ARTICLE 2*

L. L. FITUNI

Doctor of Economics Institute of Africa, Russian Academy of Sciences

Key words: International monetary relations, capital flows, IMF quotas, BRICS, low-income countries, external debt, global governance the past few years, the World Bank and the IMF have expanded their support to low-income countries (LICs) in response to changing economic conditions and their increased vulnerability to the global economic crisis. The IMF has adjusted its lending instruments mainly to meet countries ' needs for short-term and emergency support more directly.

The IMF has more than doubled the resources available to low-income countries to $17 billion. for the period from 2009 to the end of 2014 All concessional loans were charged zero interest until the end of 2012. Since 2013, the IMF has approved a two-year extension of zero interest rates on loans to low-income countries. This extension is part of a broad strategy to support concessional lending to poorer countries as they grapple with the effects of the global economic crisis. ¹

DISADVANTAGED COUNTRIES

The IMF's support to low-income countries needed to be upgraded as the economic situation in these countries changed, and many of them became more open and integrated into the global economy. Some have made progress in achieving macroeconomic stability.

In the 1990s, the vast majority of low-income countries faced the traditional economic problems of the newly liberated states, which required radical strategic changes in economic policy. The focus of national Governments ' efforts has been to achieve debt relief through restructuring or partial debt cancellation. At the same time, the degree of openness and integration of many of these countries ' economies into the global economy is increasing.

Many low-income countries enter international capital markets, goods and services, attract foreign investment, develop their own private financial sectors, and use money transfers sent to their home countries by citizens working abroad.

However, increasing the degree of openness of the economy in the international arena and integration entails greater vulnerability and increased impact of the ups and downs of the global economy. This was clearly demonstrated by the sharp increases in global food and fuel prices in 2007 and 2008. For many LICs, the lack of monetary and financial resources to pay for food imports and foreign oil has been compounded by the global financial crisis, which has reduced the ability to attract external resources from financial markets or from Governments in developed countries. It became clear that a new generation of IMF lending mechanisms was needed to support a new generation of more stable but also more vulnerable low-income countries.

To increase the flexibility of its financial support, taking into account the diversity of low-income countries, the IMF created a Trust Fund for Poverty Reduction and Economic Growth, which was launched in 2010 and includes three new lending mechanisms:

- The Extended Credit Facility (ECF) of the IMF's participation, designed for medium-term balance of payments needs; it offers greater flexibility than before in terms of extending programs, timing structural reforms, and requirements for the official poverty reduction strategy paper;

* Ending. For the beginning, see: Asia and Africa Today, 2013, No. 5.

- The Stand-by Arrangements credit mechanism, which, unlike the usual IMF stand-by loans, is focused specifically on LICs for short-term lending needs;

- Accelerated Credit Facility (RCF) - Rapid financial support in the form of a single upfront payment to low-income countries with urgent funding needs, and offers follow-up payments to them in post-conflict or other vulnerable situations.

Countries can apply for non-financial support under the current economic policy support tool to receive economic policy recommendations. Finally, in 2010, as the first wave of the global financial and economic crisis was fading, the IMF also created a Trust Fund to help ease the debt burden after disasters.

Due to the growing financial needs of LICs during the global financial and economic crisis, the IMF's concessional lending was significantly increased during the acute phase of the global financial crisis - from $1.2 billion in 2008 to $3.8 billion in 2009. However, when it became clear that the EU economies were also to be bailed out, it was again reduced to $1.8 billion. billion in 2010 and $1.9 billion. - In 2011, by mid-2012, the IMF had approximately $10 million at its disposal. to provide soft loans to low-income countries for the period from 2012 to 2014.

In addition, low-income countries received more than $18 billion. of the IMF's $250 billion special Drawing Rights Allocation (SDK). These countries can use them by considering SDRs as additional assets in their reserves, or by selling their SDRs for hard currency to meet their own balance of payments adjustment needs. ²

QUALITATIVE SHIFTS

Even if we note that the majority of developing countries are lagging behind the developed countries and the leaders of catching-up development in terms of finance, we must recognize that over the past 20 years, the financial position of the developing world in the global economy as a whole has strengthened.

