IMF's Lagarde Heads to Moscow for Debt Crisis Talks

by lexie Sun Nov 06, 2011 11:27 am

November 6, 2011 at 10:54 AM ET

IMF's Lagarde Heads to Moscow for Debt Crisis Talks

MOSCOW (Reuters) - Financial aid to rescue Europe's debt-stricken countries is set to dominate talks between Christine Lagarde, the head of the International Monetary Fund, and Russia's president, government and monetary officials during her visit to Moscow.

Lagarde, scheduled to arrive on Sunday evening for her first visit to Russia since becoming the managing director of the IMF, will spend two days convincing Moscow to chip in some of its petro dollars to boost bailout funds for the euro zone.

From Moscow, Lagarde is to travel to China and Japan.

In a typically terse statement, the Kremlin said that President Dmitry Medvedev will talk with Lagarde about the "current issues of today's global economy and its finances, international efforts to stabilise them ... as well as further steps to stabilise the global financial system."

Moscow has said it is willing to talk bilaterally with affected countries, but it has been very careful in pledging cash to the eurozone as a whole.

Finance Ministry officials have said repeatedly that Russia needs clarity and full briefing on Europe's rescue plan, including who would carry financial responsibility for the aid.

Russia's government has pledged so far only up to $10 billion and only to be used through an IMF mechanism.

It is a fraction of the 1 trillion euros that Europe's leaders aim to have available through the European Financial Stability Facility (EFSF).

The $10 billion is also a fraction of Russia's gold and foreign exchange reserves, which now stand at more than half a trillion dollars and are the world's third-largest.

It is also old money - Russia said in early 2009 it was ready to invest $10 billion in bonds that the IMF was considering issuing. Those bonds were to be potentially tailored to the so-called BRIC countries, which aside from Russia include Brazil, India and China.

At the time, the bonds were planned to be issued in an IMF quasicurrency called special drawing rights, or SDR, created in 1969 as a way to support its member countries.

SDRs are allocated according to members' IMF quotas, which are broadly based on a country's relative size in the world economy and which determines its voting power.

Late last week, sources told Reuters that the Group of 20 most industrialised global economies is considering boosting global liquidity through a special allocation of SDRs.

http://www.nytimes.com/reuters/2011/11/06/business/business-us-russia.html?src=busln