IMF chief: Speed up change in vote system

Developed economies should do more to ensure that emerging economies have a greater say in the International Monetary Fund (IMF), with China’s increased voting power reflecting the real role of the nation’s economy, said Dominique Strauss-Kahn, the IMF’s managing director.

Speaking at a press briefing at the end of the G20 summit, Strauss-Kahn said that the IMF would work hard to ensure that the shift in voting power, agreed at the Pittsburgh G20 summit last September, is implemented, but stressed that the organization’s member nations, rather than the IMF, would have the final say on the issue.

During the Pittsburg summit, the G20 nations reached a consensus that at least 5 percent of voting power should be shifted from over-represented economies including the United States and Europe to dynamic emerging markets and developing nations represented by China and India before January 2011.

Reform slows

However, quota reform has slowed down since then, with some of the IMF’s bigger shareholders dragging their heels on the issue.

“We are committed to organizing shares and of course China is part of this move, and the increase of quota for China would be very big, but at the end of the day, it is a decision that is made by themselves (G20 nations),” said Strauss-Kahn.

“I think this (quota shift) would be done,” he added, but failed to give details of the timetable.

At the moment, China holds a quota share of 3.65 percent in the IMF, the largest among developing nations, and reports said that this will increase to 3.8 percent, an increase of 0.15 percentage points, citing a reform proposal from the IMF to G20 nations.

In the G20 Declaration released on Monday, the IMF is urged to work for “an acceleration of the substantial work to complete the quota reform by the Seoul summit and in parallel deliver on other governance reforms, in line with commitments made in Pittsburgh”.

The next G20 summit will be held in Seoul in late November, the first time it will be hosted by an Asian nation.

“We will try as much as possible to provide them (the G20 nations) expertise and policies”, but this is not a determination that the IMF could make, Strauss-Kahn said.

Currently, the United States holds a 16.77 percent quota share in the IMF, followed by Japan, Germany, the United Kingdom and France.

“It’s understandable that the developed nations would not like to transfer quota shares to the developing nations, as this may harm their interests,” said Zhao Xijun, the deputy dean of the School of Finance at Renmin University of China in Beijing.

But according to Zuo Xiaolei, chief economist at China Galaxy Securities, “a greater quota in the IMF is far from enough for China to strengthen its global position. China should try to expand its presence through many other global platforms such as the G20.”

Tags: G20, G20 Summit, IMF