Emerging Nations Growing Impatient on Stalled IMF Reforms

Bangalore: Dissatisfaction bubbled among fast-growing economies such as China and Brazil, which search for a bigger voice at the IMF as the last-resort lender enveloped annual talks dominated by Europe's debt crisis. The talks had originally been expected to see the passage of key reforms that would give such nations a greater say at the International Monetary Fund (IMF), historically controlled by the U.S. and Europe. But final approval for the changes, which shuffle the Fund’s voting rights formula, is stalled in the U.S. Congress with little movement expected before presidential elections next month. Critics have warned that the changes are crucial to reflect the new face of a world economy dependent on emerging nations for growth, as some countries voiced growing impatience with the pace of change at the 188-member Fund. Brazilian Finance Minister Guido Mantega charged that the reputation and relevance of the IMF —— founded towards the end of World War II to help nations rebuild their shattered economies —— was on the line. "Resistance to reform undermines efforts to transform the IMF into a truly multilateral and representative organisation," he said in Tokyo. China, now the world’s second-largest economy and a potential key beneficiary of the reforms, issued its own diplomatic nudge to Washington. "To safeguard the IMF’s legitimacy and effectiveness, we call on member countries to conclude the 2010 quota and governance reforms by completing the domestic approval process," Yi Gang, deputy governor of China’s central bank, said in a statement. The reforms, which must be approved by 113 countries that represent 85 per cent of IMF voting rights, cannot come into force without support from the U.S., which accounts for nearly 17 per cent of votes at the Fund. The Group of 24 —— including nations from South America, Africa and South Asia —— said the shuffle would "better reflect the growing role of (emerging nations)...in the global economy, while enhancing the voice and representation of poor and small low-and middle—income countries". Meanwhile, the BRICS nations —— Brazil, Russia, India, China and South Africa —— have been studying the feasibility of a new development bank for themselves and other developing nations.