India to contribute $3 bn for IMF quota increase

SEOUL: India will have to contribute upto Rs 15,000 crore (about more than USD 3 billion) to the International Monetary Fund (IMF) following the decision of the Fund to double its quota.

While doubling its quota the IMF Board has also decided to shift 6 per cent shares in voting rights to emerging economies as part of governance reforms.

India and China are major beneficiaries of this decision with New Delhi's position climbing to 8th place above China in the IMF Board from its present 22nd position.

With the doubling decision, the IMF quota will go up from the present 214 SDR (Special Drawing Rights) billion (rpt) billion to 428 SDR billion (rpt) billion.

India will have to contribute about more than USD 3 billion to the increased quota, Indian official sources said.

The Summit of G-20 leaders, which ended here yesterday, approved the decision of the Finance Ministers and Central Bank Governors at the meeting of Gyeongju near here last month and the subsequent decision by the IMF on a comprehensive package of IMF quota and governance reforms.

The reforms are an important step towards a more legitimate, credible and effective IMF, by ensuring that quotas and Executive Board composition are more reflective of new global economic realities, and securing the IMF's status as a quota-based institution with sufficient resources to support members' needs, the leaders said in the Seoul Summit Document said.

The Seoul Summit said going beyond what was decided in the Pittsburgh and Toronto Summits the IMF reforms include shifts in quota shares to dynamic emerging market and developing countires and to under-represented countries of over 6 per cent.

Prime Minister Manmohan Singh also hailed the IMF reforms saying the grouping has succeeded in several areas since the Summit in Washington in 2008 till the Seoul Summit.

The sources said the current reforms of the IMF is a big step forward in the organisation which was born out of the Bretton Woods conference in the post-war situation.

Another major decision of the G 20 is the Mutual Assessment Process (MAP) by which policy coordination will be done among the countries in restoring economic balance in which the IMF will be involved in a big way.

A working Group comprising India and Canada has been formed for the MAP. The MAP will evolve decisions by broad agreement but it will be for the leaders to accept or not not, the sources said.