This was reflected primarily in the improvement of the institutional foundations of finance in Asia, Africa, and Latin America. They were consistently liberalized, corporate governance was improved, and legal issues of regulation and contract enforcement were resolved. Gradually, positive changes were accumulated that shape the business environment and investment climate (quality of human capital, favorable tax regimes, creation of appropriate infrastructure for business and reduction of unit costs for its management).

Under the influence of quantitative accumulation of many small positive changes, a qualitative breakthrough has taken place: the financial stability of the developing world has increased. This has resulted in a significant reduction in the risks of local currency and systemic banking crises, as well as sovereign debt crises. The banking sector has grown and improved qualitatively. Almost all countries have adopted international financial disclosure standards. The non-bank financial services segment is also making steady progress: the sectors of the national financial market that were almost nonexistent in backward countries - insurance, pension, etc. - are developing until recently.

The rapid growth of organized stock markets in Asia, Africa and Latin America has even led to an increase in initial public offerings (IPOs) on national platforms. Moreover, IPOs of large foreign companies are held on the stock exchanges of countries such as China, Brazil, the United Arab Emirates, and Singapore. The process of mergers and acquisitions (M&A) is being activated. Financial institutions of the leaders of catching-up development are successfully mastering modern securitization mechanisms - attracting financing by issuing securities secured by assets that generate stable cash flows (for example, portfolios of mortgage loans, car loans, leasing assets, commercial real estate that generates stable rental income, etc.).

ORGANIZED CAPITAL MARKETS

The BRICS countries (Brazil, Russia, India, China, South Africa) are making efforts to integrate and consolidate the potential of their stock markets. In 2011, at the 51st Annual General Meeting of the World Federation of Exchanges (WFE) in Johannesburg, South Africa, the five stock exchanges announced the creation of the BRICS Exchange Alliance. The Alliance consists of the Brazilian stock Exchange BM & FBOVESPA, the Russian Moscow Exchange, the Indian stock Exchange BSELtd (formerly known as the Bombay Stock Exchange), the Exchange and Clearing Organizations Corporation - HKEx (Hong Kong), representing the interests of China, and the Johannesburg Stock Exchange-JSE Limited (South Africa).

The Alliance's mission is to facilitate access to fixed-term contracts for the main stock indices of the BRICS countries for international investors, which will allow them to diversify their investment portfolios.

At the first stage of cooperation, derivatives were cross-listed on the main stock indices of the BRICS countries on all platforms of the Alliance countries, which is designed to help increase liquidity in the markets of the BRICS countries and significantly strengthen the position of the Alliance member countries in the international arena.

Cross-listing is performed for the following derivatives::

- futures contract for the Brazilian stock index IBOVESPA;

- futures contract for the Russian MICEX stock Index;

- futures contract for the Indian stock Index Sensex;

- Hong Kong Hang Seng Stock Index futures contract and Hang Seng China Enterprises Index futures Contract;

- futures contract for the South African stock Index FTSE / JSE Top40.

At the second stage of the project, the Alliance members plan to cooperate in the development of new products for subsequent cross-listing on their trading platforms. At further stages, it is possible to continue working together to create new tools and develop services ³.

So far, the success of the Alliance is rather modest. The Russian exchange RTS-MICEX was late, compared to other members, with the start of trading. However, there is not much excitement on the partner platforms due to the appearance of new financial instruments yet. For example, according to J. Burke, director of the Johannesburg Stock Exchange, interest is mainly attracted by Hong Kong's Hang Seng Index and Hang Seng China Enterprise Index, but the amount of contracts associated with them is only 37 million rand (approx. $4.2 million)⁴.

At the same time, despite the difficulties of the initial stage of international financial cooperation between private financial institutions of the BRICS countries, the very fact of its gradual deepening is evidence of the growing influence of emerging markets and developing countries on global capital flows and global financial infrastructure.

CONSOLIDATED FINANCIAL STRENGTH OF THE SOUTH

All sub-regions of the developing world today have their own international financial centers, including those of global importance. Some sub - regions have more than one. These centers are the hubs that link together the world's money and financial markets. This is where technological management of financial flows comes from. The most developed of the developing countries have developed their own foreign exchange, derivatives, equity, and bond markets that are more important than national frameworks. The most important feature of progress has been increasing the availability of financial services for businesses and the public.

