20 June 2012
South Africa has committed US$2-billion of its foreign reserves to the International Monetary Fund’s (IMF) firewall fund to prevent future financial crises, the Presidency said on Tuesday.
“Along with fellow members of the G20, South Africa announced in Los Cabos [Mexico] that it is committed to supporting the IMF’s firewall fund,” the Presidency announced in a statement.
Collective efforts to counteract future crises were first proposed in November 2011 at the G20 summit in Cannes, France. “World leaders agreed to increase the resources of the IMF so that it can serve as a backstop in the event of further deterioration in the Eurozone situation.”
It was agreed that the resources could be used by all members of the IMF to stave off the risk of another financial crisis, which would likely lead to a sharp global slowdown and rising unemployment.
In April 2012, G20 countries and a number of other IMF members also confirmed their participation in the effort; commitments currently exceed $430-billion. “The funds will be available for the whole IMF membership and not earmarked for any particular region,” the Presidency said.
“The funds will be invested and earn interest, and [will] only be drawn down in emergency circumstances.”
South Africa was the only African country participating in the G20 summit which ended on Tuesday and sought to remind the world about the continent’s development agenda.
Leaders of the BRICS – Brazil, Russia, India, China and South Africa – nations also met on the sidelines of the G20 summit on Monday, represented by President Jacob Zuma, Chinese President Hu Jintao, Brazilian President Dilma Rousseff, Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh.
The leaders agreed to boost co-operation within the group and also discussed the possibility of setting up a currency swap arrangement and a foreign exchange reserve pool within the five-member framework.