Two blocs of developing countries – the G24 and the finance ministers of Argentina, Brazil, Egypt and India – yesterday pressed demands for a bigger voice and vote in the IMF.
The vote on a quota reform, which will be counted tomorrow, creates a “disturbing picture” of future developing world representation in the Fund, the four ministers said in a joint statement. It is “clearly unacceptable as it further erodes the credibility and legitimacy of the IMF”, they declared.
The statement said “the current [reform] process should be kept in abeyance” and called for a “genuine attempt to work out a simple and transparent formula” for assigning representation quotas to Fund member countries. Brazilian finance minister Guido Mantega said last night that the reform process should be suspended before the voting is complete.
The G24 said the IMF reform proposals “do not adequately address the fundamental issue of the under-representation of developing and low-income countries as groups.” Margarito Teves, Philippines finance minister, told Emerging Markets: “The G24 governors were all in consensus.”
The G24 launched a counterproposal for the second stage of the reform process, under which the size of countries’ economies would be calculated using GDP calculated at purchasing power parity, giving developing countries a greater weighting.
The G24 also propose that the formula for assigning quotas and votes include “countries’ vulnerabilities to commodity price fluctuations, capital flows and other exogenous shocks.” These factors would reflect the potential future need for borrowing from the Fund.
Some in Singapore debunk the entire quota debate. Walter Molano, director of research at BCP Securities, said: “It’s typical jerry-mandering by the US. Who cares whether they get more quotas, unless they have revenue flows from lending, [the IMF] can’t cover operating costs.”