Rich countries like the US generally reduce this demand to developing countries merely seeking an additional seat or a higher voting weightage and create an impression that marginal changes like these dont translate into more effective governance of these institutions. But all of this doesnt prevent the all-powerful International Monetary and Financial Committee (IMFC) from paying lip service to this demand of the developing countries in its own communique that was issued on Sunday.
UKs Chancellor of the Exchequer and chairman of the IMFC Gordon Brown had this to say on this issue in a press conference: We said that we welcome the IMF Executive Boards progress report on quotas, representation and voice. We are asking the IMF to examine these issues further, and we agreed that we will review progress on this at the next meeting.
So these issues were dealt with, discussed today, and we look forward to the further discussion on the issues of representation at the next meeting.
But South Africas finance minister and current chairman of the Development Committee Trevor Manuel has publicly taken issue with the reduction of this matter of greater voice to seeking an additional seat for, say, sub-Saharan Africa on the IMF or World Bank boards. He has forcefully argued that this issue had to be thought of in broader terms, including the overall balance of forces within the IMF; that the matter had to be approached in a more detailed manner than taking short cuts. True to form, the latest communique notes that we have continued our consideration of innovative and pragmatic ways to enhance the voice and effective participation of developing and transition countries in the work and decision making of the Bank and the Fund. There is no single approach to accomplish this, but rather action is required over time across a range of issues. The specific reference as where such an enhanced voice can be made is enhancing borrower representation on International Development Association (IDA) replenishment process. This bears close resemblance to the statement made by Indias finance secretary DC Gupta, alternate governor to the Development Committee notably, that We are concerned over the evolution of IDAs governance. IDA Deputies, over successive IDA Replenishments have taken over the responsibility of laying down IDAs policies, which, under the Articles of IDA, fall within the province of the Board of IDA, where developing countries have a well-defined voice and role...It is our belief that the Board is the most appropriate place to reclaim this voice and participation.
The other way to reclaim the voice is by stepping up the representation of countries like China and India on the IMF board to better reflect the rising share of Asia in global GDP in terms of purchasing power parity. Former IMF Executive Director Vijay Kelkar had earlier argued that Europe has 10 chairs in the Funds board while Asia had only five. But Europes share of global GDP was only 29 per cent while Asias was 32 per cent and rapidly growing. A rebalancing in the governance structures was overdue.
Mr Manuel has his own take on this problem. It is reliably learnt that at the latest Development Committee meeting, a paper Enhancing voice and participation of developing and transition counties was circulated, which looked at the voting structure of the Bank among other issues. As South Africas finance minister has consented to serve as chairman for another term, this much vaunted demand of the developing countries will not go away so soon.