Time to push on with IMF reform

As the US Congress failed to incorporate the International Monetary Fund reform package of November 2010 into its budget legislation, the IMF quota and governance reforms are once again stalled. Christine Lagarde, managing director of the IMF, indicated in a statement in December that the board is due to meet this month to weigh "alternative options" to the four-year-old reform plan and ensure that the IMF has adequate resources.

The IMF reforms are designed to reflect the increasing importance of emerging economies and retain the influence of smaller developing countries in the IMF. According to the reform plan, 6 percent of the quota shares of developed countries will shift to emerging economies. China's quota share will rise from the current 3.99 percent to 6.39 percent. As a result, China will become the third-largest shareholder after the United States and Japan. China's voting share will also increase from 3.65 percent to 6.07 percent and the other BRICS countries such as Russia, India and Brazil will all be in the top 10. The reforms are hailed as the "most fundamental reforms of governance" in the history of the IMF.

In spite of the fact that the United States will not lose its unique veto power in the institution, it still feels that its dominance in the IMF is at risk and therefore has adopted procrastination tactics in an attempt to drag the reform into limbo.