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IMF Implements Quota Reforms
Feb 04, 2016

The International Monetary Fund (IMF) has given voting rights to India, China and other emerging economics at the multilateral funding agency with the implementation of long pending quota reforms.

Salient Features

  • The reforms by IMF represent a major step towards better reflecting in the institution's governance structure. 

  • This will reinforce its credibility, effectiveness and legitimacy. 

  • Besides, more than 6 percent of quota shares would shift to dynamic emerging markets and developing countries.

  • This would also mark the shift in shares from over-represented to under-represented IMF members. 

  • The IMF reforms that came into effect was approved by it in 2010, but was unable to implement it in the absence of its approval by the U.S. Congress. 

  • As a result of the quota reforms, four emerging market countries like Brazil, China, India and Russia will be among the 10 largest members of the IMF.

  • Others in the top 10 largest members are the US, Japan, France, Germany, Italy and the UK.

  • With the entry into force of the Board Reform Amendment and all other general effectiveness conditions met, members can now pay for their quota increases to make them effective. 

  • The reforms also increase the financial strength of the IMF, by doubling its permanent capital resources to about659 billion dollar.

  • Currently, India has voting rights of 2.34% at the IMF, which has 188 members. In terms of quota, India has a share of 2.44%.

  • Now for the first time IMF Board would consist entirely of elected Executive Directors. This would do away with the category of appointed Executive Directors—currently members with the five largest quotas appoint an Executive Director.

  • The reforms also mark a crucial step forward and it is not the end of change as efforts to strengthen the IMF's governance will continue.

  • These reforms would ensure that the fund is able to better meet and represent the needs of its members in a rapidly changing global environment.


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