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Saturday, April 20 2024

India among 10 largest IMF members with historic reforms

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Washington: The International Monetary Fund`s historic quota and governance reforms that for the first time place four emerging market countries – Brazil, China, India, and Russia – among its 10 largest members have become effective.

The reforms that also increase the financial strength of the IMF, by doubling its permanent capital resources to SDR 477 billion (about USD 659 billion) from about SDR 238.5 billion (about USD 329 billion) entered into force Tuesday.

Other top 10 members 188-nation agency include the US, Japan, and the four largest European countries – France, Germany, Italy, and Britain.

The reforms represent a major step toward better reflecting in the institution`s governance structure the increasing role of dynamic emerging market and developing countries, according to an IMF announcement.

The entry into force of these reforms will reinforce the credibility, effectiveness, and legitimacy of the IMF, it said.

The conditions for implementing IMF’s 14th General Quota Review, which delivers historic and far-reaching changes to the governance and permanent capital of the Fund, have now been satisfied, IMF said.

The amendment to the IMF`s Articles of Agreement creating an all-elected IMF`s Executive Board (Board Reform Amendment) entered into force on Tuesday.

The quota increases under the 14th Review, which were conditional on the entry into force of the Board Reform Amendment, are expected to come into effect in the coming weeks, IMF said.

“I commend our members for ratifying these truly historic reforms,” IMF Managing Director Christine Lagarde said.

“These reforms will ensure that the Fund is able to better meet and represent the needs of its members in a rapidly changing global environment. Today marks a crucial step forward and it is not the end of change as our efforts to strengthen the IMF`s governance will continue.”

Main outcomes of the 2010 quota reforms:

-More than 6 percent of quota shares will shift to dynamic emerging market and developing countries and also from over-represented to under-represented IMF members.

-The quota shares and voting power of the IMF`s poorest member countries will be protected.

-For the first time, the IMF`s Board will consist entirely of elected Executive Directors, ending the category of appointed Executive Directors. Currently the members with the five largest quotas appoint an Executive Director.

-The scope for appointing a second Alternate Executive Director in multi-country constituencies with seven or more members has been increased to enhance these constituencies` representation in the Executive Board.

As a result, 13 constituencies – including both African constituencies – are currently eligible to appoint an additional Alternate Executive Director.

-Advanced European countries have committed to reduce their combined Board representation by two chairs.

-Following the effectiveness of the 14th General Review of Quotas, the focus will now turn to work on the 15th General Review of Quotas and securing the necessary broad consensus, including on a new quota formula.

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