Developed nations on Saturday agreed to increase the quota of emerging and developing countries in the International Monetary Fund. The reformist move will improve India's quota from 2.44 per cent at present to 2.75 per cent, and move it three slots up in IMF from the eleventh position to the eighth position. This will give the country more voice in decision-making at the multilateral institution.
Over 6 per cent of the voting rights will be transferred and Europe will give up two seats for emerging countries. There will be a comprehensive review of the quota formula by January 2013 to better reflect the new economic order.
The next regular review of quota will be completed by January 2014, Finance Minister Pranab Mukherjee said.
Finance Ministers of the G20 nations also agreed to move to an all-elected IMF board, along with a commitment by IMF's members to maintain the board size at 24 chairs, and review its composition every eight years after the completion of the 2014 general review.
Apart from India, other BRIC countries are also expected to benefit from the agreement.
"We have reached agreement on an ambitious set of proposals to reform the IMF quota and governance, which will help deliver a more effective, credible and legitimate IMF and enable it to play its role in supporting the operation of the international monetary and financial system," said the G20 nations in a communiqué released after the conclusion of the two-day meeting of G20
Earlier in the day, on India's intervention on IMF reforms, Mukherjee had said the quota share of advanced economies was being protected on the basis of a flawed formula and data relating to 2008 which ignored the shifts which have taken place since.
"With the present approach, we are in serious danger of reaching an outcome which will not be perceived as enhancing the credibility or legitimacy of not only IMF but also G20," he had said.
Some IMF reforms were agreed in 2008, but only 82 countries have ratified it so far. About 112 countries had not ratified it. This seems a compromise solution between the developed and the developing countries, as the latter were pressing for a 7 per cent shift, while the US insisted on 5 per cent.
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