The International Monetary Fund is expected to increase Turkey’s quota to over 1 percent, from the current level of 0.55 percent. Such an increase would elevate Turkey’s voting power and provide cheaper credit to the country, as a higher quota reduces interest rates

Dominique Strauss-Kahn, Managing Director of the International Monetary Fund, speaks during a news conference in Istanbul. AP photo

As the annual meetings of the board of governors of the International Monetary Fund and the World Bank begin in Istanbul, Turkey expects its quota at the IMF to be raised to over 1 percent from the current level of 0.55 percent.

Turkey’s quota may be raised to between 1 and 1.5 percent, Anatolia news agency reported, citing unidentified IMF sources.

The increase would improve Turkey’s credit rights, while decreasing the cost of the credit to as little as 25 percent. With the expected quota increase, Turkey would be able to draw as much as $6 billion from the fund.

Turkey’s quota stood at 0.45 percent for many years, but was raised to 0.55 percent at the 2006 IMF-World Bank Annual Meetings.

The board of governors will meet Tuesday in Istanbul and the meeting will conclude on Wednesday.

As the global financial crisis hit, a decision made on Aug. 28 raised IMF resources to $250 billion. Around $100 billion of this amount was allocated to a specific number of countries, including Turkey.

Quotas of IMF member countries determine their maximum financial liabilities, voting rights and access to IMF financial resources. They also affect the interest rate over distributed credits.

Changes in quotas are generally implemented once every five years and depend on current accounts, gross domestic product and foreign-exchange reserves.

High-quota countries also have more voting rights. The United States currently has a quota of 17.1 percent, for example, while the quota of the European Union stands at 32.4 percent.

With the expected increase, Turkey would have voting power similar to Brazil.

Warning on credibility

In a related development, finance ministers from developing countries said Monday that they should get more voting power at the World Bank.

Ministers from Russia, India, Indonesia, Brazil and Venezuela spoke at the annual meetings of the IMF and World Bank in Istanbul, the Associated Press reported. They said the credibility of the bank, which assists developing countries, would erode unless countries have a voice consistent with their weight in the global economy.

The appeal follows a decision at a Pittsburgh meeting of the Group of 20 that the G-20 would supplant the G-7 as the world's main economic decision-making forum.

At that meeting, Group of 20 leaders agreed to redistribute at least 3 percent of voting power in the World Bank, and 5 percent in the IMF.

"We must be aware that the World Bank's credibility and legitimacy could suffer without tangible and timely progress on the voice and participation reform in which we are currently engaged," said Jorge Giordani, Venezuela's minister of planning and development.

Aleksei Kudrin, Russia's finance minister, said Russia should have more say because its share in the world economy exceeds 3 percent, which is greater than its current voting power in the International Bank for Reconstruction and Development, a part of the World Bank.

Releasing a report on Monday in Istanbul, the “Group of 30” also called on governments to “seize the opportunity of the economic and financial crisis to modernize the operations of the International Monetary Fund.”

The G-30 warned that as the effects of the financial crisis begin to wane, the impetus for real, substantive and long-lasting reform of the IMF may “begin to stall.”

"The institutional structure of the IMF needs to better reflect changing global economic realities and relationships," said Guillermo Ortiz, Governor of the Banco de Mexico and Chairman of the Board of the Bank for International Settlements. "We are recommending that the revision of IMF quotas should be accelerated to realign existing shares with members' economic weights in the global economy. Further, no single country should retain a veto over IMF decisions."

The G-30 is an international body of leading financiers and academics