these countries are saying they're willing to loan money to the IMF on a short-term basis without making a permanent commitment. Essentially, the IMF would sell bonds just like the U.S. government does. And these emerging economies could buy these bonds. That's what they've been working on this weekend. IMF officials say they're actually pretty far along in the negotiation of that new idea.
LYDEN: NPR's Tom Gjelten.
Thanks a lot for checking in with us, Tom.
GJELTEN: You bet, Jacki. Transcript provided by NPR, Copyright NPR.