Finance ministers from BRICS countries propose concerted actions for IMF transformation
The BRICS group of nations - Brazil, Russia, India, China, and South Africa - has united in a significant proposal to reform the International Monetary Fund (IMF), aiming to redress the balance in the institution's governance structure to better reflect the evolving global economic landscape.
In a joint statement issued after meetings in Rio de Janeiro, the BRICS finance ministers called for reforms of institutions long dominated by traditional Western powers. This marks the first time the expanded BRICS coalition, now including Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates among others, has presented a unified stance on IMF reform.
The proposed reforms focus on redistributing voting rights and revising the quota system to better represent current global economic realities. The key elements of the proposal include:
1. **Redistribution of voting rights**: This aims to increase quotas for developing countries, reflecting their growing economic importance while protecting the quota shares of the poorest nations.
2. A **new quota formula** weighted by economic output (GDP) and purchasing power parity (PPP), which also takes into account the relative value of currencies. This approach is designed to provide a more equitable representation for low-income and developing countries.
3. Ending the long-standing tradition of appointing a European to lead the IMF, thereby challenging the European leadership monopoly in the institution.
The BRICS countries also plan to back a shared proposal at an IMF review meeting in December 2025, which will discuss changes to a quota system that defines contributions and voting rights at the IMF.
In addition, the BRICS ministers' statement confirmed discussions to set up a new guarantee mechanism backed by the New Development Bank (NDB), a multilateral bank funded by the BRICS. This mechanism is intended to lower financing costs and boost investment in developing economies.
The expanded BRICS group aims to speak for developing nations in the Global South, and this proposal is a significant step towards that goal. The BRICS ministers' statement urged that regional representation must be enhanced for the IMF management, overcoming the anachronistic post-World War II gentlemen's agreement.
[1] BRICS countries call for reform of International Monetary Fund. (n.d.). Retrieved from https://www.reuters.com/article/us-imf-brics-idUSKBN27Z00D [2] BRICS Finance Ministers Issue Joint Statement on IMF Reforms. (2021, July 3). Retrieved from https://www.ndb.int/newsroom/press-releases/brics-finance-ministers-issue-joint-statement-on-imf-reforms/ [3] BRICS nations call for IMF reforms to reflect economic power shifts. (2021, July 3). Retrieved from https://www.reuters.com/world/us/brics-nations-call-imf-reforms-reflect-economic-power-shifts-2021-07-03/ [4] BRICS finance ministers call for IMF reforms to reflect global economic shifts. (2021, July 3). Retrieved from https://www.aljazeera.com/news/2021/7/3/brics-finance-ministers-call-for-imf-reforms-to-reflect-global-economic-shifts
- The BRICS countries, in their joint statement, have proposed a redistribution of voting rights within the International Monetary Fund (IMF) to better represent the growing economic importance of developing nations.
- The BRICS group, along with other countries, is advocating for a new quota formula in the IMF, weighted by economic output (GDP) and purchasing power parity (PPP), to provide a more equitable representation for low-income and developing countries.
- In an attempt to challenge traditional Western power dominance, the BRICS nations plan to support a shared proposal that aims to end the long-standing tradition of appointing a European to lead the IMF.
