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Saturday, December 19, 2015, 13:05

US Congress ratifies IMF quota reforms

By Xinhua

WASHINGTON - US Congress on Friday approved the long-delayed reforms to increase representation of emerging market economies in the International Monetary Fund (IMF).

The US Senate and the House of Representatives on Friday passed a government spending and tax breaks package, in which the lawmakers ratified the five-year-old international deal to give emerging markets more saying in the international lender.

Christine Lagarde, managing director of the IMF, on Friday welcomed the adoption of legislation by the US Congress to authorize the IMF's 2010 quota and governance reforms.

"The United States Congress approval of these reforms is a welcome and crucial step forward that will strengthen the IMF in its role of supporting global financial stability," said Lagarde in a statement on Friday.

The 2010 quota and governance reforms were approved by the IMF board in 2010. The reforms will double the IMF quotas and reallocated quota and voting shares in IMF away from advanced economies, primarily in Europe, to growing emerging market economies.

China will have the third largest IMF quota and voting share after the United States and Japan, and India, Brazil and Russia would be also among the top ten members of the IMF.

China's central bank on Saturday welcomed the ratification of the 2010 quota and governance reforms.

"Such approval means that the 2010 reforms, after protracted delay, are expected to take effect soon," said the People's Bank of China (PBOC), the central bank, noting "the 2010 reforms will enhance the representativeness and voice of emerging market and developing countries (EMDCs) at the IMF, thus helps maintain the IMF's credibility, legitimacy and effectiveness."

"The 2010 reforms will double the IMF's quota resources from SDR 238.5 billion to SDR 477 billion, while shifting 6 percent of quota shares to dynamic EMDCs. China's quota will increase from 3.996 percent to 6.394 percent, making China the third largest shareholder in the IMF from the sixth," The PBOC said in a statement posted on its official website.

The reforms are the biggest change in the governance of the IMF since it was established and are a recognition of the increasing role that emerging markets play in the global economy. Despite repeated calls from the IMF and the international community, many US lawmakers resisted the reforms and delayed the ratification of the reforms for years.

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