IMF starts sweeping overhaul

Singapore, September 17 :

International Monetary Fund (IMF) policymakers today backed the most sweeping overhaul of the institution for six decades to give fast-growing China, South Korea, Mexico and Turkey more influence.

The plan to overhaul the 61-year-old IMF, whose balance of power still largely reflects

the economic landscape at the end of World War II, was given the green light by the IMF’s International Monetary and Financial Committee.

“We welcome today agreement to a comprehensive reform package for quotas which, if moved forward, we want to be completed no later than the 2008 annual meetings,” said British chancellor of the exchequer Gordon Brown. “These reforms we agreed should

also enhance the participation and voice of low income countries in the IMF.”

“This package, when implemented, will make significant progress in realigning quota shares with members’ relative position in the world economy,” said Brown, chairman of the committee, describing it as the biggest reform to the governance of the IMF for 60 years.

The plan now goes to the full 184-strong membership of the Fund for final approval, with an announcement of the result of the vote expected by Tuesday.

During the 1990s the IMF was in the vanguard of efforts to resuscitate economies from Latin America to Asia, throwing out multibillion-dollar lifelines. But recently it has had no major crisis to manage and with its lending on the decline the Fund’s own finances are running in the red.

Asian nations, backed by Japan, as well as developing countries have long been

pushing for a greater say at the institution, which during its six-decade life so far has been dominated by the US, Europe and Japan.

The four countries to benefit from the changes under consideration here are said by the IMF to be the only members under-represented on all four of the criteria that determine a country’s voting rights.

Those criteria are the member’s GDP, its openness to trade, the ‘variability’ of its economy, in other words how volatile its growth is, and the amount of its reserves.

After the Singapore gathering, further discussions will seek agreement on a new formula to calculate the dollar quotas that each IMF member contributes to the Fund and which determine its voting rights. But within the membership there has been some disagreement on the reforms, with certain European and developing nations voicing dissatisfaction.

Fighting corruption :

SINGAPORE: Leaders of seven multilateral lending institutions agreed here on Sunday on a framework for fighting fraud and corruption in their operations and lending activities. The declaration was signed by the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank Group, Inter-American Development Bank Group, International Monetary Fund and the World Bank.

The lenders agreed to adopt standardised definitions of fraudulent and corrupt practices, follow common principles and guidelines for investigations, strengthen information exchange and explore how they can lend support to each other’s enforcement actions.

They also agreed to work together in helping member countries fight corruption in cooperation with civic groups, the private sector, the press and the judiciary.

The World Bank has published on its website a blacklist of companies and organizations which had fraudulently acquired and used the Bank’s funds.

The Asian Development Bank does not publicly release such information and so the agreement will allow the seven multilateral lenders to share their blacklists with each other. — AFP