Monday, 31 March 2008

IMF governance reform negligible and needs to go much further

As the Board of Directors of the International Monetary Fund met last Friday to agree on reform of the institution, Oxfam International has warned that the proposal for discussion means minimal change in the organization’s structure.
The Board signed off on a “quota formula” that will decide the share of votes that each country receives. But Oxfam warned that the poorest countries will not see any real increase in their voting share. After years of debate, a proposal that gives only a small increase in quota share for a handful of developing countries - and none for the rest – is more than disappointing. Also, this proposal must be the beginning of a longer debate that will give poor countries a bigger say in the decision-making process. This cannot be the end of the line, Oxfam said.

“The Europeans need to give up their overly-dominant position. It’s unacceptable that Ireland, Greece and Luxembourg are about to see an increase in their voice, while poor countries that make up 70% of the IMF's work, gain nothing,” said Oxfam International’s Elizabeth Stuart. Oxfam warned that the proposal on the table will barely increase the minuscule voice of Sub-Saharan Africa – which includes South Africa and 39 other countries – at the IMF. The G7 grouping of industrialized countries meanwhile, will keep more than 45% of the quotas in the Fund.

“The proposal under discussion does not represent the long-overdue reform that was promised. The new Managing Director of the IMF, Dominique Strauss-Kahn, should use his influence on shareholders to bring about the necessary reform to the way the institution is run. The IMF needs to come into the twenty-first century,” Stuart said. The final decision will be voted on and passed on by Finance Ministers as part of the spring meetings on April 12-13 in Washington. However, the decision is likely to be a rubber-stamping exercise on what is agreed this week.

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