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Business

India to buy IMF bonds worth $10 billion

Text by NEWS WIRES

Latest update : 2009-09-05

India says it will purchase 10 billion dollars worth of International Monetary Fund bonds. The move, which follows China's pledge to buy bonds worth a total of $50 billion, is set to boost the IMF's lending capacity.

AFP - The International Monetary Fund on Saturday welcomed India's commitment to buy 10 billion dollars worth of IMF bonds.

"I welcome the announcement by India of its intention to support the Fund's lending capacity through the purchase of up to 10 billion dollars worth of IMF notes" IMF director Dominique Strauss-Kahn said in a statement.

Indian Finance Minister Pranab Mukherjee announced the purchase at a G20 finance ministers meeting in London.

The Indian pledge comes after China said it would snap up 50 billion dollars worth of the asset, created in July this year as a means of propping up the Washington-based institution's finances.

"This investment will help underpin the international financial system by ensuring the Fund has adequate resources to meet the financing needs of its membership," said Strauss-Kahn.

China's was the first note purchase agreement in the history of the 186-nation body.

Brazil and Russia have also expressed an interest in the new asset, which has been embraced by top emerging markets as they seek to increase their punch on the world-stage.

In a statement, the Indian government said it expected more IMF votes and eased access to financing -- in IMF jargon an "increased quota" -- as a quid-pro-quo for the purchase.

"We fully expect that the next general quota review, which is now agreed to be concluded by January 2011, will result in the long overdue substantial re-balancing of quota and voting power in favor of emerging market economies and developing countries," the statement said.

Indian officials said the buy would not stretch the nation's finances, and would be paid in part though foreign exchange reserves.

 

Date created : 2009-09-05