August 25, 1999
Colombo - India's central bank chief said here Wednesday the voting structure of international funding agencies should be changed to reflect the economic strengths of developing nations. Reserve Bank of India (RBI) Governor Bimal Jalan said agencies such as the International Monetary Fund (IMF) and the World Bank should shed their biases and give adequate representation to the developing world.
"It is one of the ironies of the last 40 years that although developing countries have grown much faster than the developed countries ... their actual voting power has tended to decline," Jalan told bankers during a lecture in the Sri Lankan capital. "The situation needs to be corrected."
Jalan stressed the importance of equal partnership between developed and developing countries to enhance the effectiveness of international financial co-operation. "For the success of the Contingency Credit Line, a new facility operated by the IMF to forestall a debt crisis, it is necessary to ensure that political ... (and) other non-economic considerations do not creep in," said Jalan.
Meanwhile, Jalan also defended the Indian central bank's policy of artificially propping up the rupee. "(Our) objective is to ensure that the external value of the rupee is realistic ... as evidenced by a sustainable current account deficit and manageable foreign exchange situation," he said.
The RBI on Monday announced steps to calm jittery trading in the rupee following international condemnation of New Delhi's draft nuclear weapons policy. The bank said in the event of a temporary demand-supply gap, it would be prepared to intervene directly or sell dollars through the State Bank of India to augment supply in the market. "We are guided by the need to reduce excess volatility, prevent the emergence of destabilising speculative activities, help maintain adequate level of reserves and develop an orderly foreign exchange market," Jalan said.
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