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WASHINGTON (AFP) -- The International Monetary Fund’s executive board on Wednesday moved toward a fundamental restructuring of voting rights that will give more clout to emerging economies like China and Brazil, a source close to the board told AFP.
The board agreed on the outlines of a new structure for setting voting power and contributions in the Washington-based lender that will recognize the rise of the emerging economies in the global economy, the source said.
The reform still has to be defined precisely and put down on paper, but the scope of accord on the restructuring -- which would likely diminish Europe’s powerful role at the Fund -- suggests the details could be sorted out quickly.
A Fund spokesman contacted by AFP confirmed that the board discussed the issue, but declined to comment on any details of the talks.
According to the source, the reform proposal advanced by Brazil’s IMF director Paulo Nogueira Batista was received favorably by the most important directors on the board.
The proposed reform comes as the IMF is seeking to boost its resources for crisis intervention by some $500 billion.
While Europe will be a major part of this, the lion’s share is expected to come from the cash-rich emerging economies -- Brazil, China, India, Russia, South Africa, known as the BRICS, and others.
But they have shown reticence, saying both that they want a greater say in the Fund and that they are concerned over how the money might be directed toward troubled Europe.
Brazil, one of the key rising economic powers, has tied its possible contribution to reforms of the Fund’s power structure.
Brazilian President Dilma Rousseff reiterated that point on a visit to Hanover, Germany on Wednesday.
“Since the Cannes G20 summit (in November 2011), we have said that we have agreed to take part in boosting the resources of the International Monetary Fund,” she said.
However, she added, this must go hand in hand with “a reinforcement of the participation of emerging countries” in the top echelons of the IMF.
For decades, the Fund has been dominated by the United States, Europe and, to a lesser extent Japan, the largest donors and shareholders.
But that arrangement has left the BRICS sometimes less influential than much smaller economies.
For instance, Belgium currently has a larger quota than Brazil, the world’s sixth-largest economy.
The board agreed on the outlines of a new structure for setting voting power and contributions in the Washington-based lender that will recognize the rise of the emerging economies in the global economy, the source said.
The reform still has to be defined precisely and put down on paper, but the scope of accord on the restructuring -- which would likely diminish Europe’s powerful role at the Fund -- suggests the details could be sorted out quickly.
A Fund spokesman contacted by AFP confirmed that the board discussed the issue, but declined to comment on any details of the talks.
According to the source, the reform proposal advanced by Brazil’s IMF director Paulo Nogueira Batista was received favorably by the most important directors on the board.
The proposed reform comes as the IMF is seeking to boost its resources for crisis intervention by some $500 billion.
While Europe will be a major part of this, the lion’s share is expected to come from the cash-rich emerging economies -- Brazil, China, India, Russia, South Africa, known as the BRICS, and others.
But they have shown reticence, saying both that they want a greater say in the Fund and that they are concerned over how the money might be directed toward troubled Europe.
Brazil, one of the key rising economic powers, has tied its possible contribution to reforms of the Fund’s power structure.
Brazilian President Dilma Rousseff reiterated that point on a visit to Hanover, Germany on Wednesday.
“Since the Cannes G20 summit (in November 2011), we have said that we have agreed to take part in boosting the resources of the International Monetary Fund,” she said.
However, she added, this must go hand in hand with “a reinforcement of the participation of emerging countries” in the top echelons of the IMF.
For decades, the Fund has been dominated by the United States, Europe and, to a lesser extent Japan, the largest donors and shareholders.
But that arrangement has left the BRICS sometimes less influential than much smaller economies.
For instance, Belgium currently has a larger quota than Brazil, the world’s sixth-largest economy.
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Articles by Korea Herald
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