Frustrated at lack of reforms at IMF: Lagarde

A day after India expressed strong resentment over lack of quota reforms at the IMF, its visiting chief Christine Lagarde today expressed her own "frustration" over the non-implementation of the long-delayed measures.
"You have no idea how personally frustrated and irritated I am about this lack of implementation of what was intended in the first place, especially when everybody else has decided to implement it (the quota reforms)," Lagarde said in response to question at a meeting at RBI headquarters here.
The IMF quota reforms seek to provide greater say to emerging economies like India at the Fund, where the US and large European countries command high influence. The ratification of the US is necessary for implementing the reforms, agreed by the member countries way back in 2010.

If the membership weighting is realigned that will put India in the top 10 shareholders of the Fund.
At present, India has a quota of 2.44 per cent, with 2.34 per cent voting right in the IMF, while the US has 17.69 per cent, with 16.75 per cent voting right, followed by Japan at 6.56 per cent and 6.23 per cent voting share.
Yesterday Lagarde told the LSR students in Delhi that the US was "not ratifying" due to its own reasons".

"It's hard work because there is one member which is not ratifying. The US that was determined to re-balance, to move Europeans out and bring emerging market economies in, is not ratifying the reform," she had told the students.

Today she also said if the quotas are realigned it could help the Fund provide easier credit to borrowing nations, she today said the lack of reforms has a double impact.
"We have enough resources...But it's not the right structure of financials. The quota based system gives it certainty and solidity designed by the initial founders and the entire membership. We have the financials but I wish it was structured in a different way," said Lagarde.
"We don't have it because it is conditional upon the other one happening which is the governance reforms, which provides for better representation of the under-represented countries including some of the emerging market economies like India," she added.

However, she said the fact that there is no adequate representation around the table, she does not think it stops the Fund from doing the business its has to do, or stops the management and staff to represent the entire membership to be evenhanded in what we do.
On the rising criticism that the fund is not credible as it lacks proper representation of all its members, she said: "I personally don't buy the argument that we are not credible, that we are not doing the best job... But this reform must be implemented and I hope will implement it. If it does not, we will explore alternative albeit infinitely less satisfactory ways to step in that direction."

Yesterday Lagarde had met the Prime Minister Narendra Modi and Finance Minister Arun Jaitley, who had pitched for early implementation of IMF quota reforms to give a more say to emerging economies like India.
Lagarde, who had also called on President Mukherjee, emphasised that IMF was a global multilateral institution where countries like India must have a bigger say.