Of course, these changes do not occur in all developing countries in the same way. The speed and depth of progress varies in different parts of the world. However, although this process is progressing very unevenly on a global scale, both geographically and over time, overall progress is evident.

In 2012, developing countries accounted for about a quarter of all global capital flows (up from 17% in 2000). Developing countries own 25% of external assets (including foreign exchange reserves) in the global economy (up from 13% in 2000). But their role as active investors (as opposed to just holding financial assets or foreign exchange reserves) is still generally relatively small, despite the impressive external investment expansion of the BRICS countries, Turkey, Mexico, or the rich Arab monarchies. There has been relatively little progress in this area, with developing countries accounting for only 15% of global foreign investment in 2012 (compared to 11% in 2000) ^.5

The consolidation and strengthening of the positions of developing countries is quite dynamic, but these positions are still small if we take into account the incredibly increased overall economic potential of these countries and its importance for the global economy. At the beginning of 2013, IMF analysts announced that they had adjusted their forecasts and, most likely, China will be able, if current trends continue, to overtake the United States in absolute GDP and become the first economy in ^{the world in 2017.6}

According to the basic postulates of economic theory, developing countries are net importers of capital, since, in general, their labor productivity is significantly lower than in developed countries. This is confirmed by the IMF's data on the ratio of external financial requirements to liabilities at the end of 2012. The gap between them has been narrowing over the past decade. Since the beginning of this century, it has decreased from $1,000 billion. (almost 30% of total liabilities) to just $240 billion, or 1.3% of $16,000 billion. current liabilities ⁷.

In absolute terms of foreign investment, Asia is far ahead of other developing regions. Of the total volume of external investment in the global economy, Asian countries (excluding Japan, Hong Kong and Singapore)invested 5.6% abroad in 2011, Latin America - 3.6%, and the combined Africa and Middle East region - 2%. At the same time, the structure of external assets of developing countries as a whole has changed significantly over the period 2001-2011. Although bank assets excluding foreign exchange reserves still form the basis of foreign assets, foreign direct and portfolio investments account for 35% and 17% of all financial assets abroad (excluding foreign exchange reserves), respectively.

The observed change is believed to reflect shifts in the economic and, in particular, financial behavior of more successful developing countries. And geographically, we are again talking almost exclusively about Asian states. An analysis of the structure of external financial assets of the group of countries under consideration over the past decade shows that there has been a gradual shift away from low-risk and highly liquid assets (which, in particular, include banking) towards higher-risk and less liquid ones. There is a gradual movement towards the structure of external assets typical for developed economies. For example, in the Euro area, FDI accounts for 30%, portfolio investment accounts for 38%, and banking assets account for 32%.

An attempt to differentiate emerging market economies by different specific areas of financial activity abroad provides the following picture. The most active countries promoting their direct investments abroad (public and private) in the period 2002-2012, taking into account the ratio of their FDI to GDP, were China, Russia and Malaysia. The largest portfolio investors (in relation to the amount of foreign portfolio investments to

GDP) were Chile, Peru, Kazakhstan and, with reservations, South Korea, which, according to the IMF criteria, is recognized as advanced (developed) the economy.

But many individuals and legal entities (including companies) in emerging market countries still preferred less "advanced" investment objects such as bank deposits to complex financial instruments. Such investments were more active than others from Argentina, Venezuela, but also from Russia, Ukraine and Kazakhstan. As the recent example of Cyprus, where significant funds were channeled not only from the EU and the former Soviet Union, but also from the Middle East and North Africa, showed, under certain conditions, even such simple and familiar financial instruments as bank deposits can be highly risky.

Analyzing the geography of financial investments in developing countries in recent years, we can see that most capital flows are directed outside their sub-regions and even regions. The main beneficiary of the influx of such funds is the United States. 45% of all foreign investments in Latin America and 26% in Asia go there. Latin Americans are also characterized by a positive correlation between their portfolio investments and commodity exports. It can be assumed that Roman-speaking residents of the American continent prefer to place their financial investments in countries known to them from commercial trade transactions.

