Statements from various nations at the International Monetary Fund’s annual meeting in Morocco on Wednesday indicated that support for the U.S.-backed proposal to enhance the quota lending resources of the organisation without changing shareholder levels had strengthened.
In statements to the IMF steering committee, France, Britain, Ghana, Switzerland, Finland, and Belgium stated that they were in favour of an equi-proportional increase, which would see contributions from nations in line with their current IMF shareholdings.
In a statement, Fernando Haddad, Brazil’s finance minister, who has advocated for a rise in shareholding for China, Brazil, and other rapidly developing emerging markets, said that his country would back such a quota increase if it was combined with a “ad-hoc” share increase for the most “blatantly underrepresented” IMF members.
Tuesday saw the IMF report that it was witnessing “substantial support” for the U.S. plan, which aims to maintain the IMF’s $1 trillion loan capacity and its position at the core of the world financial safety net.
The additional resources are required, according to IMF Managing Director Kristalina Georgieva, to guarantee that the organisation is ready to handle another major crisis. She has demanded a timeframe to realign voting power to reflect the expansion of major emerging countries and maintain the political legitimacy of the fund, stating that “we are stuck” if an adjustment is not made as support for the US proposal grows.
Only around 40% of the IMF’s total resources are currently derived from quota contributions, which are based on member nations’ shareholdings; the remaining portion is provided by bilateral borrowings and promises of emergency capital.
The last time quotas were raised was in 2010, when China’s GDP was only one-third of what it is today. Taking up about 18% of the world GDP and holding 6.08% of the IMF’s voting power, China would benefit the most from any share realignment.
However, any increase in IMF funds that strengthens Beijing’s power will encounter strong opposition because anti-China sentiment is rampant in the U.S. Congress.
The money now, shares later concept was put up by U.S. Treasury Secretary Janet Yellen as a means of avoiding the China problem and accelerating resources to the IMF.
The United States was committed to a “fair and simple” share realignment based on economic size, she said in her address to the International Monetary and Financial Committee, but “we regret” that one has not been implemented.
An equi-proportional increase is the only feasible result that avoids picking winners and losers at random in the absence of a new formula, the speaker stated.
The governor of Ghana’s central bank, Ernest Addison, stated in a statement that the American idea “is not our first option” and was also speaking on behalf of Morocco, Algeria, Iran, Libya, Pakistan, and Tunisia, the host nation.
“We support a substantial equi-proportional increase in quotas of at least 50% in order to reach a compromise in the coming weeks,” he said, adding that this amount was insufficient to address the demands of developing nations.