China Puts IMFs Lender Status at Risk China is stepping up its role as the lender of last resort to some of the worlds most financially strapped countries. Chinese officials signalled on the weekend they are willing to expand a $24 billion currency swap programme to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments. By lending to nations shut out of over seas capital markets, Chinese President Xi Jinping is bolstering the countrys influence in the global economy and cutting into the International Monetary Funds status as the go-to financier for governments in financial distress. While the IMF tends to demand reforms aimed at stabilising a countrys economy in exchange for loans, analysts speculate that Chinas terms are more focused on securing its interests in the resource-rich countries. “Its always good to have IOUs in the back of your pocket,“ Morten Bugge, the chief investment officer at Kolding, Denmark-based Global Evolution AS who helps manage about $2 billion of emerging-market debt, said by phone. “These are Chinas fellow friends and comrades, and to secure long-term energy could be one of the motivations.“ The rouble jumped 4.9 percent to 55.8 per dollar in Moscow on Monday after Hong Kong-based Phoenix TV cited Chinas Commerce Minister Gao Hucheng as saying that expanding the currency swap between the two nations would help Russia. The ruble has gained 10 percent over the past two days, paring a selloff thats made it the worlds worst performing currency over the past six months. Unlike Ukraine, where the pro-west government received a $17 billion IMF-led bailout this year, Russia, Argentina and Venezuela are often at odds with the US and its allies, keeping them out of the reach of the Washington-based institution.
Posted on: Wed, 24 Dec 2014 06:15:36 +0000