Package will raise clout of India, other BRICS nations
Voicing their “deep disappointment” over the failure of the United States to ratify a set of IMF quota and governance reforms agreed to in 2010, the G20 countries have now set a firm, year-end deadline for Washington to act. The reforms are vital for India and other BRICS nations.
“If the 2010 reforms are not ratified by year-end, we will call on the IMF to build on its existing work and develop options for next steps and we will work with the International Monetary and Financial Committee (IMFC) to schedule a discussion of these options,” said a G20 communique issued here on the eve of IMF-World Bank spring meetings.
The reform measures that include creation of a new quota formula are aimed at doubling the IMF’s resources and increasing the voting power of emerging economies, notably of the BRICS group -- Brazil, Russia, India, China and South Africa.
“I take this opportunity to urge the United States to implement these reforms as a matter of urgency,” Australian Treasurer Joe Hockey told reporters. The next G20 summit is due to be held in Brisbane, Australia in November.
The US Congress has refused to act on the IMF reform package, with some Republicans taking the stand that the changes would prove costly for the United States which was already faced with big budget deficits.
But the G20 communique strongly reaffirmed the importance of the IMF as a quota-based institution, stressing: “The implementation of the 2010 reforms remains our highest priority and we urge the US to ratify these reforms at the earliest opportunity. We are committed to maintaining a strong and adequately resourced IMF.”
The communique was adopted at a meeting of G20 finance ministers and central bank governors.
The G20 leaders welcomed the projections for stronger global economic growth in 2014 even while noting that they remain vigilant to the possibility of global risks and vulnerabilities. “We are determined to manage these risks and take actions to further strengthen the recovery, create jobs and improve medium-term growth prospects,” the communique said.
Comprehensive growth strategies will be presented at the Brisbane Summit “to achieve strong, sustainable and balanced growth” and meet the group’s ambition to lift their collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years.
New actions will aim at addressing gaps in policy settings, lifting and rebalancing global demand and achieving exchange rate flexibility. The efforts will focus on structural reforms, along with measures to enhance trade and promotion of quality investment, particularly in infrastructure.