G20 leaders endorse sweeping reform of IMF

2010-11-12 14:53

Seoul – G20 leaders Friday gave their backing to sweeping reforms designed to give emerging economies such as China a bigger say in the International Monetary Fund.

The leaders of advanced and emerging economies announced that they were delivering “a modernised IMF that better reflects the changes in the world economy through greater representation of dynamic emerging markets and developing countries”.

The reforms would enhance its “legitimacy, credibility and effectiveness, making it an even stronger institution for promoting global financial stability and growth”, the G20 leaders said in a summit declaration in Seoul.

The IMF’s executive board had agreed to the changes – described as “historic” by managing director Dominique Strauss-Kahn – at its own meeting last week.

They create “the biggest-ever shift of influence in favour of emerging market and developing countries”, Strauss-Kahn said then.

The fund, formed after World War II to remake the world financial system and prevent a 1930s-style Depression, has long been dominated by Western powers but has faced growing calls to adapt.

The deal to reform its 24-member board of governors was thrashed out by G20 ministers last month ahead of this week’s summit.

Europe has agreed to give up two seats. Just over five percent of voting rights will be transferred, and Brazil, Russia, India and China will all be among the top 10 IMF shareholders.

China will move up to the third-largest shareholder, from sixth place.

The total size of the quotas – the contributions of the 187 member states to the fund’s capital – will be doubled, to 756 billion dollars.

G20 leaders, as part of efforts to rebalance the world economy, also tasked the IMF with advising on proposed “indicative guidelines” to help identify large current account imbalances that require corrective action.

“We will not have any way to force countries to implement our guidelines,” Strauss-Kahn told reporters Friday in Seoul.

“We have no police, no army. The strength of the IMF relies on the strength of the truth. The IMF is not going to be the dictator of the world economy.”

Upon his arrival at the IMF in 2007, Strauss-Kahn made quota redistribution a top priority, to resolve a long and bitter battle by emerging-markets and developing countries to wrest greater power.

When a previous quota reform plan was officially adopted by member states in April 2008, he hailed it as “the beginning of the new legitimacy of the Fund”.

But that reform has not been enacted due to the lack of a sufficient number of ratifications by member states.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.