Economic Times, India

Financial crisis top on agenda at IBSA summit

11 October 2008

IST, ET Bureau

NEW DELHI: When leaders of India, Brazil and South Africa meet next week for their annual trilateral summit, the one issue on top of their minds
will be the unfolding financial crisis.

Though the three countries have not been directly affected by the crisis, there have already been indirect fallouts. There have also been calls for the emerging economies to take part in finding a solution for the ongoing crisis.

Prime Minister Manmohan Singh, South African President Kgalema Motlanthe and Brazilian President Luiz Inácio Lula da Silva are likely to discuss the financial crisis at the IBSA summit here on October 15. The position of the three countries is likely to be reflected in the Delhi Declaration, which will be adopted at the end of the summit.

Sources said that the unfolding financial crisis, which has the capacity to hit areas like exports, has been worked into the agenda especially amid calls for cooperation from India and Brazil. Discussions are expected to include the issue of restructuring of the global financial architecture, which has been an issue of discussion among the Group of 20 countries (G-20).

Last year there was a discussion on the ongoing debate on restoration of the financial architecture. South Africa was the head of G-20 and in that context India had asked South Africa to provide leadership when it comes to the financial crisis,'' said Sachin Chaturvedi, fellow at the Research and Information System for Developing Countries.It’s important that these countries should come together in terms of restructuring of the financial architecture and lay out a roadmap,’’ he added.

With the global crisis unfolding dramatically, the US has called an emergency meeting of the G-20 countries along with the G-7 meeting to look at ways of dealing with the crisis. Finance minister is representing India at the weekend meeting.

The US has said that discussions would revolve around how emerging economies would coordinate with the crisis hit countries to lessen the effects of global market turmoil and the economic slowdown on all of our countries.'' India has already taken a lead in criticising institutions like the UN and the IMF for failing to take any action even as one of the largest economic crisis is unfolding. He had said that the investment banking world had destroyed world liquidity, and increased financial risks and bankruptcies.The impact on the developing world would be profound. Projects are already stopping because of the lack of liquidity and financing. The debt crisis would become worse. The decline in commodity prices and exports would hurt the developing world,’’ he had said.