IMF quota reforms delay is G20's first visible failure: India
Sydney: Describing the IMF's inability to move ahead with quota reforms as the "first visible failure of the G20," India on Friday asked member nations to expeditiously ratify the changes to give emerging nations a greater voice.
"This is perhaps the first visible failure of G20. This has reduced the credibility of G20. This has reduced the credibility of G20 as a premium forum for international economic cooperation and has dented the role of multilateral forum in achieving the agreed reforms," Economic Affairs Secretary Arvind Mayaram said.
It was agreed in December 2010 that the International Monetary Fund (IMF) would implement the 14th General Review on quota reforms by January 2014.
Once implemented, India's share would increase to 2.75 percent from 2.44 percent currently and the country would become the eighth-largest quota holder at the IMF, up from the 11th position.
After a meeting of Finance and Central Bank Deputies here, Mayaram said: "We strongly stated that it is unfortunate that despite agreement in G20, implementation of 2010 reforms, which is vital for credibility, legitimacy and effectiveness of the IMF, have not been completed and we have missed the deadline of January 2014."
The meeting preceded the two-day conference of Finance Ministers and Central Bank Governors starting tomorrow, which will be attended by Finance Minister P Chidambaram and Reserve Bank Governor Raghuram Rajan, besides other ministers and central bank chiefs of the G20, a club of rich and developing nations.
Quota reforms at the IMF have hit a roadblock because US lawmakers failed to agree on the new funding mechanism.
The failure of the IMF to undertake the quota reforms, Mayaram said, has introduced huge uncertainties on realignment of quotas and associated governance reforms and as well as completion of the 15th General Review of quotas.
"It also means that IMF reliance of NAB (New Arrangements to Borrow) and bilateral resources will increase.
So we very categorically stated that it would be difficult for us to continue to support this kind of reliance on borrowed resources," he added.
India said it is the combined responsibility of the G20 members to restore the credibility of the grouping and has asked the IMF Board of Governors to implement the 14th General Review and then proceed with the next round of reforms.
"Our first aim should be to get the 14th General Review ratified by the next meeting in April 2014...We have requested all those countries which have not ratified the 14th General Review to ratify these without further delay," Mayaram said.
The IMF Board of Governors is asking for approval of a new deadline for completing the 15th General review by January 2015.
India is vigorously pushing for early completion of the IMF quota reforms at the G20 meeting. The IMF reviews member quotas once in five years and the previous one took place in December 2010.