IMF revolution still a long way off, says Manuel

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IMF revolution still a long way off, says Manuel

Postby onepence » Mon Aug 07, 2006 2:45 pm

IMF revolution still a long way off, says Manuel
August 4, 2006 ... Id=3374824

By Quentin Wray

Johannesburg - Nothing short of a "revolution" would undo the structural inequalities within the International Monetary Fund (IMF), which give the US an effective veto over many major decisions and Europe control of nearly half of the board, finance minister Trevor Manuel said yesterday.

But he said, "my hunch is that we will not actually see significant changes", when the fund met in Singapore in September.

Manuel said this after statements by IMF managing director Rodrigo Rato, a former Spanish economy minister, that the fund would adopt an ambitious plan to give greater weight to more dynamic economies by rebalancing how much a member contributes to the fund, its voting rights and access to financing.

This would not give Africa more representation on the 24-seat board, Manuel pointed out.

Rato conceded to AFP the plan would have little impact on policy decisions of the IMF, which is mandated to help nations achieve macroeconomic and financial stability.

"It's important, not so much to change the direction of the institution but to give it stronger credibility, that the most dynamic economies get the representation their real economic weight represents in the world," Rato was quoted as saying.

Manuel said the main beneficiaries of this rebalancing of the quotas would be China, Brazil and India. Africa, which has two executive directors representing 44 countries on the board, would not see its power increased.

This means the people who need the fund the most have very little say over how it is run and those that do not need to tap into its resources have all the power.

Proposals that continental Europe gave up one seat to give Africa an extra place on the board or that another seat be added would probably not amount to anything in the short term, Manuel said.

Although he did not expect fundamental changes to the way the IMF was run, the "minimum" he wanted to walk away with was "enlargement of the voice and the quality of representation" of African countries.

One way this could be achieved without changing the make-up of the board would be increasing the number of alternate executive directors Africa was allowed.

Currently, each director has one alternate even if he or she represents a single country such as the US, UK, France or Germany.

Africa has one executive director representing 24 mainly Francophone countries and one who has responsibility for 20 mainly Anglophone nations. Each of these is only allowed one alternate.

Letting each African executive director have one alternate for every eight countries represented would, if properly resourced, improve the quality of representation, Manuel said.

In the longer term, Manuel said, he would like to see the fund governed in a way that took into account geographic representivity and population size as well as economic might. This was not yet under serious consideration and needed a "much larger body of opinion". Although this position was "formulaic", it was rational and would remove the politics involved in convincing countries to give up their chairs on the board.

But Manuel conceded, "this is not a grand time for rationality".

Rato said he expected the IMF to agree to embark on a two-year programme of reform next month.

Manuel is a former head of the World Bank and IMF joint development committee, and he is still influential in the sister institutions.

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