Business

LONDON — Leading world economies are spending $88 billion (71 billion euros) a year in fossil fuel exploration subsidies, sapping investment from low-carbon alternatives and increasing the risk of “dangerous climate change”, according to a report.

The report by Britain’s Overseas Development Institute think tank said that these subsidies “could drive the planet far beyond the internationally agreed target of limiting global temperature increases to no more than two degrees Celsius”.

The report was published in conjunction with Oil Change International, a US advocacy group, and comes ahead of a meeting of Group of 20 (G-20) leaders this weekend in Brisbane, Australia.

Britain, Russia, the United States and Australia had some of the highest national subsidies, indicated the report, which pointed in particular to Washington providing $5.1 billion to fossil fuel industries last year — almost double the level in 2009.

The report also pointed to investments made by state-owned companies as a form of subsidy particularly prevalent in Brazil, China, India, Mexico, Russia and Saudi Arabia.

“Levels of support range from $2-$5 billion in Russia, Mexico and India, to $9 billion in China, $11 billion in Brazil and $17 billion in Saudi Arabia,” it pointed out.

It identified public finance as a third form of subsidy for supporting fossil fuel exploration, highlighting its use in Canada, China, Japan, Russia and South Korea.

The report said the funds were “uneconomic investments” and “a publicly financed bailout for carbon-intensive companies” at the expense of wind, solar and hydro-power.

“Without government support for exploration and wider fossil fuel subsidies, large swathes of today’s fossil fuel development would be unprofitable,” the report added.

It gave as an example the Prirazlomnoye project, Russia’s first Arctic offshore site, saying that “even with extensive tax breaks and public investment in infrastructure, the project is of dubious commercial viability”.

“Two-thirds of the reported internal rate of return of 14 per cent can be traced to tax breaks,” it said.

It also pointed to “a large gap between G-20 commitment and action” since the G-20 powers had agreed five years ago to phase out “inefficient” fossil fuel subsidies.

The authors called on governments to “act immediately” to phase out subsidies and said that carbon should be priced “to reflect the social, economic and environmental damage associated with climate change”.

The report said fossil fuel exploration subsidies were only part of the picture with global subsidies for the production and use of fossil fuels adding up to $775 billion in 2012 compared to $101 billion for renewable energy spent in 2013.

CAIRO — Representatives from over 60 US companies wrapped up Tuesday a two-day visit to Egypt described as the largest such delegation in history that aimed to explore potential businesses to boost the country’s ailing economy. But critics say the visit strikes the wrong tone amid a government crackdown on freedoms.

Delegates to the conference, organised by the US Chamber of Commerce, stayed clear of politics. During a two-hour meeting with President Abdel Fattah Al Sisi, they listened to his vision for improving the economy and the pressures he faces from a disgruntled and demanding population.

The delegation included a personal envoy from US Secretary of State John Kerry, Ambassador David Thorne. Ahead of the visit, Kerry said a critical component of Egypt’s success is economic growth driven by policy reform, a message the delegation will deliver to Egyptian authorities.

The visit coincided with an ultimatum by authorities given to civil groups to register under a restrictive law that was drafted under the regime of Hosni Mubarak, or face shutdown and prosecution.

The deadline passed with authorities taking no immediate action. The groups say the deadline still hangs over their head, and is a threat to their work which deals mostly with government violations and crackdown.

“Egypt is suffering the most ruthless crackdown in decades but John Kerry is busy promoting US business there,” Kenneth Roth, executive director of the New-York based Human Rights Watch, wrote on Twitter ahead of the visit. His organisation closed its offices in Cairo earlier this year, citing concerns over the crackdown, after failing to register.

Egyptian authorities have also rounded up thousands of protesters and supporters of Islamist President Mohamed Morsi, who was ousted last year by the military led by Sisi, after popular protests accusing him of monopolising power.

“We all recognise that this country has been through turmoil and we recognise that the economy is challenged,” said Gregori Lebedev, a senior member of the board of the directors of the Chamber of Commerce and co-leader of the delegation. 

“I think the size of the delegation reflects the fact there was a prospect of change and reform and let’s go see for ourselves what those prospects are because we would like to be a part of that solution if we can and we certainly want to be part of [Egypt’s] long term growth.”

Lebedev and others in the conference rebuffed the criticism. “We know that prosperous economies are good for citizens wherever you are in the world,” Lebedev told The Associated Press. “So anything that the American business community can do to stimulate a challenged economy will do nothing but benefit Egyptian citizens at large.”

