The G20 group of the world's leading rich and developing countries has called for reform of the International Monetary Fund (IMF) and the World Bank, to improve their governance, strategy and operations, reports the Financial Times (17/10). The G20 said governance of the Fund and the Bank had not kept pace with changes in the global economy - notably the growth of Asian economies.
"The G20 underscores the critical importance of achieving concret progress on quota reform by the next International Monetary Fund and World Bank Meetings in Singapore," it said at the conclusion of a weekend meeting in China.
IMF quotas determine a country's capacity to borrow from the Fund and also its share of the votes on the IMF board. It is expectedthat reforming the IMF board would pave the way for a similar reform at the Bank. But past efforts to reform IMF quotas have collapsed, and some countries continued to resist the reforms during the weekend meeting, ministers said.
Reuters (16/10) adds that rich and emerging nations agreed that the division of national influence over the IMF needed changing but they remained deeply divided on how to do it. Some European countries wanted the IMF to reconsider the way in which quotas were calculated, a Japanese finance ministry official said. For example, some argued that quotas should be based purely on the country's GDP, rather than on a combination of indicators including trade volume and official reserves. According to Japanese government documents, calculations based data such as GDP, official reserves and balance of payments would make Asia under-represented by 35 percent. Others had argued that European countries could cope with smaller shares, since much of their trade was conducted inthe euro, making them less vulnerable to currency shocks that may call for financing from the Fund.
In a sign that changes may take time, French Finance Minister Thierry Breton told reporters that any reshuffling of quotas that reduced European influence in the IMF would not be acceptable.