International Monetary Fund’s (IMF’s) long-pending 2010 Quota and Governance Reforms have finally become effective.
These proposed reforms are the biggest change in the governance of the IMF (lender of last resort) since it was established after World War II in 1945 after the Bretton Woods Conference.
- Gives boost the representation of emerging economies like India, China, Brazil, Russia and increases their power and greater say in IMF.
- India’s voting rights increased by 0.3% from the current 2.3% to 2.6%. China’s voting rights increased by 2.2% from current 3.8% to 6 %.
- These reforms shifted more than 6% of the quota shares to emerging and developing countries from the US and European countries. Russia and Brazil also have gained from the reforms.
- The combined quotas or the capital resources of IMF also have doubled due to reforms to $659 billion from current $329 billion.
- The doubling of quotas means that the shares (roles) of advanced European and Gulf countries have been reduced and that of emerging nations particularly China has been increased.
- China will have the 3rd largest IMF quota and voting share after the US and Japan. While, India, Russia and Brazil will also be among the top 10 members of the IMF.
- The voting power and quota shares of the IMF’s poorest member countries will be protected.
- Under the reform, for the first time IMF’s Executive Board will consist entirely of elected Executive Directors and it ends the category of appointed Executive Directors.
Earlier Scenario: Currently, US, Japan, France, Germany, Italy, United Kingdom, Canada and Saudi Arabia are among the top ten members of the IMF. While, the member countries with the 5 largest quotas appoint an Executive Director.
The reforms were agreed upon by the 188 members of the IMF in 2010 in the aftermath of the global financial meltdown. However, there implementations were delayed due to the time taken by the US Congress to approve the changes. But, were finally approved by the US Congress in December 2015.