Brussels, 19/09/2006 (Agence Europe) - In Singapore, the Bretton-Woods institutions tackled vital future reforms on Monday. The International Monetary Fund (IMF) endorsed the first stage of its reform process, which is to lead to the large emerging economies being better represented. The World Bank, for its part, adopted the road of anti-corruption strategy but wishes to ensure that its programmes to combat poverty remain the priority.
Considerably under-represented within IMF bodies in relation to their weight in the world economy, the emergent countries are to benefit, by 2008, from a new formula for calculating quotas, which determine voting rights, the level of contribution for each country and the amount of financing that they can receive. These changes, endorsed on Monday by the 184 IMF member nations, will give a little more decision-making power to four countries. China will go from 2.94% of the votes to 3.65%, Mexico from 1.2% to 1.43%, South Korea from 0.76% to 1.33%, and Turkey from 0.45% to 0.55%. This initial revision was approved by 90.6% of the votes, but India and several Latin American countries in particular consider the rebalancing insufficient. The principle of two-step reform, envisaged by Rodrigo Rato, IMF Director, must restore the credibility and legitimacy of the institution whose future and role are brought into question by non-governmental organisations and by some countries (for debates at the European Parliament, see EUROPE 9154 in particular). This reform is “extremely important for the future of the institution”, Mr Rato said, and Gordon Brown, UK Chancellor of the Exchequer who chairs the international monetary and finance committee, says it is the most important IMF reform for 60 years. The major redistribution of quotas, however, raises many questions, especially among Europeans, as some Member State are disproportionately represented at the IMF. Debates may, however, serve as a launching pad for establishing a single European seat.
The World Bank, which recommends strengthening good governance in the States that benefit from its aid programmes, made a step in this direction, albeit with some reservation (the European Commission for Development, Louis Michel, took part in the work). Many countries stressed that this policy should not distance the Bank from its main mission, which is to combat poverty. The Development Committee, a joint forum of the World Bank and the International Monetary Fund, thus decided that this strategy would be closely monitored and that an assessment report on implementation would be presented in spring 2007. “The fight against corruption is just one of the aspects of the Bank's policy”, the French minister for development cooperation, Brigitte Girardin, said. The president of the World Bank, Paul Wolfowitz, put in: “It is not a question of reducing loans or a matter of moving away from regions where there are problems (…) but we must ensure that aid money is used to buy books and build schools and that it does not go into the pockets of corrupt leaders”.
Speaking with a single voice, the two Bretton Woods institutions called for talks at the WTO to be resumed (see related article). Mr Rato said the suspension of Doha Round talks is very disappointing and harmful. He felt that this fuels a growing tendency toward bilateralism in the best of cases and to protectionism in the worst. Mr Wolfowitz called on the parties to compromise: the Americans by reducing farm subsidies, the Europeans by increasing access to their market and the developing countries by reducing customs duties on manufactured goods. He went on to say: “We must act now, before the window of opportunity closes”.