Committed to boosting IMF resources by $430 bn: G-20
The G-20 countries today expressed their commitment to increase resources of the International Monetary Fund (IMF) by over $430 billion, saying recent economic developments reflected the continuation of a modest global recovery.
However, India said its contribution to these efforts was linked with governance issues and expressed disappointment at the pace of reforms on increasing the quota for developing countries.
“There are firm commitments to increase resources made available to the IMF,” said a communique by G-20 finance ministers and central bank governors after they concluded their two-day talks in Washington on Friday.
Though the communique pointed towards risks to global recovery, it said the resources would be available for the entire IMF membership, and would not earmarked for a particular region. The resources would be channelled through temporary bilateral loans and note purchase agreements to the IMF’s general resources account.
“Should it become necessary to use these resources, adequate risk mitigation features, conditionality and burden sharing among official creditors would apply, as approved by the IMF board,” it said.
However, Finance Minister Pranab Mukherjee expressed concern over the slow pace of quota and governance reforms in the IMF, saying steps were necessary to ensure legitimacy and effectiveness of the multilateral agency. “India will continue to play its role to assist the IMF in its efforts to augment permanent resources. However, governance issues are also linked with this, and we are disappointed at the pace of the reforms on quota and governance issues,” he said at a joint meeting of G-20 and the IMF committee.
The finance minister said a dynamic process of reform was necessary to ensure legitimacy and effectiveness of the Fund and the best possible means to improve governance and legitimacy was by ensuring there was no slippage on crucial reforms.
Saying the quota formula was of central importance, since quotas were the main determinant of the voting power of members, he said efforts should be made to complete it by January 2013.
“We reaffirmed our commitment to fully implement the 2010 Governance and Quota Reform by the 2012 IMF/World Bank Annual Meeting. We will continue to contribute towards a comprehensive review of the IMF quota formula by January 2013 and the completion of the next general review of quotas by January 2014,” the communique said.
The IMF reforms aim to increase the voting power of developing countries. Quota reforms would shift more than six per cent of quota shares to dynamic emerging market and developing countries (EMDCs). While China would become the third-largest member country in the IMF, four EMDCs, Brazil, China, India, and Russia, would be among the 10 largest shareholders in the Fund.
Saying the risks facing the global economy only months ago had “started to recede,” the G-20 block noted the growth expectations for 2012 remained moderate and downside risks still persisted. The communique also said the countries were vigilant of high oil prices and the G-20 members were ready to carry out additional actions, as needed.