WASHINGTON • Reforms just ratified by the US Senate which included plans to boost the representation of emerging economies at the International Monetary Fund (IMF) will clear the way for new industrial powerhouses such as China and India to have more clout at the global lender.
The sprawling budget deal to keep the US government operating to next September contained a measure to put Brazil, China, India and Russia among the IMF's top 10 shareholders and give emerging markets more influence at the IMF.
Last Friday's legislation will now go to President Barack Obama.
Plans agreed in 2010 to give emerging markets more voting power and double the IMF's resources had been delayed by Congress.
The Chinese central bank welcomed the move in a statement yesterday, and said China would become the third-largest shareholder under the changes, from its previous sixth position. "The 2010 reform plan will improve the representation and voice of emerging markets and developing countries in the IMF," said the central bank.
The reforms are the biggest change in the IMF's governance since it was set up after World War II. "These reforms represent an important step but still only constitute a partial shift in making the IMF's governance structure fully representative of emerging markets' growing influence in the world economy," said Dr Eswar Prasad, professor of trade policy at Cornell University.
Under the reform, all 188 members' quotas will rise as the fund's quota resources increase to about 477 billion special drawing rights or US$659.67 billion (S$932.26 billion) from about 238.5 billion. Special drawing rights are the IMF currency. The IMF board will also be entirely elected.