SAO PAULO, Brazil – Brazilian President Luiz Inacio Lula da Silva told international finance ministers Saturday that developing countries must be given a greater role in finding solutions to the world’s financial crisis.
“This is a global crisis and demands global solutions,” Lula said in opening remarks at a meeting of the Group of 20, an organization of industrialized and developing nations. “The crisis started in advanced economies. It is a result of the blind belief in the market’s self-regulation capacity and, by and large, of the lack of control of the activities of financial agents.”
During the two-day gathering in Sao Paulo, officials are expected to discuss how the economic downturn has affected their countries and how governments can coordinate responses and stimulus efforts. Lula called on the group to come up with proposals for “substantial change of the world’s financial architecture,” saying the global credit crunch is hurting the world’s poor.
Brazil and many other developing countries want to be included in meetings of the largest industrial nations, where the recent crisis originated. The G-20 began in 1999 during the Asian financial crisis, but the group’s meetings, notwithstanding the emergency session in Washington scheduled for this week, have not included presidents and prime ministers.
Brazilian Finance Minister Guido Mantega said Saturday that his country refused to be “mere coffee drinkers” on the sidelines of the richer nations’ meetings.
Many developing countries want to restructure organizations such as the International Monetary Fund and World Bank to give the nations more of a voice in decisions, said Jenilee Guebert, a senior researcher with the G20 Research Group at the University of Toronto.
“Right now, the emerging economies essentially have no voice within the IMF-World Bank system,” she said. “They want to be included. They want a bigger role in the international system. … We live in a globalized world, and they just feel that seven countries or eight countries shouldn’t be representing the whole world.”
Canadian Finance Minister James Flaherty said the countries also are discussing further interest rate cuts, Bloomberg reported.
Emerging economies have suffered during the crisis as investment funds fled for safer places, stock markets tumbled and local currencies lost value against the U.S. dollar. In Latin America, falling commodity prices have hit particularly hard because of a dependence on exporting oil, minerals and agricultural products.