Delay in Quota Reforms to Erode IMF's Credibility, Says Arun Jaitley

Washington: Finance Minister Arun Jaitley has expressed disappointment over the slow pace of IMF quota reforms and said any further delay would erode the legitimacy and credibility of the multi-lateral organisation.

"The emerging risks to the global economy call for enhanced surveillance by the IMF. The IMF needs to be sufficiently resourced to be able to fully discharge this responsibility. It also needs to function as a quota-based institution," he said at the meeting of the International Monetary and Financial Committee (IMFC).

Given that there is a broad agreement on maintaining the current overall lending capacity of the Fund and that the IMF's existing resource pool is excessively tilted towards borrowed resources, there is a "dire need" for increasing quotas, he added.

"We are disappointed that the deadline for completing the 15th GRQ (General Review of Quotas) has been pushed back to no later than the 2019 annual meetings," Jaitley added. "Any further delay in the 15th GRQ will erode Fund's legitimacy and credibility, and will be against the spirit of the Articles of Agreement. I do hope that the deadlines now set will be honoured and adhered to," he said.

Commenting on increasing protectionism and its adverse implications, the finance minister called upon the IMF to lend strong and unambiguous voice in support of free trade and raise awareness about the benefits of rule based open multilateral trading frameworks.

He added that the IMF should play proactive role by productive engagement with Regional Financing Arrangements by way of sharing information and joint mechanisms for surveillance and policy signalling to build confidence among creditors.

At the same time, it would be necessary for the multi-lateral system, especially the World Bank Group, to be stronger than ever to play a meaningful and decisive role in translating this development agenda into a reality, he said. He also endorsed the view of a minimum 50 percent increase in the capital of IBRD and a 100 per cent increasein case of IFC.

This, he added, is necessary to make the World Bank deliver a commitment level of USD 100 billion a year to make the World Bank Group play a meaningful and leadership role in global development landscape.

"We support SCI to bring about voice reform to ensure higher representation to the under-represented and support the use of the dynamic formula based allocation.