WASHINGTON, Oct 20: Intenational Monetary Fund policymakers convened on Saturday under pressure to overhaul a financially strapped institution accused of having been oblivious to changes in the global economic balance of power.

The IMF’s 24-member steering committee is meeting at a time of transition, with the Fund about to get a new managing director, former French finance minister Dominique Strauss-Kahn, who has already vowed to pursue reform “without delay.”

Largely controlled by industrialised powers, the IMF is now confronted by demands that it accord a more potent voice to developing countries, the engines of global economic momentum in recent years.

The IMF, whose mission is to promote international financial stability, is also struggling with its own finances as many countries repay debt.

Interest from loans is drying up for what used to be the lender of last resort for troubled economies as potential borrowers turn to other, easier sources of cash -- China for example -- in a robust world economy.

“With a structural decline in IMF lending, the IMF’s finances have become unsustainable,” US Treasury Secretary Henry Paulson told the committee on Saturday, adding bluntly that a little austerity would not hurt.

“It is time to roll up our sleeves on the expenditure side. A plan for the swift reform of the Fund’s expenditure and staffing must be an early priority for the incoming managing director,” he said.

The IMF lost about $110 million in its fiscal year ending April 30, “and on current trends will lose twice that amount in fiscal year 2008,”according to John Chambers, chairman of Standard & Poor’s sovereign rating committee.

Paulson also called for “fundamental reform” in the operation of the IMF “to reflect the realities of the evolving global economy,” namely by adjusting quotas to take account of emerging and poor countries “and to keep members from drifting away from this critical global institution.”

The IMF’s financial resources stem mainly from quota subscriptions, which are assigned to each member according to its relative size in the world economy.

A member’s quota also determines its voting power as well as its access to IMF financing.

In recent years developing and emerging market countries have been pressing for quota reforms to give them a stronger voice in IMF policymaking.

But according to Germany’s junior economy minister Thomas Mirow, expectations from the developing world have exceeded “what has been discussed until now.” He said that as a result it was unlikely that any headway on the quota question would be made here.

The pressure was nonetheless evident on Friday, as developing country ministers dismissed the pace of reforms to date as “disappointing and unacceptable.”

“A significant redistribution of voting power in favour of emerging market and developing countries as a group should be the overarching objective of the reform,” said the G24, which represents African, Asian and Latin American countries, including powerhouses Nigeria, India and Brazil.

The IMF’s current managing director, Rodrigo Rato of Spain, is leaving at the end of the month, nearly two years before his five-year mandate ends, citing personal reasons.

His abrupt departure comes in the middle of critical reforms he himself launched and his successor, Strauss-Kahn, will be under the gun -- after he takes office on November 1 -- to get on with the job.—AFP