IMF delays voting reforms as BRICS set up rivals
June 13, 2015, 5:11 am

File photo of US President Barack Obama and IMF Chief Christine Lagarde [Image: Archives]

A statement from the International Monetary Fund on Friday said the board has postponed the discussion on how to move forward without Washington.

The board will now take stock of the situation in September.

“The Executive Board has concluded that more time is needed to build the necessary consensus among the membership to complete its work on interim steps. The Executive Board reiterates its deep disappointment with the continued delay in the effectiveness of the 2010 Reforms, and urges the United States to ratify them as soon as possible,” the IMF statement read.

“The Report indicates that, if the 2010 Reforms are not ratified by September 15, 2015, the Executive Board will consider prior to end-September which interim solution to pursue and will, building on its ongoing discussions, complete its work on steps that represent meaningful progress towards the objectives of the 2010 Reforms as early as possible and no later than mid-December 2015,” it added.

IMF Chief Christine Lagarde had last year hinted at a “Plan B” if the US failed to endorse the reforms by the end of 2014.

Both the China-led AIIB and the BRICS Bank have been gaining popularity and are seen as a counterbalance to the IMF and World Bank. The US and Japan have not applied for the membership in either of the new development banks.

The IMF reforms will hand more IMF voting powers to BRICS, a long-standing demand of the group and will also reduce the concentration of representative power of Western Europe at the IMF board.

China and other emerging economies, including BRICS, have long protested against their limited voice at global financial platforms, including the World Bank, International Monetary Fund and Asian Development Bank.

The IMF quota reform calls for a 6 per cent shift in quota share to emerging economies. It will lift China, which still has less voting power than the Benelux countries ( Belgium, Holland and Luxemburg), to the third largest shareholder. Shares for Russia, India and Brazil will also see hefty rise.

TBP