News / Africa

International Monetary Fund Debates Internal Reforms, Global Economic Growth

Financial ministers and development activists are in Washington this week for the annual meetings of the International Monetary Fund and the World Bank. Among the topics of discussion are economic growth and the representation of developing countries on the IMF’s decision-making body, the executive board.

TEXT SIZE - +
William Eagle

The 24-member board of the IMF approves billions of dollars in loans for countries hit by the global financial crisis.

A third of its seats are held by European countries, including small ones like Belgium and the Netherlands.

But that’s expected to end.

The IMF is committed to broadening the influence of the developing countries on the board, with Europe under pressure to give some of its seats to other countries.

Soren Ambrose is the development finance coordinator for ActionAid International.

International Monetary Fund Debates Internal Reforms, Global Economic Growth
International Monetary Fund Debates Internal Reforms, Global Economic Growth

He says originally, the executive board had only 20 members, and an agreement to keep the number at 24 has to be renewed every two years.  The US says it will not agree to a renewal unless the Europeans agree to change their representation on the board.

If a decision is not made by the end of October, the board could become smaller.

"If no action is taken," he says, "we would lose four seats on the board automatically, the four smallest in terms of voting power– India, Brazil and Argentina.  [They’re] all members of the G20, who have reasons to say they are important and need representation on the board.

"The fourth on the board belongs to 23 sub-Saharan African countries, and it would be unwise for the IMF to exclude African countries which have been taking out loans most consistently for last 30 years."

Reforms would likely favor middle-income countries like Turkey and the Philippines and not the poorest of the poor. That’s because, he says, votes on the IMF board are apportioned according to a country’s “relative weight” in the global economy.   In his view, the least developed countries of the world have a meager voice on the board and could even have that diluted by future reforms.  Middle income countries currently on the 24-member board include Thailand, Egypt, Iran and India.

Members of the media ask questions to International Monetary Fund's Managing Director Dominique Strauss-Kahn.
Members of the media ask questions to International Monetary Fund's Managing Director Dominique Strauss-Kahn.

He says ActionAid would rather see voting weight based on a country’s population and on the support they’ve provided the IMF through repayments of loans.

"The reason we say [a revised board should]  take loans into account," he says, "is that for many years, the IMF survived on the  repayments being made by (developing) countries taking out loans. So if they were to get credit for all they’ve paid in like interest payments and so on,  that would increase their voice."

Also up for discussion are improvements in loans to the developing countries and the anticipated introduction of what’s being called a Global Stabilization Mechanism, which would make large amounts of money available on short notice to a number of countries at once in the case of a pending global economic collapse.

"It would be collective action backed by the board of the IMF," says Ambrose, "and, by doing many countries at once, try to restore confidence in the entire system. It means the IMF is not trying to [publicly] identify a country’s weaknesses, acting like a credit rating agency, but instead be a more systemic fixer of the entire global economy."

Participants are also expected to discuss ways of boosting growth.

Some countries are trying to boost growth by devaluing their currency, thus making their exports cheaper.  IMF Managing Director Dominique Strauss-Kahn warns that a race to lower exchange rates could destabilize the world economy.

International Monetary Fund's Managing Director Dominique Strauss-Kahn warns against a race to devalue currencies
International Monetary Fund's Managing Director Dominique Strauss-Kahn warns against a race to devalue currencies

Participants will also discuss whether the international community should boost economic growth by continuing to spend tax payer funds to stimulate their economies and provide jobs, or whether they should promote private sector growth by cutting spending and paying off debt.

Ambrose says the decision will ultimately affect developing countries.

"They rely on demand coming from the richer countries for the products they export," he explains.

"If the [industrialized] economies are slowing down and there’s not as many people working and consuming, then they are not buying [from poorer countries] coffee, or the cotton for their clothing, and the prices for thea commodities go down. That’s what affects Africa, Latin America and Asia."

New ideas could emerge through some of the week’s lectures and panel discussions.  Among them are ways to jump-start job creation and a look at some of the challenges facing emerging market economies.

Ambrose says it’s not clear if any consensus will emerge from the meetings.  If not, he says, the debate on many of the issues, including reforms of the IMF governance board, will continue in November at the meeting of G20 in Seoul, South Korea.

You May Like

Photogallery Pope's Easter Prayer: Peace in Ukraine, Syria

Pontiff also calls for end to terrorist acts in Nigeria, violence in Iraq, and success in peace talks between Israelis and Palestinians More

Abdullah Holds Lead in Afghan Presidential Election

Country's Election Commission says that with half of the ballots counted, former FM remains in the lead with 44 percent of the vote More

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid