China’s voting rights in the International Monetary Fund increased by nearly 60% after the US Senate adopted reforms to give emerging economies a greater say in how the international lender is managed.
China’s voting rights jumped to 6% from 3.8% and IMF resources will double to about $660 billion. Meanwhile, the US will see its share drop from 16.7% to 16.5%, but it retains its veto power. India’s voting rights will rise to 2.6% from the current 2.3%.
This is the biggest shake-up since the IMF and the World Bank were set up to manage the post-World War II economy, said the BBC. It added that the biggest losers are European economies, which will see their voting rights diminished.
The US has taken its time agreeing to the IMF reforms that the other 188 members agreed to in the aftermath of the world financial crisis in 2010. Even though the US was behind the 2010 initiative to reform the IMF in a bid to keep China happy, Republicans in the US Congress had been concerned at diminishing US influence.
“The IMF reforms reinforce the central leadership role of the United States in the global economic system and demonstrate our commitment to maintaining that position,” said US Treasury Secretary Jacob Lew in a statement:
IMF chief Christine Lagarde hailed the US adoption as “a welcome and crucial step forward that will strengthen the IMF in its role of supporting global financial stability.”
And China’s Central Bank said the reform “will improve the representation and voice of emerging markets and developing countries in the IMF and is conducive to protecting the IMF’s credibility, legitimacy and effectiveness.”
One of the reasons for keeping China happy was that over the past year, China has set up the Asian Infrastructure Investment Bank as an alternative to the IMF and the World Bank.