“It’s impossible, I’m certain of that,” Storchak told reporters, according to Bloomberg. “If the BRICS are going to act to overcome the eurozone’s financial problems, then it will be based on the possibilities presented by working through the International Monetary Fund.”
Finance ministry and central bank officials from Brazil, Russia, India, China and South Africa met before this week’s IMF annual meeting to discuss coordinating policy as Europe reels from a sovereign debt crisis and growth slows in the US. There is a “high” danger that Greece will not fulfill all of its debt obligations, Storchak said.
“But whether that means creditors, Greek debt holders, will declare them in default is still a question,” he said. “They might not.”
Declaring Greece in default with the idea of triggering covenants in the country’s debt would be a serious step for creditors, he said. “That would mean, at a minimum, a haircut and then maybe even cutting off part of the body.”
Neither Brazil nor other members of BRIC, which began including South Africa in its meetings earlier this year, proposed a joint effort to help Europe going into Thursday’s meeting, Storchak said. Russia would not want to provide individual help to a country like Greece without seeing a debt stability analysis like those required of Paris Club borrowers, Storchak said.
Different government procedures among the countries make joint action such as a loan or buying bonds impossible, Storchak said.
“Sovereigns aren’t banks, they aren’t able to provide a syndicated loan,” he said. “Methodologically, that would be a fairly difficult thing to do.”
Working through the IMF remains the “most practical and pragmatic path”, he added.
Finance Minister Alexei Kudrin said on Monday that countries with “major reserves” might consider options to help ease Europe’s sovereign debt crisis.
The countries said in a statement after their meeting that they would provide support “if necessary” through the IMF or other global financial bodies. The BRICS are also “concerned with the slow pace of quota and governance reforms in the IMF”.
With work lagging on implementing changes agreed in 2010, BRICS are more likely to contribute to the new agreement on borrowing as a way to help through the IMF than trying to further boost their sway by raising their shareholding, Storchak said.
The Telegraph
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