IMF implements quota reforms; India gets more voting rights

NEW DELHI: India will join the US, Japan, Germany and France at the International Monetary Fund’s top table along with three other emerging markets after the multilateral institution approved much-delayed quota reforms on Wednesday. India is now among the top largest 10 members of the IMF, along with Italy and the UK besides fellow newcomers, Brazil, China and Russia.

The changes had been pending since 2010. Finance minister Arun Jaitley had made a strong pitch for their early implementation at the last IMF-World Bank meeting at Lima in October last year.

The IMF's quota reforms of December 2010 recommended that developing countries benefit to the tune of a 6 per cent shift in quotas in their favour, in order for them to be better represented. India's vote share will go up to 2.69 per cent from the current 2.34 per cent. "These reforms will ensure that the Fund is able to bet-ter meet and represent the needs of its members in a rapidly changing global environment," IMF managing director Christine Lagarde said in a statement accompanying the move. "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."

The IMF said the changes are aimed at better governance and reflect the increasing role of dynamic emerging markets and developing countries.

"The entry into force of these reforms will reinforce the credibility, effectiveness, and legitimacy of the IMF," it said. "For the first time, four emerging market countries (Brazil, China, India, Russia) will be among the 10 largest members of the IMF."

The amendment to the IMF’s Articles of Agreement creating an all-elected executive board (board reform amendment) entered into force on Wednesday. The board reform amendment was part of a broader package of reforms that also included a doubling of IMF reservations under the 14th general review of quotas. It also marked a shift in quota shares toward dynamic emerging markets and developing countries.