IMF Implements Quota Reforms - India gets More Voting Rights


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Voting rights of emerging market economies such as India and China have gone up at the International Monetary Fund (IMF) in January 2016 as the multilateral institution has finally notified the governance quota reforms adopted in 2010.

India’s share at IMF has now increased to 2.75% from 2.44%, making it the eighth-largest shareholder in the multilateral agency from its present 11th position.

The ratification of the 2010 reforms also clears the way for the Fund to begin the next round of review of its quotas to discuss the size and composition of IMF resources and the distribution of quota shares among the Fund’s membership.

The iron grip of the US and the European Union over the Bretton Woods institutions of IMF and the World Bank and their unwillingness to make these institutions more representative by giving more say to developing economies in sync with their growing economic clout has frustrated the latter countries over the years. This has led to the creation of new financial institutions such as the New Development Bank by the Brics countries and the Asian Infrastructure Investment Bank spearheaded by China and India.

The reforms significantly increase the IMF’s quota resources and its ability to respond to crises more effectively. The combined quotas (or the capital countries contribute) of the IMF’s 188 members will increase to a combined SDR 477 billion (about $659 billion) from about SDR 238.5 billion (about $329 billion). SDR or special drawing rights is the international reserve of assets under the IMF from which it lends to countries in financial crisis. Its value is currently based on a basket of four major currencies, and the basket will be expanded to include the Chinese renminbi (RMB) as the fifth currency, effective 1 October 2016.

With the implementation of reforms, more than 6% of quota shares have shifted to the dynamic emerging market and developing countries and also from over-represented to under-represented IMF members. As a consequence, four emerging market countries (Brazil, China, India, and Russia) are now among the 10 largest members of the IMF. Other top 10 members include the US, Japan, and the four largest European countries, France, Germany, Italy, and the UK.
 


Thursday, 28th Jan 2016, 03:20:36 AM

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