Rising powers slam IMF reform delay
Emerging economies are expected to use the meeting of the International Monetary and Financial Committee to express anger over delay to IMF reform
Emerging market countries angry at the failure to implement long-delayed reforms of the way the IMF is governed could use todays key meeting to voice their complaints.
Finance ministers are expected to raise their demands for greater voting power and share of top positions known as the shares and chairs issue at the IMFs International Monetary and Finance Committee.
They want to secure bigger shareholdings or quotas and more seats on the IMFs Executive Board for emerging economies and the BRICS countries in particular.
Managing director Christine Lagarde underlined the problem on Friday when she said the stage is set for a world 20 or 30 years from now where economic power will be far less concentrated in advanced economies and dispersed across all regions.
She said this meant the Fund must be more representative and mirror these shifts although she noted it was already moving in this direction.
Reform has effectively stalled since 2010, when an agreement was reached in Seoul on a formula for giving emerging economies more voice and votes in the IMF.
The 2010 reform doubled the IMF quota or shareholding to $720 billion, transferring six percentage points of total quota to developing countries and moving two of the 24 IMF directorships from European to developing countries.
But the reform cannot take effect until the US ratifies the package and some Republicans in the House oppose giving any extra US resources to the IMF.
The Group of 24 developing countries said on Friday it deeply regrets that the agreed October 2012 deadline for implementing the 2010 quota and governance reform had been missed, and that there was no agreement on a new quota formula by the deadline of January 2013.
All members of the Group of Twenty (G20) advanced and emerging economies said they were very frustrated at failure to get the 2010 accord implemented, Carlos Cozendey, international affairs secretary at the Brazilian finance ministry, said.
The G20 re-emphasized the urgent need to immediately ratify the 2010 reform. It said it remained committed, together with the whole IMF membership to agree on the quota formula and complete the 15th General quota Review by January 2014.
Russian finance minister Anton Siluanov, who chaired yesterdays G20 meeting, said he hoped the 2010 agreement would be ratified in the near future.
A source familiar with the complex issues involved told Emerging Markets: We are waiting for Congress to ratify the 2010 reforms and clear out some of the political underbrush to get more substantive negotiations underway.
It is expected 2010 would lead to an all-elected Executive Board. Once 2010 is implemented there will be significant change in the form of adjustments in quota [shareholdings] and it is anticipated that two European seats would disappear and be taken over by Asian seats.
The shift is seen as symbolic because making the IMFs Executive Board all elected would open the door to future changes that could profoundly change the composition of a board that currently reflects the dominance of Western economies in global monetary affairs.