WASHINGTON, Sept 24: Developing countries piled pressure on the world’s industrial powers on Friday to give them more say in the running of global lenders as a David-and-Goliath rivalry heated up on the eve of the twice yearly World Bank and International Monetary Fund meetings.
The meetings in Washington — an semi-annual gathering of world finance ministers and central bankers — looked set to devolve into political sparring between powerful and less influential nations over two issues: voting shares in the IMF and a stalled debt relief deal for impoverished countries.
The Group of 24 developing nations of Asia, Latin America and Africa called for more progress in adjusting the voting shares, or quotas, in the institutions to better reflect their growing clout in the world economy.
The under-representation of developing countries continues to undermine the credibility and legitimacy of the Bretton Woods Institutions, which hinders effectiveness and relevance of these institutions, the G-24 said in a joint communique ahead of the meetings, which start on Saturday.
While there is increasing acceptance of the idea of allowing developing nations more say in the institutions, the question remains — which powerful member countries should give up some of their voting power.
The United States said on Friday it supported a change in voting shares, but insisted it would not be the one to offer up some of its power.
The quotas for many fast-growing market countries are much smaller than the IMF’s own calculations would suggest they should be, US Treasury Under Secretary Tim Adams told a conference.
He said the United States would not seek an increase in its own quota share but would also not accept any decrease in the next review of quotas in 2008.
Ariel Buira, director of the G-24 Secretariat, said developing countries had become frustrated at the slow progress in resolving the issue.
We have a situation in which we have a small group of countries which controls the institutions, makes the rules and then there is a large group of countries that are subject to these rules, Buira said, also acknowledging that some major countries had realized there was a need for change.
Clearly it is not enough, because the process is only beginning but we hope it will go far,” he said, adding: “But we don’t know.
He said developing countries hoped for progress by the next IMF and World Bank meeting in Singapore.
Singapore may be the deadline in some sense, he added.
He said Asian countries, unhappy about their lack of representation in the fund, had already started leaving the fold of the institutions, accumulating vast reserves so they would not require the IMF’s help if there were a crisis.
If they don’t feel they are getting adequate representation and sufficient influence here, which means greater quotas, they are likely to continue making their own arrangements, Buira said.—Reuters
