India calls for 'quota-based resource base' for IMF
Washington/New Delhi: Calling for a timely review of the International Monetary Fund (IMF)'s quota system, India has urged for the creation of a robust quota-based permanent resource base for the multilateral lender to mitigate risks to the international monetary system.
The call was made by Union Finance Minister Arun Jaitley in his speech at the International Monetary and Financial Committee that was delivered in his absence on Saturday by Reserve Bank of India (RBI) Governor Urjit Patel.
Patel is leading the Indian delegation to the Spring Meetings of the World Bank and the IMF which bring together finance ministers and central bankers of member countries.
"A strong quota-based permanent resource base for the IMF would serve to strengthen the Global Financial Safety Net (GFSN) and mitigate risks to the international monetary system," Jaitley said, as per the speech released by the Finance Ministry.
"We strongly support the shared multilateral commitment on completing the 15th General Review of Quotas (GRQ) by the 2019 Spring Meetings and no later than the 2019 Annual Meetings as we call for the realignment of quota shares of EMDEs (emerging market and developing economies) whose under-representation has increased further by 0.5 percentage points in the last update leading to under-representation of EMDEs by 7.5 per cent," he said.
Jaitley said although the quota increases under the 14th GRQ, the renewal of New Arrangements to Borrow (NAB) and bilateral commitments have helped in maintaining the current lending capacity, the IMF would continue to require sufficient resources "to respond to actual, potential or prospective financing needs going forward".
"We call upon the IMF to develop credible policy advice for rebalancing of the global economy while drawing attention to the adverse implications of policy spillovers on other countries," Jaitley said.
"The intensifying challenges to multilateralism call for unequivocal and forceful voice of the IMF and the WTO (World Trade Organisation) in favour of rule-based international trading system and against protectionism," he added.
In his address to the World Bank Development Committee Plenary on Saturday, Economic Affairs Secretary S.C. Garg noted that countries in India's constituency in the World Bank -- Bangladesh, Bhutan, India and Sri Lanka -- are now the highest growing block in South Asia and in the world, with a combined GDP that will cross $3 trillion this year.
The Secretary expressed India's support for the shareholding review, "including development of dynamic formula and the capital package", the Ministry said in a statement.
On Saturday, the World Bank approved a $13 billion capital increase package that includes $7.5 billion of paid-in capital for the International Bank for Reconstruction and Development (IBRD), the group's primary lending arm, and $5.5 billion for the International Finance Corporation (IFC), the group's private sector lending arm.
Following the capital increase plan, the combined financing arms of the World Bank are expected to reach an average annual capacity of nearly $100 billion between fiscal year 2019 and fiscal year 2030, it said.