India wants IMF to redefine its role

By Arun Kumar, IANS,

Washington : India has asked the International Monetary Fund (IMF) “to reshape and redefine its role and mandate” in tune with the times to play a pivotal role in warning about future global crises and help foster strong and sustainable growth.

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“Concerted and decisive actions by both advanced and emerging and developing countries helped the world to deal with an unprecedented financial and economic crisis,” Reserve Bank of India (RBI) Governor Duvvuri Subbarao told the steering committee of the 186-nation Fund Saturday.

“Our response has strengthened international cooperation and instilled confidence that together we can secure the financial stability of the world and achieve sustainable economic growth,” he said as the committee held a daylong meeting as part of the regular spring gathering of the IMF and World Bank.

Subbarao noted towards this objective, a number of significant and concrete steps have been taken with the substantial strengthening of the Fund, including refinements in its surveillance, the expansion of resources and the improvement of lending facilities.

But a lot more needs to be done, he said, seeking organisational and governance reforms to vest the Fund “with acceptability, legitimacy and independence”.

Reiterating India’s call for at least a 7 percent shift in quota shares in favour of the Emerging Markets and Developing Countries (EMDCs), Subbarao said only such a substantial shift would better reflect current global economic realities and would enhance the legitimacy of the Fund.

“If the clarification and refocusing of the mandate of the IMF is to have legitimacy, it should follow and not precede a change in the governance structure, including quota shares reflecting the present and emerging global economic realities measured in the most appropriate manner rather than on the basis of an improved but still flawed formula,” he said.

“Looking ahead, the Fund will have a pivotal role in warning about future crises, strengthening the defences of its membership against potential threats to stability, mitigating the hardships brought on by crises if and when they strike, and in general, fostering a global environment conducive to strong and sustainable growth,” he said.

This will require the Fund to reshape and redefine its role and mandate so as to adapt to the requirements of changing times, said Subbarao, taking the floor on behalf of Finance Minister Pranab Mukherjee, who represents Bangladesh, Bhutan, India and Sri Lanka on the International Monetary and Financial Committee.

“A lot has been achieved towards a new-look Fund, but more needs to be done, and in particular, the organisational and governance reforms that are being envisaged to vest it with acceptability, legitimacy and independence,” he said.

(Arun Kumar can be contacted at [email protected])