However, there is another possible explanation associated with the flight of capital from the South to the North. In Latin American countries ' trade with the United States and Canada, the share of transactions with "underpayment for exports" and "overpayment for imports"is high. The shadow delta formed in this way is not repatriated to their homeland, but settles in banks in North America on private accounts of Latin Americans.

A comparison of US statistics on the volume of financial assets in the country's banks owned by Latin Americans and the volume of legal capital exports from these countries just roughly shows the value of this delta.

In contrast, intraregional trade in Asia has little correlation with financial flows. Here, countries receive only 19% of their portfolio investments from the region itself. Capital also flows away, mainly to the United States, as well as to numerous offshore centers and tax havens.

The situation with portfolio investments from developing countries is mainly explained by the low level of development of regional financial markets, on the one hand, and interest in low - risk assets, on the other. Given the impact of the global crisis and the precarious situation in the European banking sector, the share of cross-border mutual investment from developing countries will only increase.

ECHO OF THE "CURRENCY WARS"

In early 2013, Japanese Finance Minister Taro Aso paid a visit to a number of Asian countries, during which he made important statements on both geopolitical and financial issues. Speaking about the fall in the Japanese currency, T. Aso notes: correcting the strong, from his point of view, yen exchange rate "is the most important priority in order to ensure the growth of the Japanese economy again." According to the Western press, the new rhetoric in Tokyo alone was enough to lower the national currency by more than 10% in a few weeks.⁸ Indeed, the yen's exchange rate against the dollar immediately fell to its lowest level in the previous two and a half years - 88.41. Many analysts in the East and West started talking about a return to the practice of "currency wars".

Once at the epicenter of the financial and economic crisis, developed countries, undeterred by their own recent demands to allow markets to decide the fate of strong and weak actors without government intervention, began to pursue a policy of reducing the exchange rates of national currencies in order to increase the competitiveness of their products in foreign markets, and at the same time devalue the value of external debt in your local currency. The latter, however, mainly applies to the dollar and its issuer. The so-called quantitative easing measures implemented by a number of Western countries during the crisis years also work in this direction.

At the same time, the latter do not tire of accusing new rising developing countries and, above all, China of "currency manipulation" and maintaining an unreasonably low exchange rate of national currencies. Almost all the " old " economic powers have become embroiled in a currency war, which inevitably draws other nations into this maelstrom, especially countries with emerging economies and open capital markets.

Neither the current currency wars nor the crisis itself has led to a radical loss of the dollar's position. Moreover, since, despite everything, the United States remains the most developed, diversified and large economy in the world, its currency, by definition, becomes more attractive than others in a crisis, playing for many investors the role of a tool of last resort.

Individual and collective attempts by rising economies to partially take this place have not yet led to a radical breakthrough, but certain achievements are evident. The BRICS countries are taking some steps along this path, but the deepening global crisis forces them to be extremely cautious and move forward very slowly.

Success in this endeavor has so far been mainly attributed to the Chinese yuan. It is increasingly being used in international settlements. Offshore centers working with Chinese currency have started to be created. The first of them appeared in Hong Kong, then in Singapore and Taiwan. In Europe, London is going to become the largest offshore (from the point of view of the PRC) "yuan center", where a number of banks have been conducting operations with this currency and maintaining accounts in it for more than a year. The City of London, promoting its services as a global financial center, even publishes a special "Yuan Bulletin"⁹. In 2012, the number of customers served in RMB

cross-border trade transactions increased by 41%, while investment transactions increased by 153% compared to 2011. According to the World Interbank Financial Telecommunications (SWIFT) Community, in January 2013, the yuan surpassed the ruble in popularity among world currencies and came in 13th place. Today, the Chinese currency serves 0.63% of the international payments market, the ruble-only 0.56%.10 The time is not far off when, along with eurodollars, Euro yuan will become the usual financial instrument.

The yuan is also playing an increasingly important role as a reserve currency. The yuan is included in the structure of state gold and foreign exchange reserves and/or is used as an element of the currency basket when calculating the exchange rates of national currency units by most countries of East and Southeast Asia, Brazil, Australia, Venezuela and, according to unconfirmed reports, Pakistan, Iran, Israel and Saudi Arabia. By the end of 2013, this list is likely to expand to include several African countries. Many countries, including, for example, Japan, have recently expanded the yuan component in their foreign exchange reserves by reducing the share of the US dollar.

