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Country's IMF voting rights likely to be curtailed

Ignoring protests by India and the G-24 developing countries, the IMF has pressed ahead with its move for an increase in quotas for some countries.

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World body favours ad-hoc hike in quotas.

NEW DELHI: Ignoring protests by India and the group of 24 (G-24) developing countries, the International Monetary Fund has pressed ahead with its move for an ad hoc increase in quotas for some countries. This will result in India's voting rights in the multilateral agency dropping by September this year.

Finance ministry officials said it is not clear by how much India's voting rights will suffer as a result of the IMF move for ad hoc increase in quotas.

The criteria for this exercise have not been spelled out, they said.

Each of the 184 IMF member-nations have a quota of special drawing rights (SDRs), which broadly reflects each country's economic size.

Corresponding to this, India has the voting rights of 41,832 votes which is 1.92% of the total voting rights.

India, one of the celebrated BRICs in the Goldman Sachs report and one of the fastest growing economies in the world, has been pressing for a comprehensive review of IMF quotas and voting rights to reflect the new global economic architecture.

In the spring meeting of IMF last week, RBI governor Y V Reddy, leading the Indian delegation, forcefully made that point. Reddy questioned the ad hoc increase in quotas as an exercise removed from current realities because it would lower the quotas of three of the four BRICs - Brazil, Russia and India. Only China and some other emerging economies such as Argentina and Turkey stand to benefit.

The International Monetary and Financial Committee (IMFC) of the IMF, which held its meeting under British Chancellor of Exchequer John Brown, gave the ad hoc quota increase a push.

"We underscore the role of an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy," the committee said in a communiqué.

The committee also asked the IMF managing director to work with IMFC and the IMF executive board to come forward with concrete proposals for agreement at the annual meeting on September 17 in Singapore.

"We have not agreed to the ad hoc quota increase", a senior finance ministry official said. "Our position is reflected in the communiqué", he added pointing out that there is still no agreement and the document mentions the fact that "the committee agrees on the need for fundamental reforms".

Voting rights are important for member countries for it provides them the power to nominate or elect their executive directors on the board of IMF, which runs the day-to-day management and takes key decisions.

Major economic powers such as the US and Japan have large quotas and voting power to nominate their representatives on IMF's 24-member board.

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