By Arun Kumar, IANS,
Washington : India, China, South Korea, Brazil and Mexico will see some of the largest gains in their quota shares in the International Monetary Fund to bring them closer to their evolving position in the world economy.
The five nations are among 54 members which will receive an increase in their quotas once the 2008 reform for improving IMF governance is implemented, the Fund said ahead of a gathering of finance ministers and central bank governors from around the world here from April 24 to 26.
While these 54 countries will get an increase in quota shares of 4.9 percentage points, 135 countries will see an increase in voting share of 5.4 percentage points due to the combined effects of the increase in quotas and basic votes.
As world finance leaders meet here to assess the global response to the world financial crisis and attempts to recover from the deepest recession since the 1930s, IMF said a top priority for the Fund’s legitimacy and effectiveness is the completion of outstanding governance reforms.
The IMF will push to promptly ratify quota and voice reforms agreed in April 2008 and then launch the next phase, including further rebalancing of country representation by January 2011, it said. Quotas largely determine a country’s voting power in the 185-member international institution.
IMF managing director Dominique Strauss-Kahn has said that top priority now should be to clean up the banking sector, which lies at the heart of the crisis.
“We all understand the stakes. 2009 will almost certainly be an awful year-we expect global growth to enter deeply negative territory,” he said at a briefing last week on the Fund-World Bank Spring Meetings,.
“This is a truly global crisis, and nobody is escaping. It originated in advanced economies, and spread like wildfire across the world.
“Emerging markets are being hit hard, facing the double punch of a sharp drop in export demand and a sudden stop in capital inflows, and this threatens to undo the impressive gains in growth and convergence achieved over the past decade or so,” Strauss-Kahn said.
Meetings of both the Group of Seven industrialised countries and the G-20 will be convened on April 24, ahead of the Saturday session of the IMF’s policy-setting guidance body, the International Monetary and Financial Committee (IMFC).
Among other things, the committee is expected to be interested in measures being taken to prevent crises and to spot emerging ones earlier, IMF said. Steps are being taken by the IMF to enhance analysis of risks and linkages between the real economy and the financial sector.
The IMF is also working on the development of an early-warning exercise – joint with the Financial Stability Board – and revamping the Financial Sector Assessment Programmes which look at country financial sectors.