IMF members haggle over voting rights at fund

WASHINGTON (Reuters) - Who should have more say in the International Monetary Fund -- and why -- is the subject of bitter debate among the fund's 185 countries as they try to reshape the 62-year-old organization to better reflect modern economic times.

For months, the IMF's member countries have pored over complex economic measurements to work out a new formula for calculating the size of each member's quota -- essentially its voting power -- to give developing countries more say in the running of the institution.

But so far no single plan has emerged.

"We will not have a decision here," German Deputy Finance Minister Thomas Mirow told reporters on the sidelines of the spring meetings of the IMF and World Bank.

At stake is the credibility of the IMF to assure its membership that it is representative of their interests and not biased toward the industrialized world.

Currently, quotas are based broadly on a country's size in the world economy and calculated according to gross domestic product, its trade and its reserves.

The United States has the most quotas followed by Japan. Germany, France and Britain. But emerging economic powers like China are under-represented.

Developing countries say their time has come.

"A new quota formula under discussion in the IMF must reflect the relative economic size of countries in the world economy. GDP measured at purchasing power parity should be the principal measure of determining a country's economic weight," the Group of 24 developing countries said in a communiqué on Friday.

The forum said that openness is not a good measure and the inclusion of trade within a single currency bloc was a distortion.

European countries, however, are loath to cede any influence.

Mirow said Germany strongly opposes proposals, to leave the trade between European countries out of the calculation. The most dynamic countries should get higher quotas, he said, but these are not only emerging countries like China or India, but also ones like Spain.

Germany see itself under-represented under the current system, Mirow said.

One mooted option is for Europe to have its say as a bloc.

"I hope the European member states will realize that it will be more efficient for the European voice and for the European strength inside the IMF to share a single seat," European Union Commissioner Joaquin Almunia said on Friday.

Political horse-trading aside, ministers said the differences were not insurmountable and IMF reform could still be achieved in the next year.

"I hope that the discussion of today and tomorrow will bring progress to reach the base for a consensus in September," said Italian Economy Minister Tommaso Padoa-Schioppa.

(Additional reporting by Francesca Landini)