The proposal is in response to a request by China for a special increase in its quota to better reflect its position in the world economy following the resumption of Beijing's sovereignty over Hong Kong. The proposed quota represents about 3.0 per cent of total quotas. China's share in the IMF will be equal to that of Canada. Both will now share the eighth position on the basis of their holding in the fund. Earlier, China occupied the 11th position, but now with a fresh investment of $2.2 billion, it has moved up three slots. The United States, Japan, Britain and France are some of the fund's top shareholders. India stays at the 13th position with its 1.9 percent of the shares. The adoption of the proposal requires a majority of 85 per cent of the total voting power and the IMF board of governors are being asked to vote by February 5, 2001.

This, however, is mere a procedural formality. China will have 30 days from the date of the approval by the governors to consent to, and pay, the increased quota subscription. The proposal provides that 25 percent of the quota increase, SDR 420.5 million, be paid in SDRs or usable currencies specified by the IMF, with the remainder paid in China's own currency. The increase in China's quota would bring total IMF quotas to SDR 212.4 billion.

Earlier, the IMF had announced the revised amounts for the four currencies that determine the value of the SDR. Effective January 1, 2001, the value of the SDR will be the sum of the values of the following amounts of each currency: US dollar 0.577, euro 0.426, Japanese yen 21.0, pound sterling 0.0984. The decision on the amount of each currency in the SDR valuation basket is the final step implementing the results of the latest review of the method of valuing the SDR.

(India Abroad News Service)