Abstract
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Voice and representation formed one of the main issues discussed during the Annual Meetings. IMF Managing Director Rodrigo de Rato told the Board of Governors that “the Fund’s ability to persuade our members to adopt wise policies depends not only on the quality of our analysis but also on the Fund’s perceived legitimacy. And our legitimacy suffers if we do not adequately represent countries of growing economic importance.” He said this means increases in voting power for some of the emerging market countries, especially in Asia, and also ensuring that Africa is adequately represented. “It’s usually taken as axiomatic that if some countries ‘win’ from a re-allocation of quotas, other must ‘lose.’ I don’t agree. This is not a zero-sum game.” And he urged industrial countries to take the lead on this issue.
The Ministers of the Group of 24 developing countries urged in their communiqué that “a new quota formula is needed to reflect more accurately the relative economic size of developing countries in the world, taking into account purchasing power parity and developing countries’ greater vulnerability to commodity price fluctuations, volatile capital flows, and exogenous shocks” Ariel Buira, Director of the G24 Secretariat, told a press briefing that without change countries would start “walking away from the Fund,” and pointed to Asia as an example where increased regional cooperation—coupled with the huge accumulation of reserves—was reducing the role of the Fund. “If you want the [Bretton Woods] institutions to remain relevant, you need to reform,” Buira said.
In a recent Executive Board seminar on the issue, Directors agreed that progress will require broad consensus among member countries. Directors examined the options for change if there is no general quota increase: ad hoc increases for selected countries; voluntary adjustments in quotas among country groups or individual members; and an increase in basic votes (which would require an amendment of the Articles of Agreement). With regard to the quota formula, de Rato told the IMFC that although there was support for a simpler and more transparent formula, directors “held differing views on whether adjustments in actual quotas should be linked to agreement on a new formula.”