Breathing space needed before next round of IMF reforms

IMF chief's comments, which came at the Advancing Asia Conference, came on the completion of a round of quota reforms

A day after India pitched for further quota reforms at International Monetary Fund (IMF) to reflect global economic realities, Christine Lagarde on Sunday said a round of thesehas just been completed and there has to be some breathing space before the next round.

“It was an in-depth series of changes, which are not sufficient. The quota review is a continuous momentum. We will be at it over and over, because it has to mirror the state of the economy,” she told reporters at the end of the three-day Advancing Asia Conference.

On Saturday, at the conference, Prime Minister Narendra Modi had stated the quota revisions agreed in 2010 had finally come into effect but “even now, IMF quotas do not reflect the global economic realities”. On her part, Lagarde said, “We just completed one (round of reforms) and we need to breathe for a few moments and then move to the next one.”

IMF had in January announced implementation of its pending which will give more voting rights to emerging economies such as India and China in the functioning. India's quota in IMF rose to 2.7 per cent from 2.44 per cent and its voting share increased to 2.6 per cent from 2.34 per cent.

For the first time, four emerging market countries of the BRIC bloc — Brazil, China, India, and Russia — will be among the 10 largest members of IMF.

Other top 10 members include the US, Japan, and the four largest European countries — France, Germany, Italy and the UK.

Lagarde welcomed BRICS Bank and the Asian Infrastructure Investment Bank (AIIB), saying this is much needed for the region and its investment requirements.

She said it would be better for the multilateral institutions to work together.

“The IMF is a different animal. We are in the business of helping countries in disarray when there is a significant balance of payments issues, when a country is unable to finance or refinance itself, then we are called upon helping.

“We don't finance projects. However, we provide a light of technical assistance to encourage projects that are well managed,” she said.

Asked about the new GDP series India has adopted, she said, “We have conducted the work and analysis and the answer is very clear. Yes, we do think that it is in line with international standards.”