India’s Finance Minister Arun Jaitley has expressed his disappointment over the non-implementation of IMF quota and governance reforms, which would give emerging economies a greater say in global financial management.
In his address to the International Monetary and Financial Committee, the finance minister expressed, “We are greatly disappointed that the 2010 Quota and Governance Reforms have not become effective in spite of the strong support of the global community for the reform.” He added, “We are also concerned that we have not made any headway in the forward looking elements of the 15th Review, including the review of the quota formula and the initiation of the discussions on the Review.”
The 2010 reforms, originally propelled by Washington, have been repeatedly endorsed by President Barack Obama. But he is facing difficulty in convincing some legislators in the US Congress, where they are blocking his proposals. The quota reforms seek to provide a greater say to emerging economies like India and China over the IMF, where the United States and other European countries continue to possess sizeable heft.
“The continuance of such momentum in the IMF governance and quota reforms is essential to maintain the effectiveness, credibility and relevance of the IMF as a multilateral quota based institution, which reflects adequately, the changes in the global economic framework,” he said.
The finance minister underlined that at the moment, global economies are facing some major challenges. First, the potential growth rate has declined in advanced and emerging market economies. Second, there is an uncertainty about the smooth exit of unconventional monetary policies (UMPs) employed by central banks in major economies.
Jaitley emphasised that at this crucial juncture the focus should be to encourage infrastructure investment, strengthen the investment climate and improve human resource skills.
Economic growth recovery continues to be weak in several areas of the world, including the Euro zone and Japan.
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