The International Monetary Fund (IMF) needed to play a more assertive role in helping to resolve economic crises “sooner rather than later” and South Africa would, therefore, support moves to bolster the financial resources of the IMF to enable it to make decisive earlier interventions.

Reporting back on the outcomes of the World Bank-IMF Annual Meetings, which took place in Washington DC from September 23 to 25, Finance Minister Pravin Gordhan argued that there was no other “reasonably credible institution” that could take such actions.

The possibility of providing support to the eurozone, through the IMF, was also endorsed by the finance ministers from the Brazil, Russia, India, China and South Africa, or Brics, bloc, who met on the sidelines of the annual meeting.

Such support would be designed to deal with current, as well as possible future, challenges to global financial sustainability, and might involve a shift in the composition of countries that were either borrowers or creditors within the global system.

South Africa, Gordhan said, was convinced of the need for “global solidarity” and that all countries had to “contribute something” to the solution, regardless of whether that contribution was political or financial.

The country would, therefore, support moves to increase the IMF’s financial “firepower” from the prevailing levels of about $400-billion to “a substantially increased amount” to enable it to play a more active role in resolving the current crisis.

“By virtue of our holding within the IMF, that could mean a couple of hundred-million US dollars. But that’s minor compared to what the big players would have to contribute,” Gordhan explained.

South Africa would also seek to participate in the formulation of policies around the manner in which that enlarged capital pool should be used. It is particularly keen to see developing countries cushioned from any possible fallout.

“Some of the calculations suggest that, if this crisis spreads to Italy and Spain, you will need over $2-trillion to be able to intervene,” Gordhan outlined, noting that a recapitalized IMF fund could complement the €750-billion European Financial Stability Facility, or rescue package.

Such support recognised the interconnected nature of the global economy and the need to contain the potential contagion effects within Europe and outside of the territory.

“We welcome efforts of European countries to address the sovereign debt crisis and restore confidence. However, more needs to be done to address weaknesses in bank balance sheets and to accelerate further structural reforms to ensure stronger, sustainable growth in the Euro area,” Gordhan said, adding that it remained vital that the July 21 rescue package be ratified by all 17 eurozone countries by October 14.