U.S. Treasury Secretary Janet Yellen addresses a news conference during a G20 finance ministers’ and Central Bank governors’ meeting at Gandhinagar, India, July 16, 2023. REUTERS/Amit Dave//File photo
MARRAKECH, Morocco -U.S. Treasury Secretary Janet Yellen told Reuters on Friday that her plan for an “equi-proportional” increase in International Monetary Fund quota-based lending resources was “pretty likely to get done” despite concerns raised by China.
Yellen was speaking in an interview on the sidelines of the IMF and World Bank annual meetings.
“There’s a desire to see the IMF well-resourced with larger quota resources and less reliance on borrowing arrangements,” Yellen said.
Under the U.S.-backed plan, IMF member countries would each contribute toward an increase in quotas in proportion to their current shareholdings to boost the Fund’s lending power. Decisions on how to shift the IMF’s shareholding formula would be left to a later date.
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China and other large, fast-growing emerging markets, including Brazil and India, have been clamoring for more shares and influence at the crisis lender, but would have to wait under the current plan.
Yellen said she discussed the quota matter on Friday with People’s Bank of China Governor Pan Gongsheng.
“I think they feel, based on China’s size and role in the global economy, they should have a larger quota share,” Yellen said. “We’ve made the point that we can’t support an ad-hoc realignment of quota shares, that we believe the formula needs to be revised.”
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The U.S. contribution towards the quota increase would require approval by the U.S. Congress, where anti-China sentiment is running high, and the Treasury plan would sidestep a difficult political fight.
Indian Finance Minister Nirmala Sitharaman on Friday backed the U.S. plan as an “immediate, temporary solution” to the need to add quickly to boost IMF funding.
“The equi-proportional quota seems to be the less contentious way of addressing it,” Sitharaman told an Atlantic Council event in Marrakech. “I from my side did openly say yes.”
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The money-now, shares later plan has been gaining support among IMF shareholders this week, but IMF Managing Director Kristalina Georgieva has called for a deadline to adjust its shareholding structure to give more weight to large emerging market economies.
British Finance Minister Jeremy Hunt told reporters that while he had confidence the U.S. plan would succeed, shareholdings need to be adjusted to ensure the IMF’s credibility.