India on Wednesday opposed a proposal on ad-hoc increase of quota of some countries in International Monetary Fund, saying the redistribution of quota based on the current "flawed" formula cannot provide a durable solution for reforming the global institution.
"It is widely believed that the present quota formula of the IMF is hopelessly flawed. Obviously an ad-hoc quota redistribution based on this flawed formula cannot provide a durable solution," Finance Minister P Chidambaram said at a meeting of the Commonwealth Finance Ministers in Colombo.
A member's quota delineates basic aspects of its financial and organisational relationship with the IMF, including voting powers and access to finance. India has always held that the developing world deserves to have much greater "voice" in the management of the international financial institutions, he said, adding: "We need a consensus on a new formula. And we need it quickly."
Chidambaram said there must be a deep commitment to fundamental reform and there should be no postponement of a comprehensive review.
"My government firmly believes that any exercise intended to enhance the credibility and legitimacy of the IMF has to be based on fundamental reforms in the quota structure." Earlier this month, IMF managing director Rodrigo de Rato had said the Board of Governors meeting in Singapore from September 19 will take up the contentious issue of ad-hoc increase of quota for China, Korea, Mexico and Turkey.
The Board of IMF had agreed on a two-year reform programme that will include ad-hoc quota increases for these four countries. This will now be sent to the Board of Governors for approval in Singapore, he had said.
