INTERNATIONAL

IMF reforms: India, China, Brazil get more voting rights

IMF Managing Director Christine Lagarde said that greater representation will help the institution better meet the needs of its members. —FILE PHOTO: AP  

In long-pending reforms that came into effect on Wednesday, emerging economies gained more influence in the governance architecture of the International Monetary Fund (IMF). India’s voting rights increase to 2.6 per cent from the current 2.3 per cent, and China’s to six per cent from 3.8. Russia and Brazil are the other two countries that gain from the reforms.

More than six per cent of the quota shares will shift to emerging and developing countries from the U.S. and European countries. The combined quotas — or the capital countries contribute — doubles to about $659 billion from about $329 billion.

The reforms, which came into effect on Wednesday, were agreed upon by the 188 members of the IMF in 2010, in the aftermath of the global financial meltdown, and their delayed implementation has been a major concern for India.

Among the reasons for the delay has been the time it took the U.S Congress to approve the changes. U.S voting share will marginally drop, from 16.7 per cent to 16.5 per cent. The U.S Senate had approved the changes in December 2015.

“I commend our members for ratifying these truly historic reforms,” IMF Managing Director Christine Lagarde said. She said a “more representative, modern IMF will ensure that the institution is able to better meet the needs of its members in a rapidly changing global environment.”

The reforms bring India and Brazil to the list of the top 10 members of the IMF, along with the U.S, Japan, France, Germany, Italy, the U.K., China and Russia.

For the first time, the Executive Board will consist entirely of elected executive directors, ending the category of appointed executive directors. Currently, the members with the five largest quotas appoint an executive director, a position that will cease to exist.