The finance ministers and central bank governors from China, Brazil, Russia and India -- the so-called BRIC countries -- on Friday called for a substantial shift of quotas and shares in the international financial institutions in favor of emerging market and developing countries.
The BRIC countries gathered in London to discuss the reform of international financial institutions. A communique from the BRIC meeting said the reform is crucial to ensuring a stable and balanced global economy.
For the International Monetary Fund (IMF) and the World Bank Group, the main governance problem, which severely undermines their legitimacy, is the unfair distribution of quotas, shares and voting power. Priority should be given to a substantial shift of quotas and shares in favor of emerging market and developing countries, says the communique.
The BRIC countries proposed the setting of a target for that shift of the order of 7 percent in the IMF and 6 percent in the World Bank Group, so as to reach an equitable distribution of voting power between advanced and developing countries. This would lead the overall share of emerging market and developing countries in the IMF and the World Bank Group to correspond roughly to their share in world GDP.
The four countries stressed that they welcome the progress that had been made in strengthening the IMF's lending capacity. They thought IMF notes or bonds are the best option to provide immediate resources to the IMF without undermining the quota reform process.
The BRIC countries are together contributing 80 billion U.S. dollars to supplement the resources of the IMF.
For the reform of the World Bank, the BRIC countries believed that the World Bank Group also requires a review of its capital base in order to be able to fulfill an effective countercyclical role, especially in trade finance, and to deliver its development mandate over the long term.
Furthermore, they stressed the need to both expand the capital base and improve the efficiency and transparency of the governance structure at the World Bank.