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17 Nov, 2008 15:07

Russia to chip in, as focus turns to stronger economic policies

Russia will help the International Monetary Fund to support countries grappling with the financial crisis, following last weekend's G20 summit.

Global macroeconomic imbalances are the main cause of the meltdown of the worlds financial markets over the last year and a half  – that's what leaders agreed at the G20 meeting in Washington this weekend, according to Russia's Deputy Finance Minister Dmitry Pankin.

He says the threat of asset bubbles forming still exists and a common effort is needed to prevent them.

“The question is the coordination of macro economic policy. Everyone agreed that the reason for this bubble was lack of a strong economic policy, low interest rates with good economic environment, and this policy was linked with such bubbles.”

The G20 nations, which generate around 80% of world GDP, are united in wanting to give more responsibility to the International Monetary Fund. For its part the IMF said that an extra $100 Billion is needed to provide support for countries struggling through the crisis.

Russia, as well as other emerging economies, could be one the nations donating the money to IMF. It's said it could offer a billion dollars. Howard Davies, Director of the London School of Economics says that if emerging nations want to be at the decision making table, then they will need to pay for the place.

“If Russia and other countries like China want to be part of the IMF and the World Bank, that brings a benefit in terms of decision making but also comes with a cost. Those countries will have to contribute to the cost of solving problems around the world.”

Currently, by raising the key Central Bank rate, and imposing new import duties, Russia is going against the flow of the other countries fighting the crisis. Prime Minister Vladimir Putin said on Monday that Russian will comply with decisions made at the G 20 summit, but it's not going to compromise its national interests.

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