The International Monetary Fund (IMF) has won final approval from its board of governors for a reform package that gives emerging economies like India a little more say in its running.
India's share stands increased to 2.34 percent, up by a mere 0.42 percentage points, while the total voting power of developing nations goes up by just 1.6 points under the changes approved Tuesday by the board made up of finance ministers from the fund's 185 member countries.
Besides India, the reform package would boost the voting shares of other emerging economic powers like China, Mexico, Brazil and South Korea, who for more than a year have been demanding a bigger role in IMF decisions.
At the same time, it would reduce the shares of several others including like Russia, Egypt, Saudi Arabia, Venezuela, Argentina, Chile and South Africa.
"This vote shows the overwhelming level of support across the Fund's membership for these reforms, and I thank the members for this resounding endorsement," said IMF Managing Director Dominique Strauss-Kahn.
"I see this result as the beginning of the new legitimacy of the Fund," he said, noting: "The new structure represents an important step toward a redistribution of voting shares toward dynamic emerging market and developing countries and we expect to see a continued shift over the next decade."
The changes will enhance the participation and voice of emerging market and developing countries, and realign members' shares with their relative weight and role in the global economy, the IMF said.
Governors of 175 countries, representing 93 percent of the total voting power in the Fund, voted in favour of changes to the quota and voting share structure by a deadline of April 28. Three countries voted against, two abstained, and five did not vote. Approval of the Resolution required 85 percent of the total voting power.
Besides increasing the voting shares of more than two-thirds of the member countries, the reforms package will also enhance the voice and participation of low-income countries through a tripling of basic votes-the first such increase since the Fund's creation in 1944.
"In particular, the tripling of basic votes reflects an innovative part of this reform effort, aimed at enhancing engagement and voice of our low-income members," Strauss-Kahn said.
"To preserve this element of the reforms, the package includes a mechanism that will keep constant the ratio of basic votes to total voting power in the IMF," he said.
The reform of country representation is part of a two-year programme approved at the 2006 Annual Meetings in Singapore, when initial ad hoc increases in quotas were agreed for China, South Korea, Mexico, and Turkey. A country's quota at the IMF largely determines its voting power in the 185-member institution.
The proposed changes will increase nominal quotas ranging from 12 to 106 percent for 54 countries, with some of the largest gains going to dynamic emerging market economies, the aggregate shift in quota shares for these 54 members amounts to 4.9 percentage points, IMF said.
India along with other underrepresented emerging market and developing economies, whose shares in global GDP in terms of purchasing power parity (PPP) are more than 75 percent greater than their actual pre-Singapore quota shares, will receive a minimum nominal quota increase of 40 percent from their pre-Singapore level.
Overall, the changes in voting shares amount to an aggregate shift of 5.4 percentage points to under-represented countries. Still, the actual shift from industrial countries to emerging ones was a small 2.7 percentage points.
Among industrial countries, the US' voting share dropped by 0.292 percentage points to 16.732 so did the shares of Germany, France, Britain, Italy and Canada. Japan was the only industrial country whose voting shares increased.
Indo-Asian News Service
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