G24 with India on IMF reform

G24 with India on IMF reform

Bats for 5% shift to emerging economies

G24 with India on IMF reform

(Clockwise from right) Finance Minister Pranab Mukherjee, Finance Secretary Ashok Chawla, RBI Governor D Subbarao and IMF Executive Director Arvind Virmani during the annual plenary meeting of the International Monetary Fund and the World Bank in Washington. PTI

Attaching great importance to ongoing discussions of governance reforms in IMF, a meeting of Ministers of Intergovernmental Group of 24 on the International Monetary Affairs and Development, said a significant realignment of quotas must be centerpiece of such reform.

“The Ministers reiterated that the goal for the 14th General Review of Quotas to be completed by January 2011 must be to bring about a shift of at least 5 percentage points from advanced economies to EMDCs. Ministers called on countries that have not yet done so to complete the ratification of the 2008 quota and voice reform,” said a communique issued after the meeting.

Chaired by South African Finance Minister Pravin Gordhan and vice-chaired by Union Finance Minister Pranab Mukherjee, ministers noted that realignment must reflect the rapidly evolving weights in the world economy.

“The quota formula cannot serve as a robust guide in this regard. Ministers reiterated their call to reform the quota formula. If consensus cannot be reached on a reformed formula for the immediate exercise, the reliance on the quota formula should be minimised and its shortcomings addressed,” the communique said.

“In particular, the ministers supported a much greater weight for PPP-GDP in the quota realignment. While regretting that the quota formula was not reviewed before it was used again, as called for in the 2008 Governors Resolution, they called for a firm commitment to reform the quota formula within two years from now and for more frequent quota adjustments based on timely data,” it said.

Ministers noted that, while the realignment would be primarily expected to benefit dynamic EMDCs, it must not come at the expense of other EMDCs that have already suffered losses in the 2008 quota allocation and are most adversely affected by the deficiencies of the quota formula. They called, therefore, for adequate protection of other EMDCs.

Ministers supported the protection of the quota shares of the poorest countries on an individual basis, but underlined that this must come from the contribution of advanced economies.