New Distribution of Voting Rights and End of European Leadership at the IMF

BRICS Proposes IMF Reform                                                                                                                                         

New Distribution of Voting Rights and End of European Leadership at the IMF

Finance ministers from the BRICS emerging economies called on Sunday for reform of the International Monetary Fund, including a new distribution of voting rights and an end to the tradition of European leadership at the helm.

The joint statement by the finance ministers marks the first time the BRICS countries have agreed on a unified position on the proposed reforms. They agreed to support the joint proposal at the IMF's December review meeting, which will discuss changes to the quota system that determines contributions and voting rights.

"Quota realignment should reflect the relative positions of members in the global economy while protecting the shares of the poorest members," the ministers wrote in their statement after their meetings in Rio de Janeiro, adding that the new formula should increase the shares of developing countries.

A Brazilian official who followed the negotiations said the BRICS ministers called for a new formula weighted by economic output and purchasing power, taking into account the relative value of currencies, which should better represent lower-income countries. The ministerial meetings came ahead of the leaders' summit in Rio for the bloc, which expanded last year beyond Brazil, Russia, India, China, and South Africa to include Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.

This added diplomatic clout to the group, which aims to speak for emerging economies in the Global South and urge reforms in institutions long dominated by traditional Western powers. "With full respect for the merit-based selection process, regional representation in the IMF's management must be strengthened and the outdated post-World War II gentlemen's agreement, which is incompatible with the current global order, must be overcome," the finance ministers wrote.

Their statement also confirmed discussions on establishing a new guarantee mechanism supported by the New Development Bank, a multilateral bank funded by the BRICS, aimed at lowering financing costs and boosting investment in developing economies, Reuters reported on Thursday.