The IMF needs to beware of “mission creep” and refocus on core functions such as surveillance, Aleksei Mozhin, the Fund’s executive director representing Russia, has said.
There is a “danger” of the Fund “moving in too many directions at once and becoming less focused”, Mozhin told Emerging Markets, echoing concerns voiced by top officials from other non-G7 shareholders.
With Fund shareholders gathering in Singapore to debate the medium-term strategy, Mozhin distanced Russia from calls by the US and other G7 powers for the Fund to become more active on poverty reduction, money laundering and combating funding for terrorism.
It was “natural” that the Fund, a standing international institution, should have been “pushed by its membership and shareholders in various directions that were not the main areas of its activities”, Mozhin said.
But “we have to define specific objectives”, he emphasised. On poverty reduction, the Fund had to work with other players, and contribute mainly through its monitoring of and advice to low-income countries on financial and budget issues. On counter-terrorism, efforts should concentrate on coordination with bodies such as the Financial Action Task Force.
Mozhin also backed the developing countries’ demands on IMF representation, calling for GDP at purchasing power parity to be used in calculating quotas, and a “substantial” increase in the basic vote.
“The system now borders on absurdity. Singapore’s IMF quota is as large as those of Russia, Brazil and India put together”, Mozhin said. Fund managing director Rodrigo de Rato has put the case for the changes proposed in the medium-term strategy, in an interview with Emerging Markets today (see pages 16-17).
Agustin Carstens, deputy managing director of the Fund, said that the management’s proposals for reforming the IMF have been “very well received by practically all members of the institution”.
Adjustments may be required in Fund surveillance “to attend to problems in the global economy that require coordinated action by many countries,” Carstens told Emerging Markets. “The Fund is reviewing in detail its capacity to act in financial issues.”
On exchange rates, the Fund has been the subject of a “universal call to give clearer and more opportune opinions about exchange rates.”