During the delegation’s meeting with Sisi Monday, Lebedev said it was clear that the new government is not “whitewashing” the country’s myriad problems, commending the new energy he said characterised the economic team picked by the president.

“I think people have to give some amount of credit for an otherwise successful individual [Al Sisi] to take on challenges that most people would turn away from,” he said.

Khush Choksy, vice president of the US chamber of commerce for Middle East affairs, said the timing of the visit couldn’t have been better to seize on positive signals the government has sent to the business community.

“Business likes to get in the act early,” he said, adding that visit hopes to boost American investment in Egypt, which now stands at over $10 billion, at a time when its government took drastic and much awaited economic reforms such as cutting fuel subsidies.

Sisi has also launched a number of mega-projects aimed at jumpstarting the economy and providing employment. 

Such projects, as well as Egyptian interest in investing in them, Choksy said, have triggered interests of private American businesses.  

He added that the chamber plans to host another regional investment conference in Egypt next spring.

For Egyptian businessmen, the conference is an opportunity to commit the government to a more business friendly environment.

“One of the recommendations [to the government] will be to be very transparent, to be very candid about what laws are going to be changed and to be candid that nothing will be taken retroactive on any of the decisions taken by the government,” Hisham Fahmy, head of the American Chamber of Commerce in Egypt, told AP.

MOSCOW — Many Russians are buying dollars and hoarding cash, increasingly concerned by a slide in the ruble and wary of possible restrictions on bank withdrawals as President Vladimir Putin blames currency woes on speculators and the West.

While there is little panic on the streets of Moscow and other major cities, some Russians are taking no chances with their money, with many hardened by a financial crisis in 1998 which wiped out the savings of millions of people.

The ruble has fallen more than 25 per cent against the dollar in 2014, with especially heavy losses in the past month when the currency repeatedly hit all-time lows despite the central bank spending around $30 billion to defend the currency.

Financial officials and the Kremlin have united in calling for calm, suggesting that speculators were to blame for the falling ruble, rather than tumbling oil prices or Western sanctions that have weakened the economy.

Putin has hinted that the global oil price has been deliberately manipulated to hurt Russia.

Russian search engine Yandex said queries such as "what to do with rubles in 2015?" hit a record high of over 1.2 million on one day last week.

Viktoria Openko, deputy head of currency conversion operations at mid-sized Russian lender B&N Bank, indicated that demand for dollars had risen more than four times in Moscow from October 9 compared with the preceding two months and the bank had to increase the number of times it restocked its branches.

"We first noticed increased demand in Moscow on October 8-9, when the dollar repeatedly started to trade above 40 rubles," she said. "In the regions, the rise in demand started later, from October 13, and on a lesser scale."

Representatives from VTB 24, the retail-banking arm of Russia's second-largest lender VTB, and Rosbank, part of Societe Generale Group, have seen a similar increase in foreign exchange demand.

Another mid-sized Russian lender, Soyuz, revealed selling 2.3 million in dollars to customers in October, compared with $890,000 in September.

Flight to safety

So far there are few signs large banks are running short of dollars, but media have reported foreign currency shortages at smaller lenders in the past week.

Four large banks were able to sell up to $10,000 to a Reuters reporter on Friday, while an office of sanctioned SMP Bank had large amounts of dollars but had run out of euros.

According to an employee who did not wish to be named at a currency exchange booth in Moscow, customer behaviour had changed.

"We have the same customers ringing up in the morning to check the rate. People are worried," the employee said.

Bella Zlatkis, deputy chief executive of top lender Sberbank , said late last month that demand for safety deposit boxes was the most noticeable change in customer behaviour.

"We can't buy safes quickly enough, the largest demand we have is for safes. I understand when people want to put dollars in safes, but at the moment there is another trend, to take out rubles and put them in a safe," Zlatkis indicated.

She suggested demand for safes was linked to fears that authorities could restrict bank withdrawals. "The No. 1 motivation is to save so they can't take it from you."

On Monday, the ruble firmed sharply after Putin said he hoped speculative trading on the ruble would stop soon.

By mid-afternoon it was trading more than 2 per cent higher than the previous close after the central bank said it could intervene at any time to punish speculators after letting the currency float freely.

"That Russian officials from the president down are trying to talk up the ruble speaks volumes about the extent of the deterioration in sentiment towards the currency," said Nicholas Spiro, managing director of Spiro Sovereign Strategy.

