Growing clout of BRICS nations in high-profile negotiations on global finance
Finance Minister Pranab Mukherjee laid the blame squarely at the feet of “a number of countries” for holding up the progress of quota reform within the International Monetary Fund, hinting that there may in fact be a steep hill to climb before multilateral consensus emerges to give BRICS a greater voice in the Bretton Woods institution.
Addressing media in a final briefing before boarding a flight back to New Delhi, Mr. Mukherjee said that when the 2010 commitments to undertake quota reform at the IMF were recently reviewed, “it was found that the decision has not yet been approved by a number of countries.”
Regarding the percentage of votes required to get the process moving forward, the Minister said there was a shortfall of close to 15-16 per cent, although 53.7 per cent of the votes have been received.
Explaining that for quota reform 70 per cent of the votes were required and for reform of the Board of the IMF 85 per cent was required, he said, “I suggested that those countries that have not yet ratified the decisions, they should do so.”
Mr. Mukherjee's visit to Washington, focussed on a slew of meetings at the World Bank, the IMF, the G-20 and the G-24, has seen the growing clout of the BRICS nations in high-profile negotiations on global finance. The BRICS leaders have also used the opportunity to press their demands for quota reform at the IMF.
While the BRICS nations are expected to play a significant role in the IMF's bid to collect $430 billion to shore up its lending operations globally, Mr. Mukherjee went to lengths to clarify that the BRICS nations' offer to support the IMF and the World Bank should not be seen as conditional upon quota reform.
“It [may] be presumed ... that the BRICS countries have given any condition that they will contribute to increase the funds on fulfilment of certain conditions. That is not the case,” he said.
Addressing the question of why India had not announced a specific number in terms of its proposed contribution to the IMF's finances, he said that “some practical problems of making an announcement at this meeting,” had come up, including indications that the Russian and the Chinese leadership had suggested they would not be in a position to announce their numbers.
“Therefore, it was decided that we will announce that we are contributing to the Fund but the exact quantum of contribution will be communicated in due course.”
Over the weekend Mr. Mukherjee also explained some of his criticism of the IMF policy recommendations on capital flows, saying in response to a question from The Hindu that the G-24 had expressed “strong reservations” with the IMF staff recommendations on this matter.
“There cannot be a straight-jacket formula or one-size-fits-all formula. The countries should have the flexibility to determine how they can watch the volatility of capital flows and how they can handle it. It should be country-specific.”