IMF seeks new lease on life in middle age
Washington, September 10 :
Six decades after it was created to inject stability into the ruins of the post-war financial system, the International Monetary Fund (IMF) is today trying to forge a new role that better represents a globalised economy.
The IMF is expected to adopt an interim voting reform to give a greater say to four countries at its September 19-20 annual meetings, held with its sister institution, the World Bank.
The share of IMF votes given to China, South Korea, Turkey and Mexico has fallen far behind the four countries’ economic influence. Without a greater say for such emerging players, the IMF argues that it risks becoming irrelevant.
But beyond the annual meetings in Singapore, IMF chief Rodrigo Rato wants deeper reforms by 2008 to remodel a World War II-era institution that remains dominated by the US, Japan and Europe. Rato said that his strategy ‘is motivated by the central insight that the world is changing fast, and that the Fund needs to adapt to help our members deal with the challenges of 21st century globalisation’. “If the Fund is to remain relevant to its members, both its work and its governance structure must be adapted to these new realities.”
The IMF was created in 1945 as a lender of last resort when its members, which now total 184 eco-nomies, ran into balance-of-payments crises. At the same time the World Bank was create to fund development in poorer countries.
From 1997, the IMF achieved new prominence as a series of Asian countries crashed as a result of a financial crisis. Its bailouts of Indonesia, South Korea and Thailand did much to restore calm. But IMF-imposed policy strictures contributed to a clamour of cri-ticism from campaigners that both IMF and WB were cruel and out of touch with the needs of poorer nations.
Forex criticism :
SHANGHAI: A key meeting of international finance ministers and central bankers is likely to renew calls for China to step-up the pace of currency reform but the Asian power is unlikely to budge. “We don’t think the government will appreciate the yuan just because the IMF meet is coming,” said Jason Chang, an economist at Standard Cha-rtered in Shanghai. “It would not be consiste-nt with what they have done in the past.” — AFP