"While there has been no widespread dollarisation of retail deposits, this is now a much bigger risk than it was as recently as a couple of weeks ago," Spiro added. "Today's recovery in the ruble looks and feels like a temporary respite."

The central bank predicted Monday that Russia faces the prospect of three years of economic stagnation, underscoring the heavy costs of Putin's Ukraine policies and of Russia's dependence on fragile oil prices.

In an annual monetary policy strategy document, the bank slashed its economic growth forecasts in 2014-16 to almost zero, anticipating that Western sanctions imposed over Russia's actions in Ukraine would last at least until the end of 2017.

It also raised its forecasts for net capital outflows to $128 billion in 2014 and $99 billion in 2015.

Separately, it said it was scrapping the ruble's corridor against a dollar-euro basket, a decision presaged by the bank's announcement last Wednesday that it would limit intervention.

The bank's view on sanctions, the first official assessment of how long they may last, tallied with that expressed by influential former finance minister Alexei Kudrin in September.

It base scenario expected just 0.3 per cent economic growth in 2014, zero growth in 2015, and 0.1 per cent growth in 2016. The economy was only expected to revive modestly in 2017, when the bank expected growth to reach 1.6 per cent.

Its forecast assumed a modest recovery in the oil price to $95 per barrel next year, followed by a further decline.

"Oil at 95 [dollars] may be optimistic, but the assumption of sanctions staying until 2017 seems very realistic and suggests Russia is planning for the long haul," Standard Bank analyst Tim Ash said in a note.

Miserable outlook

Sanctions imposed by the United States and European Union against major Russian banks and companies over Moscow's backing for pro-Russian separatism in Ukraine have led to a virtual freeze on investment inflows that has contributed to the ruble's slide.

Finance Minister Anton Siluanov said the ruble was clearly undervalued and he hoped its volatility would cease by the end of the year.

"The public mood [is] that these economic hardships are the fault of the foreign enemies of Russia," said Christopher Granville, managing director of Trusted Sources, an emerging markets consultancy in London.

Failed growth model

Putin's policies have failed to diversify an economy largely based on natural resources and the political stand-off with the West is starving the country of badly-needed investment capital.

Even before the escalation of the Ukraine crisis this year, the economy was performing poorly, with disappointing growth of 1.3 per cent in 2013, underscoring how a growth model based largely on energy exports is no longer working.

In its base scenario, the bank predicted that the Urals oil price would recover in the short term to average $95 per barrel in 2015, but fall to $90 per barrel by the end of 2017.

The bank also considered alternative scenarios, including the possibility that sanctions would be lifted in the third quarter of 2015, as well as the possibility that oil prices would recover to over $100 per barrel.

It said the scenario envisaging the lifting of sanctions next year was closer to official government forecasts made by the economy ministry, which envisage 1 per cent economic growth next year. But the bank's growth expectations were also modest even if more optimistic assumptions are factored in.

If the sanctions are lifted next year, the bank predicted  0.3 per cent economic growth in 2015 with oil at $95 per barrel, and 0.6 per cent growth if the oil price recovers to $105.

The bank also considered more pessimistic scenarios with lower oil prices. In its worst-case "stress scenario", in which the oil price fell to $60 by the end of 2015, the economy would shrink by 3.5-4 per cent in 2015.

"In working out its scenarios the Bank of Russia considered tendencies in the Russian economy in recent years, which show that existing structural constraints won't be overcome quickly," the bank said in its report.

"As a result, even with a more favourable combination of external factors moderate economic growth rates are forecast," it added. 

DUBAI — A prolonged decline in oil prices will likely slow the economies of the energy-rich Gulf Arab states and impact their massive infrastructure projects, according to Standard and Poor's Ratings Services (S&P).

"The recent drop in hydrocarbon prices, if sustained, could have a significant impact on the region's economic and financial indicators... and dampen economic growth," S&P said in a report.

On average, energy revenues for the six Gulf Cooperation Council (GCC) states constitute 46 per cent of their gross domestic product (GDP) and three quarters of their exports, the report indicated.

Total GDP of the GCC states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE) — hit $1.64 trillion last year, according to the International Monetary Fund (IMF).

S&P viewed Bahrain and Oman as most vulnerable to a decline in the hydrocarbon market, and Qatar and UAE as the least vulnerable.

