By Brian Winter
SAO PAULO (Reuters) - Brazil will propose that it and other large emerging market countries make billions of dollars in new funds available to the International Monetary Fund as a way to help ease the crisis in the euro zone, an official said on Monday.
Finance Minister Guido Mantega will make the proposal at a meeting of the BRICS group later this week in Washington, the official told Reuters on condition of anonymity. The BRICS bloc of large emerging markets also includes Russia, India, China and South Africa.
"Giving more funds to the IMF looks like one of the more attractive options available for us to help Europe," the official said.
Brazil could make up to $10 billion of its own money available to help Europe through various channels, including the IMF or by making bond purchases, the official said.
Brazil's contribution by itself would almost certainly be too small to make a major difference in Europe's growing debt crisis. Yet a coordinated effort that includes China and Russia, in particular, could have greater impact at a time when investors are looking to large, growing emerging markets with high foreign reserves as a potential source of help.
Consensus toward such a concerted rescue effort appeared to be growing on Monday. Russia's Finance Minister Alexei Kudrin told reporters that countries that hold substantial reserves may assist in bailing out the euro zone's debt-ridden states "on certain conditions.
BRICS countries are already buying European debt through the European Financial Stability Facility, Brazilian newspaper Valor Economico reported Monday.
Mantega had previously proposed that BRICS countries engage in coordinated purchases of European bonds, but that idea met with resistance from other members of the group who were wary of buying risky assets or doubted they had enough financial firepower to help.
The IMF could provide a "safer" vehicle for a coordinated effort, the official said.
HELPS EUROPE, SATISFIES BRAZIL'S AMBITIONS
The proposal would satisfy two imperatives for Brazil.
Additional funds might be too late to save Greece from default, but they could help insulate other troubled economies on the periphery of Europe -- namely Portugal and Spain, which have large investments in Brazil, the official said.
A greater financial participation at the IMF could also eventually enhance Brazil's power at the Washington-based lender. Officials in President Dilma Rousseff's government have said they see the crisis in Europe and the United States as an opportunity for Brazil to push for a greater role in global affairs for themselves and BRICS countries generally.
One way for the BRICS countries to make more funds available could be through the IMF's "New Arrangements to Borrow" -- a kind of crisis fund that currently has about $591 billion available, according to the IMF's website.
Brazil has been approached by troubled European countries to buy their sovereign debt directly, the official said, but internal regulations mean that it can only use its roughly $350 billion in foreign reserves to buy high-quality assets.
A spokesman for Brazil's finance ministry was not immediately available for comment.
(Reporting by Brian Winter, Editing by Todd Benson, Diane Craft and Andrew Hay)