WASHINGTON Oct 12 Emerging market countries on
Saturday griped about the plodding progress in giving them more
power at the International Monetary Fund.
The global lender, after its annual meetings this weekend,
failed to meet a deadline originally self-imposed for 2012 to
make historic changes meant to give emerging markets a greater
say. The changes, a topic at each meeting since the deadline
passed, would make China the third-largest member and cut
Europe's representation on the IMF's board.
"Why does this problem remain with us in meeting after
meeting?" India's finance minister P. Chidambaram said in a
statement. "Also, there is no clarity, even after the passage of
a year, as to when this will be finally achieved."
Brazil's central bank governor Alexandre Tombini said the
negotiations have entered a state of "complete paralysis."
But European countries may be breathing a sigh of relief
that a delay largely caused by the United States has taken them
out of the spotlight for the moment, as they must give up
further seats on the IMF's 24-member board.
The delay on changes first agreed in 2010 also pushes off
even more difficult decisions about how to reform the IMF, which
was founded by the victors of World War Two, who still dominate
The 2010 reforms have been held up because the United
States, the fund's biggest and most powerful member, has not
ratified them and prospects for action before year-end are slim
due to gridlock in the U.S. Congress.
Under the 2010 agreements, European directors also agreed to
give up two of their eight seats on the board, but have not
fully decided which second seat to relinquish.
"U.S. Congress ratifying the last reform is the prerequisite
for taking the next step," Germany's finance minister Wolfgang
Schaeuble. "Then we Europeans will feel the heat a bit more
because we have to provide our second seat."
The next round of voting reforms may involve even more give
and take, as IMF member countries wrangle over the specifics of
an elaborate formula that determines the voting power of each
country, how much it must contribute to the Fund and what it can
The formula takes into account the size of each economy,
foreign exchange reserves and trade, and members are tussling
over how much weight to give each measure.
The IMF said it planned to finalize a formula by January
2014, when it next reviews the voting shares of member
countries. But many countries have not made formula debates a
priority until the 2010 reforms are completed, meaning yet
another deadline is likely to slip by.
The revision of the formula is intended to further reflect
the rise of China, Brazil and other large emerging market
economies, by giving greater weight to purchasing power GDP,
which measures the buying power of an economy instead of just
the dollar value.
European countries, for their part, have sought more
emphasis on openness, the most hotly debated of all the
measurements because it captures the vast trade flows between
euro zone countries. Removing, or scaling back, the openness
measure would sharply reduce Europe's influence in the IMF.
"The main hurdles have been determined resistance to change
on the part of overrepresented countries and somewhat flagging
determination from IMF management to push the process forward,"
Brazil's Tombini said.
Africa is also demanding swift progress on the next round of
reforms to the IMF's 24-member board, asking for a third seat
for sub-Saharan Africa, which currently only has two positions
on the executive board representing 43 countries.
"The formula as presently applied has continued to generate
an erosion of Africa's quota at the IMF," Pravin Gordhan, South
Africa's finance minister, said in a statement.
"Against this backdrop, we urge the IMF to address this
representation deficiency with the urgency it deserves."