The renminbi's success in expanding its influence in the world compared to the currencies of the other BRICS countries, but not only them, is due to the huge economic potential behind the renminbi (the world's second largest economy, which also has one of the world's largest gold and foreign exchange reserves of $3.31 trillion). Equally important is the partners ' confidence in the reliability of the Chinese currency, based on the predictability of government policies and their ability to control the course of economic and political processes in the country.

Although monetary and financial cooperation between the BRICS countries is deepening from year to year, it is still progressing at a slow pace. It is still dominated by useful solutions and far-reaching declarations. The practical implementation of the plan runs into a pluralism of aspirations and opportunities of the participants. At the Fifth BRICS Summit in South Africa (March 2013), it was decided to create a joint Development Bank and a foreign exchange reserve of $100 billion, which will help the BRICS countries prevent short-term liquidity shortages, provide mutual support and strengthen financial stability. Both projects are presented as a democratic alternative to the Bretton Woods financial institutions of the neocolonial era. However, even here, many organizational and application issues are still unresolved.

The situation described above, of course, provides only a very general picture of the processes of financial differentiation and consolidation in the developing world. At the same time, it sets the general framework of the narrative ¹¹. Within the circumscribed perimeter, there are a huge number of specific complex issues of monetary and financial development of the countries of Asia, Africa and Latin America of varying degrees of significance and relevance.

The financially developing world is still very poorly integrated. But to deny that "the process has already started" would also be incorrect. Moreover, the dynamism and growing power of this process are more than obvious. For the first time since decolonization in the middle of the last century, developing countries, despite all their difficulties and uneven development, have the opportunity to consolidate significant own or borrowed funds, which they can dispose of at their discretion, based on their own vision of development priorities and the effectiveness of investments.

For the first time, capital flows of global significance began to move not only between developed and developing countries, but increasingly within the developing world. This was supported by the following factors: the globalization of corporate activity in developing countries, especially BRICS countries; the growth and global expansion of so-called sovereign wealth funds; crisis phenomena in the financial sector of the developed world; the entry into the maturity phase of institutional investors (investment and pension funds, insurance companies) in Asia, Africa and Latin America.

* * *

It can be assumed that a new stage of consolidation of financial positions in emerging markets will begin over the next decade. It will manifest itself in three directions: the share of global financial assets owned by these countries will increase; the number of net debtors and net creditors will become approximately equal; the structure of investments will change-from less risky and short-term to more risky and long - term.

If the first decade of the twenty-first century was marked by an unprecedented increase in the power of fast-growing emerging economies in the field of world trade, then the next 10 to 15 years will be a time of unprecedented strengthening of their financial positions in the world.

¹ http://www.imf.org/external/np/cxr/facts/rus/poorr.pdf

² The IMF. IMF assistance to low-income countries. Informational help. New York, 2012, p. 2.

^{Abramova I. O.} 3 Developing countries in the global economy of the XXI century: shaping a new architecture of international economic relations // problems of modern economy. 2011, No. 1, p. 72. http://rts.micex.ru/a802

⁴ http://www.fm.co.za/business/money/2013/01/31/brics-exchange-alliance

⁵ http://data.worldbank.org/topic/financial-sector (на 27.01.2013)

⁶ http://www.imf.org/external/pubs/ft/survey/so/2013/NEW012313A.htm

⁷ http://economic-research.bnpparibas.com/Views/AUConjoncture.aspx?Lang=en-US

⁸ http://www.welt.de/finanzen/articlel 12728632/Die-Welt-steht-vor-dem-naechsten-Wachrungskrieg.html

⁹ http://www.cityoflondon.gov.uk/busi-ness/support-promotion-and-advice/ promoting-the-city-internationally/china/Documents/20120131London%20_renminbi_update. pdf

¹⁰ http://www.rg.ru/2013/03/29/valuta. html

^{Fituni L. L., Abramova I. O.} 11 Regularities of formation and change of models of world economic development // Mayo. 2012. N 7. p. 3-15.

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