IMF for hike in India`s vote, quota shares

In a move that acknowledges India`s contribution to global growth and stability, the IMF has proposed raising its quota and vote shares which would push its position up to 11th among the 184 member nations. The major reform proposal under which the quota share would be increased from 1.92 per cent to 2.44 per cent and vote share from 1.88 per cent to 2.34 per cent was endorsed by the International Monetary and Financial Committee of the IMF on Monday.

In a move that acknowledges India`s contribution to global growth and stability, the IMF has proposed raising its quota and vote shares which would push its position up to 11th among the 184 member nations. The major reform proposal under which the quota share would be increased from 1.92 per cent to 2.44 per cent and vote share from 1.88 per cent to 2.34 per cent was endorsed by the International Monetary and Financial Committee of the IMF on Monday.
 
The IMFC-endorsed reform package, which is expected to be put to formal voting on April 28, came as India sought a realignment of votes allotted to countries in the International Monetary Fund.

"The IMF can now be justifiably proud that it is the first international organisation that has taken a significant step in reforming its governance structure. This modest, albeit crucial first step will surely have a catalytic effect on reforms in the world bank and other organisations under the UN umbrella," Finance Minister P Chidambaram said.

He said a "near consensus" on the new formula was more important than the second round of ad-hoc quota hike itself.

Chidambaram, who was speaking at a World Bank-organised event, also welcomed the forward movement on implementing the income model of the Crockett committee, particularly on sale of "post-second amendment gold" and the creation of an
endowment.

"I expect this proposal will be endorsed expeditiously by national authorities across the membership of the fund and a significant source of steady income would be available without further delay," he said.

The head of the International Monetary Fund has, in the meantime, warned that spikes in food costs around the world could lead to starvation and the crumbling of governments. "We are facing a huge problem," Dominique Strauss-Kahn said at the end of weekend meetings of world finance ministers and central bank governors, referring to rapidly rising food prices that have caused hunger and deadly violence in several countries.

The IMF is often the lender of last resort for countries in trouble. Prices of wheat and rice have more than doubled in the past year, with rice - a staple in Asian diets - surging by 75 per cent in the past two months, according to the World Bank, the IMF`s sister organization.

The IMF and the World Bank wound up two days of meetings on Sunday that dealt with the financial crises roiling global markets and rising food and energy prices. A severe credit crisis could result in losses approaching USD1 trillion (euro 630 billion) before it is over, according to an IMF estimate released this week.

Also Sunday, Robert Zoellick, the head of the World Bank, urged immediate action to deal with rising food prices. The international community has "to put our money where our mouth is" and act now to help hungry people, he said. "It is as stark as that." He called on governments to rapidly carry out commitments to provide the UN World Food Program with USD 500 million (euro315.8 million) in emergency aid it needs by May 1.

Zoellick said the bank was responding to a number of countries with conditional cash transfer programs, providing food at workplaces and seeds for planting in the new season. Elizabeth Stuart, of the international aid agency Oxfam, said that aid levels are going down, not up. "All this concern would look a lot more serious if they delivered the cash they have promised," she said in a statement. "Concern is no substitute for cold hard cash."

Despite heavy security precautions around the IMF and World Bank headquarters in downtown Washington, near the White House, there were few demonstrations.

Echoing a call by India, finance ministers from around the world have sought urgent action to stem rising food prices, warning that social unrest will spread unless the cost of basic staples is contained.

`We have to put our money where our mouth is now, so that we can put food into hungry mouths. It is as stark as that,` World Bank President Robert Zoellick said at the end of a meeting of the International Monetary Fund (IMF) and World Bank`s Development Committee Sunday.

Earlier addressing the committee, Indian Finance Minister P. Chidambaram had asked the global community to collectively deliberate on immediate steps to reverse the unconscionable increases in the price of food, which threatens to negate the benefits to the poor nations.

`It is becoming starker by the day that unless we act fast for a global consensus on the price spiral, the social unrest induced by food prices in several countries will conflagrate into a global contagion leaving no country - developed or otherwise -unscathed,` he said.

Zoellick again cited growth in India and China to advance what he called a `One Percent Solution to build equity investment in Africa so that it can become a complementary growth pole in 10-15 years, just as China, India, and others are complementary poles today.`

`The allocation of even one percent of the assets of Sovereign Wealth Funds to equity investment in Africa could draw $30 billion to African growth, development and opportunity,` he said, reporting a `very positive feedback on this idea.`

Zoellick said the Development Committee Ministers had endorsed his proposal for a `New Deal for Global Food Policy` and had also called on donors to fill the $500 million feeding gap identified by the World Food Programme.

Noting that high commodity prices and their impact on growth and development will be a topic for the G8 finance ministers in Japan in June, he said: `This is important and can help build towards that New Deal. But, frankly speaking, the G8 meeting is in June and we cannot wait for that.`

Zoellick estimated that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty. `This is not just a question about short-term needs, as important as those are. This is about ensuring that future generations don`t pay a price too.`

The Development Committee endorsed the overall World Bank Group (WBG) objective of contributing to an inclusive and sustainable globalisation - to overcome poverty, and enhance growth with care for the environment.

A communique issued at the end of the meetings noted: `While the balance of risks to the global outlook has become more negative, emerging and developing economies have so far been less affected by financial market developments.`

Strongly supporting intensified and decisive efforts to agree on an ambitious pro-development Doha Round that improves access to markets, the committee stressed the need to integrate trade and competitiveness within national development strategies.

At the same time it called for stepping up support for Aid for Trade, including assistance for countries` efforts to strengthen trade logistics and ensure competitive access to services since these are central to improving poor countries` competitiveness and ability to benefit from trade opportunities.

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