More voting rights for developing nations in IMF, WB

 India on Saturday scored a major victory at the summit of G-20 leaders when its demand for increasing the voting rights of the developing countries in International Monetary Fund (IMF) and World Bank  (WB ) was adopted, reflecting the importance of emerging economies in the crisis scenario.

The meet also accepted India’s position against any hasty and immediate withdrawal of the global stimulus package adopted at the London Summit in April. The current meet hosted by US President Barack Obama took a cool long- term look at the situation according importance to the role of emerging economies like India and China whose economies were rescuing the developed countries from the recession.

“After this crisis, critical players need to be at the table and fully vested in our institutions to allow us to cooperate to lay the foundation for strong, sustainable and balanced growth. We designated the G-20 to be the premier forum for our international economic cooperation,” said the 31-point four-page ‘Leaders Statement’ at the conclusion of the summit. “We established the Financial Stability Board (FSB) to include major emerging economies and welcome its efforts to coordinate and monitor progress in strengthening financial regulation,” said the the statement.

Shift in IMF quota
The document said the G-20 leaders were committed to a shift in the IMF quota share to dynamic emerging markets and developing countries of at least 5 per cent from over- represented countries to under-represented countries using the current quota formula as the basis to work from. “Today we have delivered on our promise to contribute over $500 billion to a renewed and expanded IMF New Arrangements to Borrow (NAB),” the statement said.

Analysts said that the IMF quota shift reflects a recognition by the US and Europe of a new global reality in which emerging economies play a bigger role in the aftermath of the crisis which has hurt the advanced economies more than the market economies like India and China.

Prime Minister who led the Indian delegation, said the shift in voting rights in the IMF could lead to a 50:50 power equation in the international financial architecture if not more in favour of the emerging and developing countries, a stand that has been voiced by India for long. He said the demand was for 7 per cent shift in voting rights but what was agreed was 5 per cent. “It was a compromise,” he explained.

The summit stressed the importance of adopting a dynamic formula which primarily reflects countries’ evolving economic weight and the World Bank’s development mission and that generates an increase of at least 3 per cent of voting power for developing and transition countries to the benefit of under-represented countries.