BRICS called for reform of the International Monetary Fund (IMF) to distribute voting power fairly and end the tradition of appointing Europeans as leaders.
The BRICS group of finance ministers has proposed a new mechanism for allocating voting rights based on economic size and purchasing power, and increasing regional representation in the selection of IMF leaders.
MAIN CONTENT
BRICS proposes reform of IMF voting structure, increasing share for developing economies.
Ending the historic agreement to appoint a European to head the IMF to increase regional representation.
Establish a new guarantee mechanism from the BRICS Development Bank to boost investment and reduce financing costs.
What changes do BRICS propose for the International Monetary Fund?
BRICS finance ministers have agreed to propose reforms to the IMF’s voting rights and governance structure, stressing the need to reflect the relative positions of countries in the global economy. They also called for an end to the European-only leadership of the IMF, to allow for regional diversity.
According to a Reuters report, the proposal was presented at the BRICS meeting in Rio de Janeiro ahead of the 2023 leadership summit in Brazil. Brazil's finance minister noted that the new allocation of voting rights should be based on a combination of economic output and purchasing power, while protecting the interests of poor countries.
The process of adjusting voting rights must reflect the economic position of each member, while protecting the proportion of the poorest countries.
Brazilian Finance Minister, 2023, in Rio de Janeiro
What is the status and influence of BRICS in the global structure?
BRICS, which includes Brazil, Russia, India, China and South Africa, is expanding its membership to include countries such as Egypt, Indonesia, Iran and others, bringing its total to 23 partners. The expansion gives the group a stronger voice in representing developing countries on the global stage.
Reuters commented that the BRICS' push for IMF reform aims to overcome the dominance of Western powers in international financial institutions that has long given them an unfair advantage.
With full respect for merit-based selection processes, regional representation in the IMF needs to be enhanced to move beyond the outdated post-World War II arrangement.
BRICS Finance Ministers, Joint Statement 2023
What role does the BRICS Development Bank (NDB) play in the reform proposal?
The NDB, established by BRICS in 2014 to support public-private projects through loans and guarantees, has now expanded its scope beyond its original members. BRICS has confirmed plans to establish a new guarantee mechanism based on the NDB to reduce financing costs and attract investment for developing countries.
Russian Finance Minister Anton Siluanov updated that by 2023, BRICS financial assets will exceed $60 trillion, the challenge is how to attract more capital, especially from digital financial assets. The Indonesian representative also emphasized that the NDB will not become a dominant organization like the IMF or the World Bank, but will be governed based on the principles of equality and mutual respect.
Why do BRICS want to change the IMF leadership structure?
The main reason for the proposal is to break with the tradition of appointing Europeans to head the International Monetary Fund, which is considered a “big brother” arrangement after World War II and no longer in line with the current world order. BRICS calls for a transparent, fair leadership election mechanism that reflects regional diversity and actual capabilities.
Criteria Before reform (traditional IMF) BRICS proposal Allocation of voting rights Prioritizing Western powers Based on economic size, purchasing power, protecting poor members Fund leadership Practice of appointing Europeans Merit-based election, increasing regional representation NDB role None New guarantee mechanism to promote investment, reduce financial costs
Frequently Asked Questions
What is the purpose of BRICS' proposed IMF reform?
The goal is to distribute voting power more equitably, reflecting the global economy, while increasing diversity in the IMF's leadership structure, consistent with the actual influence of developing countries.
Which countries are currently members of BRICS?
Initially including Brazil, Russia, India, China and South Africa; now expanded to 23 countries including Egypt, Indonesia, Iran, UAE and Vietnam as partners.
What role does the BRICS Development Bank (NDB) play in financial reform?
The NDB supports development projects with credits and guarantees, with plans to establish a guarantee mechanism to reduce financing costs and attract investment for developing countries.
How does BRICS change the IMF leadership tradition?
The group called for an end to the traditional arrangement of appointing Europeans to head the IMF, moving towards a more transparent, diverse and regionally fair selection process.
Will NDB become a major financial institution like the IMF or the World Bank?
According to the BRICS representative, NDB does not aim for dominance but operates on the principles of equality and respect among members.
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