“It appears that recovery will be unsteady and long-drawn with growth in employment lagging behind. Maintaining policy stimulus is crucial for anchoring the recovery,” Finance Minister Pranab Mukherjee said at the annual meeting of IMF-World Bank in Istanbul.
“Balancing the stimulus against risks of inflation and threats to fiscal viability is a key short term challenge. The timing and sequencing of exit strategies assume importance,” he said while cautioning that lingering effects of the crisis on the poor might continue for many years.
Stressing the need for restructuring of institutional mechanism of international financial architecture he called for drastic reforms in the IMF and World Bank to give a bigger role to emerging economies in economic policy making.
To preserve the fund as quota-based institution, at the minimum there should be doubling of quotas, Mukherjee suggested adding this can be achieved through 7 to 8 per cent shift in quota shares.
He said “the chairs in the Executive Board should be redistributed on a more equitable basis amongst regions of the world. Any changes should protect representation of developing countries.” The IMF received a $500 billion boost in its resources in April but emerging market countries India, China, Brazil and Russia have made it clear their contribution is not permanent unless they are given greater say in the institution and also in how the funds are used.
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