Concerned over the unwillingness of developed economies to push IMF quota reforms, Finance Minister P. Chidambaram on Wednesday said the decisions of the G-20 meeting should be implemented expeditiously to ensure credibility of the organisation.
“Most advanced countries have now clearly indicated their unwillingness to move ahead on International Financial Institutions (IMF, World Bank) governance and capital reform. This has hampered the credibility of G20 and makes it difficult to progress on other issues as well,” he said at an ICRIER event here.
The Minister said to be able to play a meaningful role in the global governance, the G-20 agenda should be sharper and focused only on those issues on which it can make a distinctive contribution, particularly, on economic and financial matters.
“Finally it is important to ensure that the decisions taken in G20 meetings are carried forward expeditiously,” he said.
“In the backdrop of the upcoming WTO ministerial in Bali in December 2013, G20 leaders have called on all WTO members to show flexibility so as to achieve a successful conclusion in Bali,” he said.
In the recent G-20 Summit, Prime Minister Manmohan Singh had emphasised the need for early completion of the International Monetary Fund (IMF) quota reforms to increase representation of the developing countries in the multi-lateral body.
Aimed at improving the voting share of developing countries and achieving a better representation on the IMF Board, the reform of the international financial institutions has been a key part of G-20 agenda.
G-20 is a club of developed and emerging economies.
Mr. Chidambaram said the membership of G-20 represents a different balance of power where both advanced and emerging countries come together as equal partners allowing for more inclusive deliberation and effective response to today’s complex global challenges and opportunities.
“There is a clear recognition that the dimension of development challenge vary from country to country. Therefore, any policy that is recommended at the international forum has to be tailored to national circumstances,” he said.
Noting that the agenda setting of G-20 has an advanced country perspective, he said, this is highlighted by the emphasis given on the financial regulation and on transparency.
“As the crisis originated in the advanced country, it is natural that higher capital requirements and asset quality have been stressed in the Basel norms for the banking sector,” Mr. Chidambaram said.
Emerging markets have accepted these norms in the spirit of multilateralism, he said.
“However, in the context of a weak global recovery we should be careful that the pro-cyclical bias should not be a stumbling block in developing countries,” he said.
“Since, growth in the emerging market is crucial to the strength of the global economy, it is critical the G-20 finds ways to develop strong links of coordination and cooperation and take up issues of emerging economies as otherwise G-20 may evolve as a loose forum instead of a powerful steering wheel of global governance,” he added.