The Government of India made a commitment to give $10 billion as contribution to International Monetary Fund (IMF). This announcement came along with announcing of framework for issuance of notes to the official sector. The notes will serve the investments in the IMF as international reserves. Therefore, RBI will be able to invest somepercentage of its foreign reserves in the IMF.

Finance Minister Pranab Mukherjee told “India has decided to invest up to $10 billion of its reserves in notes issued by the IMF,” in a meeting of BRIC(Brazil, Russia, India and China) ministers ahead of G-20 conference in London last night.

“For us, IMF notes or bonds are the best option to provide immediate resources to the IMF without undermining the quota reform process,” was the statement issued after the end of meeting of BRIC finance ministers. However the move of governmentwill not affect the country’s fiscal resources for participating in IMF’s debt. The government also assured that the fiscal deficit target of 6.8 per cent will not be affected for the current financial year.

Looking at the Global economic slowdown India committed $10 billion to the IMF to combat the slowdown effects in London on April 2 during G-20 meeting.

During the summit, governments from all around the world committed to enhance the lendable resources of IMF through bilateral financing and arrangement to borrow by $500 billion. India’s amount of $10 billion is broadly in proportion with its quota share at the IMF, which had to resort to IMF financing on a few occasions till the early nineties, will now be participating in an international effort to make resources available to the fund for lending to countries in need,” said the government in a press release.