Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 820 Sat. September 16, 2006  
   
Business


Greater say of the poor unlikely in IMF now


The poor countries like Bangladesh are unlikely to have greater voice in the International Monetary Fund in near future, as IMF will ask its members only to commit to work on a broader reform of the quota distribution process within the next two years.

The multilateral lending agency, on the other hand, is going to ask the members to approve an increased quota for four countries -- China, Korea, Mexico and Turkey -- at the World Bank and IMF joint annual meetings here September 19-20.

IMF Managing Director Rodrigo Rato, however, termed the four countries likely to have enhanced voice in the IMF 'very under-represented' countries considering their weight in the global economy.

"We'll ask our members to support proposals to enhance the voice of low income countries through an increase in the 'basic-votes' that are allocated to all members regardless of size," he told a press briefing at Suntec Singapore yesterday.

Less than two-weeks ago, the IMF Executive Board reached the agreement on a package of reforms which would bring about a change in the governance structure, amid widespread criticism by the member states that their voice remain marginalised in the IMF.

"We will be marginalised further under the reform proposal," a senior official in Dhaka told the news agency over the reform proposals in the governance structure of the IMF. He expressed the frustration that "we'll have to cope up with the reform pressures unless we can raise our voice."

Rato, however, stated at the briefing that "this (the reform) will involve a new formula designed to capture member countries' weight in the global economy in a simpler and transparent manner, and further quota increase for a broader range of members based on the new formula."

Replying to a question, he said there was very clear majority at the board in favour of endorsing the resolution. Otherwise, it would not have been brought to the meeting. However, he could not say anything until the countries have expressed their votes.

"We're in the middle of the countries expressing their votes. We'll have to wait and respect that period," the IMF managing director added.

On the modalities of reforms, he said once a yardstick is set backed by group of countries that are represented at the Fund by 184 countries, IMF would move into a second ad hoc increase. And that would be in response to which countries are more underrepresented by the new formula.

Other than the quota reform, Rato expected that the annual meetings would also draw consultations on a shared analysis of the nature and consequences of global imbalances, a common understanding on policies designed to make things happen in several countries together and understanding on the role the Fund could play as a forum for implementing the common approach.

"We look forward to a deep and thorough discussion of these issues this weekend."

He indicated the IMF would focus surveillance more sharply across the countries and topics, and would seek a richer engagement with members.

The IMF will have discussion on a new instrument to provide liquidity for the emerging market countries that have strong fundamentals but remained vulnerable to shocks.

"The aim would be to provide assurance that substantial financing will be available in the time of need, a framework for policy commitment and monitoring, and a signal to markets," Rato said.

He expected that the IMF would work on the issues to make concrete progress before the next spring meetings.

The IMF managing director said the annual meetings would also discuss the multilateral debt relief initiative, wiping out the debt owed to IMF by some of the world's poorest countries to help them meet the Millennium Development Goals (MDGs).