IMF steering committee aims for 'considerable progress' on shareholding reforms
The International Monetary Fund's steering committee on Friday said it would accelerate its discussions on quota reforms at the global lender with an eye to making "considerable progress" by its next meeting in October. Spanish Economy Minister Nadia Calvino, who chairs the International Monetary and Financial Committee (IMFC), said members were committed to revisiting the adequacy of the IMF's quotas for shareholders and completing a review by Dec. 15.
"In this context, we support at least maintaining" the IMF’s current lending resources, Calvino said in a summary of the committee's work. "We also welcome the fourth progress report to the Board of Governors and will accelerate our discussions to achieve considerable progress by the time of our next meeting toward the conclusion of the review as part of a package approach." The IMF currently has about $1 trillion to lend. U.S. Treasury Secretary Janet Yellen on Friday said the Fund has adequate resources to deal with global financing challenges but needs to follow through with "fair and simple" shareholding reforms that reflect the economic size of its member countries.
In a statement to the IMFC, Yellen also said she wanted the World Bank to implement further reforms to scale up lending for climate and other global needs on a rolling basis ahead of the IMF and World Bank's annual meetings in October in Marrakech, Morocco. "With regard to IMF resources, I continue to believe that overall resources remain adequate," Yellen said. "At the same time, the IMF needs to follow through on its commitment to a new quota formula that is both fair and simple and primarily reflects the economic size of its member countries."
She said the IMF needed to remain a quota-based institution so that it has a "consistent, predictable level of resources" that keeps it at the center of the global financial safety net. The IMF in 2019 delayed a long-awaited review of its quota funding structure until December 2023 amid past U.S. opposition to changes that would give a bigger voice to China and other fast-growing emerging market countries.
The last changes to the IMF's shareholding structure were made in 2010. The United States, which holds an effective veto over major IMF structural decisions, is the largest shareholder, with 16.5% of the Fund's voting power, followed by Japan at 6.14%, China at 6.08% and Germany at 5.31%. CHINA REPRESENTATION
People's Bank of China Governor Yi Gang's IMFC statement said the quota reform was needed "to fundamentally enhance the Fund's legitimacy, effectiveness and representativeness." He called for a "pragmatic approach" to complete the review by December to increase IMF resources and to "strengthen the voice and representation of dynamic emerging market and developing economies."
Saudi Arabian finance minister Mohammed Al-Jadaan took a different view: "We welcome the growing consensus thus far toward keeping the current quota formula unchanged in the spirit of pragmatism." Yellen said that despite difficult global economic conditions, she was optimistic about the steps that policymakers have taken to overcome challenges including pandemic recovery, spillovers from Russia's war in Ukraine and the battle against inflation. She also said the U.S. economy remained sound.
"The U.S. banking system is far more resilient and has a stronger foundation than before the Global Financial Crisis, and we will continue to take steps so that our financial system remains strong," Yellen said, adding that she was working with the IMF, the Financial Stability Board and other counterparts to monitor financial stability disruptions and prevent spillovers.
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