G20 strikes deal on IMF quota, ignores trade and currency woes

The Group of 20 emerging and developed economies meeting in Gyeongju, South Korea, today agreed on increasing the voting rights of emerging economies at the International Monetary Fund (IMF) but failed to agree on the broader issues of trade imbalances and currency pricing.

The governance reform will make China the third largest member of the 187-strong Washington-based lender while India will become its eighth largest member with a 2.75 per cent voting share.

The deal, brokered by IMF managing director Dominique Strauss-Kahn, will shift two seats on the 24-member IMF executive board and over 6 per cent of the voting power at the Fund from developed countries to the fast-growing developing economies.

"This makes for the biggest reform ever in the governance of the institution," Strauss-Kahn said after the accord.

Speaking on the sidelines of the G20 meeting in South Korea, India's finance minister Pranab Mukherjee said the reform that will give increased voting rights and board seats to emerging economies will only start in 2013.

Under the deal, Europe will surrender two of the nine seats it currently holds in the IMF board while the US will retain its 16.67 per cent voting share and veto power.