In an important step in the direction of reforming global financial governance architecture, the voting rights of emerging economies like India and China in the International Monetary Fund (IMF).
India’s voting rights has increased to 2.6 per cent from the current 2.3 per cent, and China’s to six per cent from 3.8 percent. Russia and Brazil were the other two countries that gained from the reforms.
According to the new reforms, more than six per cent of the quota shares will shift to emerging and developing countries from the US and European countries. The reforms came into effect on January 27. The capital contributed by countries has now doubled to about $659 billion from about $329 billion. “I commend our members for ratifying these truly historic reforms,” IMF Managing Director Christine Lagard said. “A more representative, modern IMF will ensure that the institution is able to better meet the needs of its members in a rapidly changing global environment,” she added.
The enhancement of resources will strengthen the IMF’s ability to respond to crises more effectively. “These reforms will reinforce the credibility, effectiveness, and legitimacy of the IMF,” an IMF statement said.
In the aftermath of the global financial meltdown, IMF reforms were agreed upon by its 188 members in 2010. The delay in implementation had been a major concern for India. Prime Minister Narendra Modi and his predecessor Manmohan Singh had raised the issue at various international fora regularly. India has been consistently demanding for more representation for the developing countries in the global financial system.
One of the major reasons for the delay for the reforms was that it took the US Congress time to approve the changes. The U.S voting share has now marginally dropped from 16.7 percent to 16.5 percent. Despite having a veto power, the Republicans have been agitated over the “declining U.S power” status. The US Senate approved the changes in December 2015. This paved the way for the implementation of the reforms.
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