"While the Gulf countries' significant oil and gas reserves are key supports for their sovereign credit ratings, their economies' concentration in the hydrocarbon sector is also a significant vulnerability," it said.

It added that the decline will hurt infrastructure projects and the private sector.

The agency revised Brent oil price at $85 a barrel for the rest of the year and $90 a barrel for 2015 and beyond. The assumption is very close to most of the GCC's budget price for oil.

Lower government revenues may also result in more efforts to tackle energy subsidy reform, but this is likely to hurt industries reliant on feedstock subsidies, such as petrochemicals.

A top World Bank official said last week that the GCC states, which pump a fifth of the world's crude oil, spend more than $160 billion on energy subsidies annually, and called for immediate cuts.

IMF chief Christine Lagarde warned last month that GCC states will face budget shortfalls if the recent decline in oil prices persists.

Oil prices have lost about 30 per cent since it started to decline in June.

The total revenue of the GCC states — 90 per cent of which come from oil — more than doubled from $317 billion in 2008 to $756 billion in 2012.

It declined slightly to $729 billion last year, according to IMF estimates.

IMF has said that GCC states will not be greatly affected in the short-term as they can tap into their massive fiscal reserves estimated at $2.45 trillion.

Separately, Oil-rich Kuwait on Monday ordered Cabinet ministers to "rationalise spending" after considering measures to counter the sharp decline in oil prices.

"The government asked ministers to control expenditure and rationalise spending in such a way to serve citizens and achieve the country's higher interests," said an official statement following the weekly Cabinet meeting.

The statement added that the Cabinet had studied proposals presented by the finance ministry about the slide in oil prices and "emphasised it will continue with capital spending and projects under the development plan".

Oil income makes up around 94 per cent of public revenues in the emirate which pumps around 3 million barrels per day.

The head of parliament's budget committee, lawmaker Adnan Abdul Samad, has said if oil prices continue at the current level, the budget surplus would shrink to just $3.1 billion from $45 billion last year.

The emirate has decided to end subsidies on diesel, kerosene and aviation fuel as a first step in revising heavily-subsidised electricity, water and petrol.  

Local media said Kuwait's fiscal reserves grew to $548 billion as of June 30. 

The tiny emirate has a native population of 1.25 million and is also home to about 2.8 million foreigners.

AMMAN — The National Society for Investor Protection (NSIP) will organise next Monday the National Conference for Investor Protection, under the patronage of Prime Minster Abdullah Ensour.  Khaldoun Nusair, chairman of Afaq group and NSIP member, said yesterday the conference will tackle issues related to transport, energy, logistics, education and health sectors. It will also provide non-Jordanian investors with an opportunity to speak about the challenges they face in the Kingdom, Nusair added. The conference, Nusair noted, will host several leaders from various investment sectors, economic experts in the investment field, investment companies in the Kingdom. It will also attract local banks sector, public institutions, chambers of industry and commerce, and Arab and foreign economists. The conference will also discuss working papers presented by the participants.

AMMAN — Amman Chamber of Commerce (ACC) announced on Sunday that exports during the first ten months of 2014 reached JD3.24 billion, compared with JD3.26 billion during the same period of 2013.

Arab countries topped the list of ACC exports during this year’s January-October period with JD2.05 billion, compared with JD2.17 billion during last year’s ten months.

Despite the drop in ACC exports to Iraq by 20 per cent, it still topped countries importing Jordanian products with JD697 million, followed by Saudi Arabia with JD450 million, USA with JD306 million, India with JD285 million and United Arab Emirates with JD143 million.

According to the ACC report, exports increased to each of Syria by 119 per cent reaching JD95 million, Turkey by 61 per cent with JD84 million and Palestine by 45 per cent reaching JD68 million during the first ten months of 2014. In sector distribution of exports, chemical industries and cosmetics came first with JD702 million mineral industries came second with JD528 million followed by engineering and electric industries with JD476 million.

AMMAN — Amman Chamber of Industry Chairman Senator Ziyad Homsi on Saturday said that the industrial sector has incurred losses amounting to around JD21 million as a result of the recent strike by Aqaba  Container Terminal (ACT) employees.

Presiding over a meeting of the maritime transport agents, Homsi called for more pressure on ACT to prevent any similar strikes in the future, citing the deep impact on trading activity.

Homsi also said that ACT has been imposing non-stop increases on its cargo handling services since June in addition to the fines imposed by ships agents which varied between JD52 to JD74 per container, calling for more pressure on the ACT to cut down such "harmful attitude".

