IMF members make little headway on power shift
Global finance chiefs made little headway on Sunday in overcoming long-standing disagreements over how much power rich nations should cede to major developing countries at the International Monetary Fund.
The IMF’s 186 member countries, however, did find some common ground, agreeing the institution should develop a set of principles by April to guide nations as they get ready to pull back on extraordinary recession-battling measures.
“We’re not out of the woods but we’re well on our way,” said Youssef Boutros-Ghali, Egypt’s finance minister and chair of the IMF’s policy-steering committee. “Exit strategies are being discussed but they are nowhere near being implemented now until we firm up the recovery in the world economy.”
The IMF, which has committed about $175 billion in loans to countries around the world this year, says it will need more resources if it is to oversee the recovery of the global economy and help prevent future crises.
But this depends on giving emerging market economies a greater say. If a member’s voting share is increased, they are required to increase how much money they provide the Fund.
IMF members aim to conclude talks on voting power by January 2011.
“The task of realigning quota shares with current global realities remains politically vexing,” the IMF’s board said in a report weighing in on the issue at the Fund’s semiannual meeting here.
While the steering committee supported an agreement struck just more than a week ago by the Group of 20 nations to shift at least 5 percent of the IMF’s voting power to developing economies, emerging powers said it was not enough pay day loans.
Major emerging economies are demanding the developed world shift no less than 7 percent of its share to growing powers, like China.
“We can only hope that over-represented advanced countries will realize that they may do great harm to the Fund if they attempt to block or delay quota and voice reform,” Brazilian Finance Minister Guido Mantega told the meeting.
He said the Fund needed to change so it could “cease to be regarded as mainly an American-European institution.”
The demand for a 7 percent shift is meeting resistance from the developed world, particularly European nations, which do not want to give up too much of their own power.
Finance Minister Anders Borg of Sweden, which currently holds the European Union presidency, warned that Europe could become less generous in its financial support of the Fund if it lost influence over it.
“Adequate participation in the decision-making process … is a prerequisite for our taxpayers’ continued support of large financial contributions,” he said.
GROWING DEMAND