Emerging countries call for IMF vote reform
- Source: Global Times
- [01:06 August 06 2009]
- Comments
Emerging economies have dug in their heels over power sharing in the International Monetary Fund, insisting that realigning voting shares must come before any other governance reforms are tackled.
Emerging countries want voting shares to reflect their rising might in the global economy and rejected a proposal strongly backed by IMF Managing Director Dominique Strauss-Kahn for a decision-making ministerial council, which they fear might delay the basic reforms they want.
Copies of statements obtained of initial discussions on IMF quota reform last week reflect developing countries’ frustration over the long-standing dominance of the United States and Europe in IMF decisions.
A joint statement by a large group of developing countries, including big emerging economies China, India, Russia and Brazil, said unfair distribution of members’ quotas that favors developed nations severely undermines the IMF’s legitimacy.
“We are of the view that the most urgent issue in the reform of IMF governance is a substantial quota realignment in favor of middle-income countries and low-income countries, reflecting the changing global realities,” the countries said.
In the meeting, some developing countries accused Strauss-Kahn of being dismissive of quota adjustments and trying to rush through the reforms, including changes that would give him more authority while weakening the role of the existing board of member countries.
The politically sensitive issue of IMF voting power is shaping up to be a key subject at meetings in Turkey in early October of the IMF’s 186 members.
China argued that trying to address broader reforms such as the selection of the head of the IMF and the size of the board without first fixing the issue of voting power was like “putting the cart before the horse.”
Emerging economies have long pushed for a more open process of selecting the head of the IMF, which since its inception more than 60 years ago has always been a European, while the World Bank president is always American.
In his statement, Strauss- Kahn sought to reassure the board that rebalancing members’ quotas was central to IMF governance, but added, “Given that progress on quotas will take time, I fear it will damage our credentials as a reform-minded institution if we were to put off debate and consideration of all the other governance issues until the quota question is resolved.”
The idea of a council was first proposed by an outside panel led by former South African Finance Minister Trevor Manuel as a way to bring more political weight into IMF decisions.
Strauss-Kahn has backed the proposal for a council, saying it was important to put decisions regarding the IMF’s strategic direction more into the hands of political leaders.
Reuters
