BRUSSELS - The poor have been given a
little more say in the International Monetary Fund
(IMF)in the biggest change in voting rights since
the organization was founded more than 60 years
ago.
The reform on Monday reduces the
power of the IMF's rich member countries to 57.93%
of voting rights from 60.57%. Members had until
April 28 to approve the proposal to give
developing countries more heft in the institution.
Inter Press Service was told that the proposal has
been approved with 92.93% of the vote, comfortably
more than the minimum of 85% needed for the new
division of voting rights to enter into force.
Important IMF members such as Russia and
Saudi Arabia voted
against the proposal
because it meant that their voting weight is
reduced.
Developing countries have been
complaining for many years that they do not have
enough power within the IMF. Nor do many of them
believe that the fund is really for their good.
For that reason, particularly since the 1997-98
Asian financial crisis, some developing countries
have amassed enormous financial reserves to make
sure that they will not need the IMF any more.
IMF assistance to many countries in need
in the past has been given with conditions that
have brought long-term damage for short-term
relief. The most controversial of these were the
Structural Adjustment Programs that the IMF
demanded in return for rescue loans.
These
programs meant in effect a lowering of import
barriers and a move towards a supposedly
free-market economy that frequently harmed local
industry and produce. Such reforms are usually
referred to as the Washington Consensus, over
which there is now little consensus.
The
growing clout of the developing countries against
such impositions, and the increasing strength of
their economies, raised the pressure on the IMF to
reform. In 2006, the voting rights of South Korea,
Mexico, China and Turkey were increased. This
week, a second important step was approved.
As a group, developing countries now see
their share of voting rights grow to 34.49% from
31.7%. Most of the increase goes to the emerging
economies, that now have 25.64% of the vote within
IMF instead of the 23.88% earlier.
Countries like Brazil, China and India get
more voting power, while Saudi Arabia and Russia
have to make do with less. The share of the
majority of low-income countries has improved to
9.61% from 8.45%. The transition countries, the
former Soviet Union states, see their share drop
slightly from 7.09% to 6.82%.
The most
influential members of the IMF remain the US,
Japan, Germany and a group headed by Belgium
consisting of Turkey, Austria and several Central
and Eastern European countries.
The IMF
managing director, at present Dominique
Strauss-Kahn, has always been from a European
country, by way of an agreement among the
developed countries.
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