As Greece breathed a sigh of relief at the International Monetary Fund’s (IMF) decision to release the next tranche of funding in its bailout package, the IMF itself began to shift voting power within the organization to emerging market countries so that it “better reflects realities.”
On Friday, according to a Reuters report, the IMF’s executive board announced that upon completion of its review of Greece’s economic performance, it had found that the authorities were working hard to implement required reforms and that it would provide another 2.5 billion euros ($3.3 billion) to the country.
Murilo Portugal, deputy managing director of the IMF, said that Greece deserved credit for keeping reforms moving forward. However, the dissatisfaction of the Greek populace with the austerity measures would require determination on the part of the government to continue. In a statement, he said, “Given pressure points in the public sector and still unfavorable investor sentiment, comprehensive and timely reforms remain essential to secure renewed growth and sustainable public debt dynamics, while protecting vulnerable groups.”
Greece has so far received about 10.58 billion euros from the IMF in the bailout.
Even as things were moving forward with Greece, on Thursday the IMF said that its board of governors had approved measures to deliver more voting share to the emerging market nations that are part of that body. In a statement, the IMF said, “It will result in a shift of more than six percent of quota shares to dynamic emerging market and developing countries and more than six percent from over-represented to under-represented countries.”
While emerging markets have gained greater importance in the organization over the past five years, the shift in voting power is a much larger action that actually overhauls the global economic order in the wake of World War II that formed the basis for the setup of the IMF.
The 10 members who will have the largest voting share under the new arrangement will be the U.S.and Japan; emerging market nations China, Brazil, India, and Russia; and France, Germany, Italy, and Britain.
The change will also double IMF member quotas; that will boost the IMF’s balance by approximately $733.9 billion in current exchange rates.
China, which will gain by the arrangement, had hesitated at contributing more as long as its share of responsibility was held back.