India to lend up to $10 billion to IMF
Posted on: 10:40 PM IST Sep 04, 2009
New Delhi: India on Friday said it will lend up to $10 billion to the International Monetary Fund to make funds available to countries in need.
"India intends to make available up to $10 billion to shore-up the resources of the IMF," an official statement said.The statement, however, added this will not load the Government and not further stretch its resources.It is quite a change that India, which had to resort to IMF financing till the early 1990s on a few occasions, is now participating in an international effort to make resources available to the fund for lending to nations in need. The lending will not increase the burden on the exchequer, which is already facing the burgeoning fiscal deficit, as the Reserve Bank may invest a portion of its foreign exchange reserves in securities to be issued by the IMF.Finance Minister Pranab Mukherjee is in London to attend a finance ministers meeting of G-20 countries ahead of the main meeting later this month at Pittsburgh.India's statement follows the recent decision by the IMF executive board, announcing a framework for the issuance of these securities, called Notes.The $10-billion lending is broadly in proportion to India's current quota share in the IMF.Even as India would lend to the IMF, it says that this kind of bilateral financing are only a "temporary bridge" and quota reform should take place in the fund in favour of emerging economies. Member nations have quota in IMF which determines their voting rights."We fully expect that the next general quota review, which is now agreed to be concluded by January 2011, will result in the long overdue substantial rebalancing of quota and voting power in favour of emerging market economies and developing countries," the statement said.