Virmani goes to IMF, says developing nations need more quota
The issue of giving more representation to developing and emerging economies in the IMF still remains to be resolved even as the G-20 has agreed to increase their share by five per cent, Arvind Virmani, who will be joining the Fund as Executive Director this month, said.business Updated: Nov 01, 2009 11:55 IST
The issue of giving more representation to developing and emerging economies in the IMF still remains to be resolved even as the G-20 has agreed to increase their share by five per cent, Arvind Virmani, who will be joining the Fund as Executive Director this month, said.
"The basic idea is to even the balance (in IMF between developed countries and developing, emerging economies)...I think that objective remains for emerging and developing countries," Virmani, whose term ended yesterday as Chief Economic Advisor, told PTI in New Delhi.
G-20 nations have agreed to increase quota of developing countries in International Monetary Fund (IMF) by at least five per cent at their meeting in Pittsburgh.
However, India and other emerging nations are arguing for seven per cent increase in the quota, Virmani, who will be representing India, Sri Lanka and Bangladesh in IMF, said. These three countries have 2.35 per cent voting share in IMF.
He said the issue could be resolved by convincing every one and giving reasons for even representation in the IMF.
The quota of developing countries is around 44 per cent in the IMF.
When G-20 countries had agreed in September to transfer five per cent quota to developing countries, Prime Minister Manmohan Singh had described it as a compromise figure.
The Prime Minister had said, "The BRIC countries, the poor countries, have suggested a re-balancing to the extent of seven per cent, in which case the developing countries would have more than 50 per cent."
Besides representation, there are other issues of governance in the Fund. A review panel, which comprised Planning Commission Deputy Chairman Montek Singh Ahluwalia, had said in a report, "Given the dual nature of the unwritten agreement that reserves the IMF Managing Director position to a European national, it is important that the leadership selection process in both institutions (World Bank and IMF) be reformed in parallel, facilitating the political bargain that will surely be required."
Virmani will replace Adarsh Kishore in the IMF.
IMF has 24 executive directors who are responsible for conducting the day-to-day business.
Besides, the Fund has the Managing Director, who serves as the the Chairman of the Executive Board. Currently, Dominique Strauss-Kahn is the IMF MD.
When asked that IMF is too cautious about giving projections for India and will it also be an issue for him during his stint, Virmani said this issue is not for Executive Director to deal with, but for the Finance Ministry.
IMF has projected India to grow by 5.33 per cent this calendar year, where as it grew by 5.8 per cent in the first quarter and 6.1 per cent in the second quarter of the year.