CHICAGO — A federal judge on Friday approved Detroit's plan to exit the largest municipal bankruptcy in US history, restructuring its $18 billion debt.

Judge Steven Rhodes ruled that the plan meets the legal requirement under Detroit's Chapter 9 bankruptcy to help the city of Detroit and the state of Michigan, giving the "Motor City" a fresh start on the road to recovery.

"This is an historic day not just for Detroit but for our region and our state," said Judge Gerald Rosen, the lead bankruptcy mediator, at a news conference in Detroit.

Entering bankruptcy protection in July 2013, the heart of the US automobile industry was saddled with more than $18 billion in debt and a tax base depleted by decades of population loss and urban blight.

After several weeks of hearings, the exit plan the federal court approved cancels about a third of Detroit's long-term debt, or $7 billion; creates a commission to oversee the city finances and requires a cost-cutting restructuring.

According to US media reports, part of the funds freed up by restructuring the debt will be reinvested in badly battered public services such as fire and police departments.

Some of the money would be used to attack widespread urban blight in the city, where some 80,000 homes and buildings have been abandoned.

"It's not the end, not even the beginning of the end, but maybe the end of the beginning," said Rosen, paraphrasing Winston Churchill's comment on a British victory during World War II.

"Detroit has a grand future," Michigan Governor Rick Snyder said at the news conference, but "there is more work to be done”.

Home to the "Big Three" automakers — General Motors, Ford Motor and Chrysler — the city has been on the decline for 60 years. It has lost half its population and crime is rampant.

The situation in Detroit is being closely monitored by government workers across the country who are fearful that they too may see their retirement benefits slashed by cash-strapped states and cities. 

Nearly half of the city's debt is to underfunded pension plans and retiree health benefits.

"To the current leadership of the city, you are about to get your city back from us in the bankruptcy world," said Judge Rhodes in his decision. "We give it back to you with the fresh start that this city needs and deserves under our federal bankruptcy laws. We hope we helped."

BEIJING — China secured backing from Asia-Pacific ministers Saturday to deepen anti-graft efforts, in a move that dovetails with a high-profile Communist Party "fox hunt" for corrupt officials who have fled abroad.

The anti-corruption proposal is said to have been pushed by China and backed by the United States at the Asia-Pacific Economic Cooperation (APEC) gathering in Beijing, which culminates in a two-day summit of leaders from 21 member-economies starting Monday.

But it remained unclear how effective the move would be, amid apprehension in some countries over returning suspects to China due to fears they could be subject to abuse and denied legal due process.

China in July launched its so-called "Fox Hunt" — a campaign to bring back corrupt officials or their family members who have moved abroad, taking ill-gotten gains with them.

A report attributed to China's central bank and leaked three years ago said that as many as 18,000 corrupt officials had left the country over between the 1990s and 2008, taking as much as $123 billion with them.

In a statement, APEC ministers pledged to step up nascent anti-graft efforts with a regional commitment to "deny safe haven to those engaged in corruption, including through extradition".

But they stressed that such moves would be "subject to domestic laws and policies" and needed to be carried out "in accordance with fundamental legal principles of each economy".

"We, APEC member economies, recognise that corruption impedes economic sustainability and development, threatens social security and fairness, undermines the rule of law, and erodes government accountability, as well as public trust," the statement said.

It pledged to establish an office for the day-to-day running of the APEC Network of Anti-Corruption Authorities and Law Enforcement Agencies (ACT-NET), a body coordinating anti-corruption efforts that was launched by Chinese and US officials in August.

The office will "assist in detecting, investigating and prosecuting corruption, bribery, money laundering, and illicit trade" and seek cooperation on tracking cases across borders.

China has recently announced stepped-up efforts to extradite former officials suspected of corruption from countries including Australia, New Zealand and Canada.

Australian police said last month that they would work with their Chinese counterparts to track down and seize illegal assets, but foreign concerns over the country's legal system linger.

Anti-corruption efforts with the ruling Communist Party are carried out by an internal body which operates without any legal oversight, and there is concern that the crackdown may be used for political faction fighting.

APEC Secretariat Executive Director Alan Bollard said Thursday the proposal had been championed by China and the United States.

Bollard said any anti-corruption effort "needs to happen within the different laws and legal structures" of APEC members, but the statement did not spell out how this would work.

"Corruption impedes economic sustainability and development, threatens social security and fairness," the ministers concluded.

