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Sunday, October 13, 2013

'Impatience With I.M.F. Is Growing'

Developing countries are unhappy with the IMF:

Impatience With I.M.F. Is Growing, by Reuters: Emerging market countries complained on Saturday about the plodding progress in giving them more power at the International Monetary Fund. The global lender, after its annual meetings this past weekend, failed to meet a deadline originally self-imposed for 2012 to make historic changes meant to give emerging nations a greater say. ...
The delay on changes first agreed to in 2010 also pushes off even more difficult decisions about how to reform the I.M.F., which is still dominated by the nations that founded the organization after World War II.
The 2010 changes have been held up because the United States, the fund’s biggest and most powerful member, has not ratified them and prospects for action before the end of the year are slim due to gridlock in the U.S. Congress. ...
The next round of voting changes may involve even more give and take, as I.M.F. member countries wrangle over the specifics of an elaborate formula that determines the voting power of each country, how much it must contribute to the Fund and what it can borrow. ...
The I.M.F. said it planned to finalize a formula by January... But ... another deadline is likely to slip by. The revision of the formula is intended to further reflect the rise of China, Brazil and other large emerging market economies...

Joe Stiglitz in 2006:

... As the IMF has increasingly lectured others about the importance of governance, problems in its own political legitimacy have increasingly impaired its efficacy. Granting more voting powers to China and a few other countries that are under represented is a step in the right direction. But even the IMF recognizes that it is only the first step. Critics point out that these changes are unlikely to have much effect on its decisions, and they worry that having granted the most powerful of the underrepresented more voting power, the drive for further reform will weaken.
That would be a shame. The U.S. still is the only country with veto power. The choice of the heads of both the IMF and the World Bank make a mockery of legitimate democratic governance. Neither asks who is most qualified, regardless of race, color, nationality. The American president appoints the head of the World Bank and Europe chooses the head of the IMF. The recent selection of the head of the World Bank highlighted the problems.
The IMF’s new focus on global imbalances is also a step in the right direction. ... The IMF should have long been focusing on such issues—its real mandate—rather than on development and the transition from Communism to the market economy, areas that are clearly not within its core competence, and where its policies were often badly misguided. ...

    Posted by on Sunday, October 13, 2013 at 12:39 PM in Economics, International Finance | Permalink  Comments (1)


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