A meeting of emerging economies today will consider a Brazilian proposal to buy European bonds to help crisis-hit euro zone countries, South Africa’s Finance Minister Pravin Gordhan says. But Gordhan said it was just one idea that would be examined during the meeting in Washington of BRICS countries Russia, India, China, Brazil and South Africa.
“It is something we will have to evaluate,” Gordhan told a news conference. “Those of us that have the ability to contribute to that should perhaps consider that,” he added. He said it was more important for emerging and developing economies to work together within the Group of 20 to find a global solution to the euro zone sovereign debt crisis.
“At the end of the day buying European bonds is just one idea, but more importantly is that we reestablish levels of cooperation and give-and-take that we established post 2008 because that is what we require again,” Gordhan said. “We will examine what is it as BRICS and emerging markets we need to contribute into an overall solution that will take the globe into a more stable direction,” he added.
Gordhan said IMF First Deputy Managing Director David Lipton told a meeting of Commonwealth finance ministers in Washington earlier in the day that solutions would be forthcoming “within the next few days.”
“We were informed that there are some solutions coming up in the next few days and we certainly look forward to that from some of the G7 countries,” Gordhan added. He said the lack of decisive answers to the euro zone crisis was prolonging the perception of increasing risk. “What Europe requires is a well-established fact by Europeans themselves and it’s not for us to tell them what to do,” he said, “The only question is when can they cross the bridges they need to cross and how can all the rest of us collaborate with them?” Gordhan added.
The South African rand has been battered by risk aversion as concerns over the euro zone have increased and investors have dumped emerging market assets. The currency extended losses to 3.6 percent against the dollar on Wednesday, hitting 7.73 to the dollar, its weakest since July 6, 2000.
“It’s a reflection of what is happening in the rest of the world and we are feeling the impact,” Gordhan told Reuters when asked about the rand’s weakening.