Finally, the International Monetary Fund has made country quota reforms agreed by the G20 in 2010 a reality. One could imagine a collective, global sigh of relief as the chief objector to the changes, the U.S. Congress, dropped its intransigence in December and allowed the multilateral lender to adopt a country quota distribution that better reflects the power balance of emerging markets in the global economy. With this structural shift, more than 6 percentage points of the quota, including both the Fund’s capital and its proportionate voting rights, have been transferred from developed to emerging economies. The greatest gains from the reforms accrue to the IMF itself, as the combined capital that its 188 member-countries contribute will increase to approximately $659 billion from nearly $329 billion. Other winners are India and China, who have respectively increased their voting shares by 0.292 and 2.265 percentage points. The emerging economies wrested a 2.6 percentage points increase. The developed nations have had a haircut in their voting share, somewhere between 0.2 and 0.5 percentage points. Consequently, India, China, Brazil, and Russia will be among the 10 largest members alongside large advanced economies. As IMF Managing Director Christine Lagarde said, it is appropriate to “commend [the IMF] for ratifying these truly historic reforms”. But the reforms have come so late and after so much wrangling that, similar to its crisis-lending policies, they leave a bitter taste in the mouth.

Back in May 2011, the Fund’s Executive Directors from the BRICS economies openly revolted against the prospect of the position of Managing Director reverting to a European, deepening the woes of an organisation that had been rocked by the resignation of Dominique Strauss-Kahn following sexual assault allegations. At the time, Arvind Virmani, Executive Director, from India, argued that the 2008 global financial crisis erupted in developed countries and its provenance “underscored the urgency of reforming international financial institutions so as to reflect the growing role of developing countries in the world economy”. Multi-year Republican Party obstructionism in the U.S. meant that the negotiations were dragged into the mud of dirty domestic politics, with some threatening to veto them unless President Barack Obama’s landmark health-care reform was repealed. Law-makers relented only after years of persuasion made them realise that their inaction was hurting U.S. diplomacy. Even so, they extracted their pound of flesh, and the final reform plan acquiesces to their demand to rescind the “systemic exemption” loophole, which allowed the Fund to lend to Greece in 2010. It is also a shame that BRICS nations had to launch their own bank, the Asian Infrastructure Investment Bank, before the high priests of the Fund felt the need to modernise their quota structure. Despite all these push-factors, the process of governance restructuring at the IMF has not ended; it has only just begun.