India today pitched for a revision in the quota formula in the International Monetary Fund (IMF), based on purchasing power parity, and demanded an increase of five-six per cent in voting power for emerging economies in the 186-nation multilateral agency. Finance Minister Pranab Mukherjee said the existing flawed quota formula could not deliver a shift and should be revised in a separate time-bound programme.
“The quota review should ensure a forward-looking realignment of quota shares. The burden of the quota shift to dynamic emerging markets and developing countries have to be borne primarily by advanced economies and I reiterate my call for a shift of five-six per cent in quota share from advanced countries to developing countries.”
A substantial ad hoc allocation based on global PPP-GDP shares has to form a part of the solution to ensure that the Fund’s quota shares better reflect global economic realities, he further added.
Earlier on Thursday, while addressing a meeting of G-24 countries here, Mukherjee had called for shifting more voting power in favour of emerging market economies in IMF as they represented around 47.5 per cent of global economy, but had only 39.5 per cent share in the multilateral lending body.
“Recent developments in the global economy indicate that resumption of self-sustaining growth may be more sluggish and protracted than anticipated,” he said. Noting that the IMF is at a crucial stage of reform exercise, Mukherjee said changes could enhance the Fund’s credibility, only if, bold and forward looking quota and governance changes were implemented. He urged other countries to ensure that the ratification of the April 2008 package of quota reforms was completed without further delay.
Meanwhile, US Treasury Secretary Timothy Geithner said the reform of the IMF must reflect the current economic realities of the world. He also said the quota review should also achieve an appropriate rebalancing between the IMF’s quota and borrowed resources, including the New Arrangements to Borrow. Geithner added that modernisation of the governance of the IMF needed to be accompanied with progress by countries, particularly the surplus countries, towards market-oriented exchange rate policies and policies that would reduce reliance on exports.