IMF voting reform set for approval
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IMF voting reform set for approval

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A major milestone in the four year-long negotiations to give developing countries a greater say in the running of the IMF will be passed at the G20 summit this week

Leaders look ready to approve a package of measures to shift voting power from rich to poorer countries to give developing nations more seats on the board at the expense of Europe.

But the details need to be finalised and the reforms are still likely to provoke opposition among countries and campaign groups that say the deal falls short of the original ambition.

G20 finance ministers meeting in South Korea last month backed a package of reforms of the way that the IMF is governed. This included:

A shift in quota shares to “dynamic” emerging markets and developing countries (EMDC) and to underrepresented countries of over 6%; greater representation for EMDCs on the Executive Board through two fewer advanced European chairs; and a move to an all-elected Board (five seats are currently appointed).

The details of the package agreed by the IMF’s executive board last week show that the quota held by advanced economies will fall to 57.7% from 60.5% while total EMDC share will rise to 42.3% from 39.5%.

These changes will make China the third largest shareholder and will vault India, Russia and Brazil into the top ten.

Amar Bhattacharya, director of the G24 country group, gave it a mixed welcome. “The bottom line is that this is an important step in the right direction but we would have liked to have seen a greater shift not just to dynamic EMDCs but EMDCs generally,” he said.

The Bretton Woods Project, a campaign group, accused the IMF of “false representation”, saying it had included Korea and Singapore as emerging economies despite treating them as advanced in its world economic outlook.

Oxfam said Europe was still “vastly over-represented” with a 30.2% share. “While this represents some progress, it isn’t sufficient,” spokesperson Pamela Gomez said.

“European countries should have contributed more towards the shift.”

Details of the handover of two of the nine seats currently held by European countries to EMDCs still have to be hammered out.

Peter Chowla, programme manager at BWP, criticised the rich countries for failing to spell out the details. "This complete lack of transparency about the process for the selection of the board is a bit worrying.”

Bhattacharya urged Europe not to succumb to the temptation of simply reshuffling seats from advanced to emerging Europe.

“I would stress that countries like Mexico and Turkey should comer to the fore and that sub-Saharan Africa which has 48 countries but only two chairs should get a third chair.”

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