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IMF vote change needs G20 political backing
(Agencies)
Updated: 2009-09-25 10:06 PITTSBURGH: Group of 20 leaders should agree at their summit here on the size of an increase in voting power for emerging nations in the International Monetary Fund or the urgency over the issue may be lost, the head of a key IMF panel said on Thursday. Egyptian Finance Minister Youssef Boutros-Ghali, who chairs the IMF's steering committee, the International Monetary and Financial Committee (IMFC), said a G20 agreement on specific percentage changes in IMF voting power would give momentum to a 2011 restructuring deadline. The United States is pushing for a 5 percentage point shift in voting power from developed countries to "dynamic" emerging economic powers to reflect the growing influence of countries such as China in the world economy. While European countries say they recognize the need for change, some are resisting a dilution of their economic clout in the IMF. A significant increase in China's quotas, which determine its voting power, would push it above established European powers France and Britain.
"The vote shift is a zero sum game. Some countries' gain is going to be others' loss," he added. "For this to happen we need to put it in a broader context of a positive sum game, where everybody gains if the IMF becomes more representative, more legitimate, and more efficient in doing what it's supposed to do." Speaking after talks with US Treasury Secretary Timothy Geithner, Boutros-Ghali said it was clear the United States was determined to push for change. "I get the feeling that they genuinely are committed to reforming this institution," he said, adding he had also spoken to several small European countries "who would naturally" resist voting power shifts at their expense. As policymakers struggle to make the IMF more representative of the global economy, the smaller G20 club of rich and emerging countries grapples with the question of whether the forum is the proper one for managing the global economy. That risks treading on the turf that the IMF has fought hard to reestablish as its own. Just a few short years ago, many pundits were questioning whether the world needed an IMF, but the global financial crisis has reinvigorated the fund's role as the lender of last resort. Boutros-Ghali said turning the G20 into the world's economic council would dilute the IMF's effectiveness in overseeing the economic policies of its 186 member countries. "If we go this route, not only would we not get the effectiveness that the IMF has in implementing surveillance but we will lose the little that we have in terms of effectiveness of international institutions," he said. He also said that making the IMF more representative through increased voting power for major developing countries would help resolve issues such as promoting more balanced global growth. "To be effective, you need to give the IMF greater voting power and to do this you need to take a political decision," he said. "If you're not willing to take a political decision and you do some hand-waving in that direction, then you lose the effectiveness and legitimacy of the institution." |
