The Executive Board of the International Monetary Fund (IMF) has approved proposals that will lead to a major overhaul of the Fund's quotas and governance putting India among the top ten.
Aimed at strengthening the Fund's legitimacy and effectiveness, the quota shift announced on Friday would exceed the target set out in October 2009 by ministers and governors in the International Monetary and Financial Committee (IMFC).
The Fund's policy-advisory body had set a target of a shift in quota share to dynamic emerging market and developing countries of at least 5% from over-represented countries to under-represented countries, while the voting share of the poorest members is protected.
The Executive Board on Friday also endorsed a timeline that calls for the quota increase and realignments to take effect by the Annual Meetings of October 2012, and Executive Board reforms to be implemented no later than the subsequent Executive Board election, which is scheduled in late 2012.
With the quota shift, the 10 largest members of the Fund will consist of the United States, Japan, the BRICs (Brazil, China, India, the Russian Federation), and the four largest European countries (France, Germany, Italy, the United Kingdom).
"This historic agreement is the most fundamental governance overhaul in the Fund's 65-year history and the biggest ever shift of influence in favour of emerging market and developing countries to recognize their growing role in the global economy," IMF Managing Director Dominique Strauss-Kahn said after the Executive Board's decision.
As part of the far-reaching reforms, the Executive Board proposes completion of the 14th General Review of Quotas with a doubling of quotas to approximately SDR 476.8 billion (about USD 755.7 billion at current exchange rates), and a major realignment of quota shares among members.
It will result in a shift of more than 6% of quota shares to dynamic emerging market and developing countries and more than 6% from over-represented to under-represented countries, while protecting the quota shares and voting power of the poorest members.
Moreover, the total shift in voting share to emerging market and developing countries as a whole will be 5.3%, when combined with the 2008 quota and voice reform.
The Board also endorsed proposals that would lead to a more representative, all-elected Executive Board.