BEIJING — An impasse over a global pact to streamline customs procedures poses "the most serious crisis the World Trade Organisation has faced" and has paralysed all negotiations in the trade body, its chief Roberto Azevedo said Saturday.

A draft of the so-called Trade Facilitation Agreement was hammered out last December during tough negotiations at a World Trade Organisation (WTO) conference in Bali — the WTO's first global accord since its 1995 founding.

But the WTO's 160 members failed in July to reach a final agreement on the deal, which Azevedo himself has said is crucial to ensuring the WTO's relevance.

"The impasse has effectively paralysed the multilateral negotiations in the organisation," Azevedo told reporters in Beijing.

"Substantial discussions on all the measures in the Bali package programme have come to a halt," he said. "I have described this impasse to members as the most serious crisis the WTO has faced," 

Azevedo was speaking on the sidelines of the 21-member Asia-Pacific Economic Cooperation (APEC) forum's annual gathering, hosted this year by China.

Members of the Geneva-based WTO set trade rules among themselves in an attempt to ensure a level playing field, and spur growth by opening markets and removing trade barriers including subsidies, excessive taxes and regulations.

The Bali negotiations were seen as make-or-break for its mission of achieving a worldwide trade agreement fair to both rich and poor nations, which Azevedo has said is under threat from proliferating bilateral and regional trade deals often skewed in favour of richer countries.

Bali was the WTO's first ever global agreement and signalled the first concrete progress on the Doha Round of trade liberalisation talks.

Those discussions, launched in 2001, aim to underpin development in poorer nations, but agreement has been elusive amid protectionist reflexes.

Negotiators instead extracted parts of the Doha package for the far less ambitious Bali customs accord, in the hope of creating momentum towards the wider agreement.

But the trade facilitation deal has been put on ice by post-Bali sparring between WTO members, notably over demands from India that the group approves the developing power's stockpiling of food.

It took nearly a decade to conclude the customs talks, which began in 2004, and Azevedo warned that the patience of many WTO members is "fast running out".

India and its developing-world supporters say food stockpiling is essential to ensure poor farmers and consumers survive in the cut-throat world of business.

Western countries, led by the United States, have raised concerns that such stocks could leak onto global markets, skewing trade.

Azevedo said US Trade Representative Michael Froman had told him talks between Washington and New Delhi on the issue had resumed.

"It seems, however that we still don't have a breakthrough in these bilateral talks," said Azevedo.

He plans to stress the severity of the situation again this week when he attends a summit of the Group of 20 (G-20) biggest economies, hosted by Australia.

Russia on Friday warned of the imminent "death" of the WTO if developed and developing nations don't come to an agreement at the upcoming G-20 summit in Australia.

Russian President Vladimir Putin will participate at the G-20 summit in Brisbane on November 15-16. 

His representative at the summit, known as the G-20 sherpa, said the gathering will address a number of top issues like trade, stressing that the interests of developing nations would have to be taken into account.

"The process of negotiations within the framework of the WTO have practically ground to a halt," said G-20 sherpa Svetlana Lukash, noting that several key decisions of the global trade body have not been implemented.

She told reporters that it was necessary to find a solution that would take into account concerns of both developed and developing nations.

"If we don't find a way out of this dead-end at the G-20 summit this could jeopardise the entire system of multilateral trade," she said.

"In essence, it would mean... well... the death of the WTO," Lukash added. "It is a very important question. We are foreseeing rather heated discussions on this topic."      

She also expressed Moscow's concern about the stalled reform of the International Monetary Fund (IMF).

"The most important thing for us is the reform of the IMF, a problem which has not yet been solved within the framework of the G-20," Lukash said.

She accused the United States of hampering the reform.

"Not only does it thwart the renewal of the IMF in line with today's realities which have seen a significant rise in the role of emerging economies, it also prevents the decisions to double the IMF capital from coming into force," Lukash indicated. 

She warned that Russia and its BRICS partners would offer alternative proposals if a solution is not found by the end of the year.

Along with Russia, BRICS include emerging market nations Brazil, India, China and South Africa.

Russia is locked in a dramatic confrontation with the West over its support for separatists in eastern Ukraine.

The Russian strongman has repeatedly spoken out against what it calls Washington's desire to dominate world politics and economy, saying developing economies should have a greater say in global affairs.

Putin has accused Western nations of violating WTO rules by slapping sanctions against Russia.