IMF needs to be reorganised: Kelkar

Washington, Feb 25 | Updated: Feb 26 2005, 05:30am hrs
The International Monetary Fund needs to be reorganised for it to reflect todays global economic realities, according to IMFs former executive director Vijay Kelkar.

There needs to be a greater representation of emerging economies on the IMF board, more accountability to member states, and a strengthened capital base, Mr Kelkar, former adviser to finance minister, wrote in Finance and Development published by IMF.

Mr Kelkar prepared the article with Praveen Choudhry, assistant professor of political science at Ohio University, and Marta Vanduzer-Snow, a research scholar in the department of politics at New York University. They said governance of the global political economy required institutions that reflected the changing distribution of economic power in the international system. IMF will have to adapt to meet the challenges of key economic forces profoundly altering the global economic map and power centres.

The foremost requirement for managing the new wave of globalisation was to strengthen the resource base of IMF, they said. Although the capital base of IMF has increased from SDR 61.1 billion in 1978 to SDR 212 billion in 1998, the size of the fund had shrunk significantly when compared with a variety of global indicators.

In addition to an increase in quotas, IMF could also increase the amount it has for addressing crises by borrowing from capital markets and creating self-liquidating SDRs to meet liquidity needs.

The executive board needs restructuring. Currently, Europe had ten chairs on it, while Asia had only five and Africa two, which did not reflect the current global economic balance of power, the authors said.