Tuesday, April 21, 2009

BICS to gain largest IMF Quota Shares

The International Monetary Fund(IMF) has been developed to stabilize international exchange rates and facilitate development with an macroeconomic perspective. It also provides its members with financial and technical assistance.

Brazil, China, India, South Korea and Mexico will recieve the largest share of fund from IMF so as to fasten the speed of economic development in these key economies. The 5 nations will be among the 54 nations which will recieve extended shares once the 2008 reforms will be implemented. While these 54 countries will get an increase in quota shares of 4.9 percentage points, 135 countries will see an increase in voting share of 5.4 percentage points due to the combined effects of the increase in quotas and basic votes. Quotas basically are the voting powers of a country in the 185 countries drafted committee.

The final verdict will be done in the Conference of Finance Leaders and Governors from 24th to 26th April. The other issues included are the Rebalancing of Countries in 2011, this may include strengthening on Developing countries hold in IMF quotas.

This capital quota share hike has been due to the double-punch the Developing economies have to bear including the Crashing of Internal Capital Indices along with recessionary acts leading to weakening of Gross Domestic Product(GDP). The major notion behind this initiative is to influx more capital in these economies.

Many other strategic steps including development of a riskfree investing environment and enhancement in analysis of risk and linkages in the real economy and financial sector.

No comments: