2009-10-04 11:13:16
By CHRISTOPHER TORCHIA, Associated Press Writer Christopher Torchia, Associated
Press Writer 2 hrs 59 mins ago
ISTANBUL A key panel of the International Monetary Fund said Sunday that it
supports giving more voting power to emerging market and developing countries,
warning that the legitimacy of the institution was at stake.
The group's International Monetary and Financial Committee said it backs a
shift of at least 5 percent of voting power from countries with ample
representation to those with little influence. The move would seek to reflect
changes in the global economy, with strong growth in countries that once lagged
far behind the elite club of rich nations.
"Quota reform is crucial for increasing the legitimacy and effectiveness of the
Fund," the committee said in a statement. It planned to review progress at its
next meeting in Washington on April 24, and sought an agreement on the voting
shift by January 2011. The change would then be subject to approval by the
legislatures of some member countries.
"This is a process that will take time. It won't happen overnight," said
committee chairman Youssef Boutros-Ghali. "We are reforming an organization
that is complex, sophisticated and reaching every corner of the world economy."
The committee, which sets the IMF's agenda, said it was also committed to
protecting the voting share of its poorest members. Panel members include IMF
Managing Director Dominique Strauss-Kahn and U.S. Treasury Secretary Timothy
Geithner, and other finance chiefs.
The announcement came at the IMF's annual meeting, held this year in Istanbul.
It followed a decision at a Pittsburgh forum that the G-20 nations would become
the world's main economic decision-making forum, effectively taking over the
role of the G-7 group of rich countries.
Earlier Sunday, Geithner said "a more representative, responsive and
accountable governance structure is essential to strengthening the IMF's
legitimacy."
He noted that G-20 countries had committed to shift some control in the IMF to
countries with relatively little input. The Group of 20 includes developing
economic powerhouses such as China, India and Brazil.
Geithner said the IMF should outline soon how the proposed transfer of voting
power can occur. He said reform of the IMF's executive board was vital to
modernizing the Washington-based institution, which represents 186 countries.
The U.S. recommends reducing the board size while preserving the current number
of emerging market and developing country chairs.
The IMF is usually headed by a European and the World Bank by an American. It
has received pledges of more money to help poor countries struggling to emerge
from the global economic crisis, and a broader range of nations wants to have
more say in how the funds are handled.
Aid agency OXFAM says current voting formulas at the IMF give Luxembourg more
weight than the Philippines, which has almost 200 times the population. It said
the 5 percent shift in voting power was insufficient.
"They need to give more voice to the poorest countries, have fewer European
seats on the Board, and get rid of the U.S. veto," said Caroline Pearce, OXFAM
policy adviser. She said the IMF can only be relevant if it gives "countries
hardest hit by the financial crisis a say in their own destiny."
The U.S. has a 17 percent voting stake in the IMF, effectively giving it veto
power because major decisions require an 85-percent majority to pass.
SOLIDAR, a European network of non-governmental organizations, said the calls
for a 5 percent shift amounted to "grandstanding" that distracted attention
from the harsh impact of IMF austerity policies in nations including Ethiopia
and Latvia.
"Governments are still being forced to cut pensions, jobs in the public sector,
unemployment benefits, teacher's salaries, and the list goes on," Andrea
Maksimovic of SOLIDAR said in a statement.
The IMF has often been criticized for allegedly imposing tough measures on
countries in exchange for loans and without sufficient regard for the impact on
the poor.
IMF officials say they have shown more flexibility in recent years. John
Lipsky, the IMF's No 2. official, has said the IMF is undertaking "substantial
efforts" toward internal reform that will provide "a fair shake for all our
members."
At the Istanbul conference, a group of 35 heavily indebted countries welcomed
the G-20's new role as a leader in global economic decisions, but said poor
nations also needed representation to express their financing needs.
"We need at least one seat so that almost 1 billion Africans can express their
views," said Lazare Essimi Menye, Cameroon's finance minister.