By ABHRAJIT GANGOPADHYAY And ANANT VIJAY KALA
NEW DELHI—The Brics group of nations expressed concern Thursday over the West's slow pace at giving developing nations greater control over the International Monetary Fund, and they bashed Western countries' loose monetary policies for causing instability in global financial markets.The leaders of Brazil, Russia, India, China and South Africa, at a summit in New Delhi, outlined modest measures that are part of the group's efforts to restructure a global financial system long controlled by Western nations and to reduce their dependence on exports to the developed world.
The Brics nations said they also are asking their finance ministers to study the possibility of setting up their own development bank, an institution that they hope could offer an alternative to the U.S.-dominated World Bank.
For now, Brics countries, especially China, continue to rely to a great extent on the U.S. to spur their growth. Big disagreements between Brics members have reduced the body's effectiveness, especially tensions between India and China over territorial disputes and Beijing's massive trade surplus with New Delhi.
But the group also captures a dissatisfaction with Western economic leadership, especially amid the current global economic turmoil. The Brics leaders, in a joint declaration, blamed the West for lax monetary policy that the group said had led to "excessive volatility in capital flows and commodity prices," hurting their economies.
The Brics nations held their first annual summit three years ago in Russia amid the onset of the global financial crisis. The group, which accounts for 40% of the world's population and a fifth of the global economy, set out to remodel the world's financial architecture amid rising anger over Western dominance of the system at a time of financial meltdown.
China, by far the largest economy of the five, would like a greater say at the IMF, and it is pushing for its currency, the renminbi, to play a larger role in global trade, challenging the U.S. dollar and euro.
The group also sees trade among its members eventually helping to reduce dependency on exports to the U.S. and Europe—by far their largest growth engine but one that is under pressure due to Western nations' economic problems. Trade among Brics members, growing at 28% annually, stands at $230 billion a year and is expected to touch $500 billion by 2015.
The Group of 20 major economies agreed in 2010 to a raft of changes at the IMF to give developing economies a greater say in decision making. But the Brics nations said Thursday they were frustrated by the slow progress.
The changes require approval in domestic legislatures, but fewer than half of the IMF's members have signed off. IMF managing director Christine Lagarde in March urged nations to "quickly" implement the changes.
The group's declaration said they were "concerned at the slow pace of quota and governance reforms in the IMF." The reforms agreed to in 2010 should be implemented before the IMF and World Bank annual meeting in October, it added.
"This dynamic process of reform is necessary to ensure the legitimacy and effectiveness of the fund," the declaration said.
The group said it hoped a meeting of the G-20 nations in Mexico in June would address issues of global financial turmoil. And it said it welcomed the candidates from the developing world to take over the helm of the World Bank when its current president, Robert Zoellick, steps down in June.
The U.S.'s proposed candidate, Jim Yong Kim, a South Korea-born American physician, is viewed as a shoo-in for the job. The other two candidates are Nigerian Finance Minister Ngozi Okonjo-Iweala and José Antonio Ocampo, a Colombian economist.
The new World Bank leader needs to ensure the organization "truly reflects the vision of all its members, including the governance structure that reflects current economic and political reality," the Brics nations said.
The leaders also warned that growing tensions between Iran and the West over Tehran's nuclear program, which have driven crude oil prices higher, could derail chances of a global economic recovery.
"The situation concerning Iran cannot be allowed to escalate into conflict, the disastrous consequences of which will be in no one's interest," the declaration said.
The Brics nations said they recognized Iran's "right to peaceful uses of nuclear energy." Both India and China remain large purchasers of Iranian crude, a fact that puts them at odds with the U.S. as it attempts to squeeze Tehran financially in a bid to get it to give up its alleged nuclear-weapons program.
They also expressed their "deep concern" over the situation in Syria and called for an immediate end to violence.
Write to Abhrajit Gangopadhyay at Abhrajit.gangopadhyay@dowjones.com and Anant Vijay Kala at anant.kala@dowjones.com
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