Finance chiefs inch toward IMF vote agreement

By Lesley Wroughton

WASHINGTON (Reuters) - Global finance chiefs on Saturday made progress on reforms that would give emerging economies a greater say in the International Monetary Fund and expressed confidence they could seal a deal next year.

Under a plan backed by the IMF's policy committee, fast-growing emerging market nations would get more voting power in the global lender, which has long been dominated by rich developed countries.

The head of the panel, Italian Economy Minister Tommaso Padoa-Schioppa, said it was "now very likely" an interim agreement on a formula to govern IMF voting shares would be reached by April, with a final deal nailed down by the fund's annual meeting next fall.

Last fall, the IMF's 184 member countries endorsed a plan that increased the voting power of emerging economies China, Mexico, Turkey and South Korea, and agreed that a second round of adjustments should be completed by 2008, based on a new voting formula.

After a day-long meeting, the IMF's policy panel proposed an increase of member countries' votes "in the order of 10 percent" and a doubling of so-called basic votes, which are distributed equally to each member.

The increase in basic votes would ensure the voting power of lesser-developed countries did not decline as more power shifted to larger, emerging economies away from developed countries.

"An outcome of the second round of reforms should be a further increase in the voting share of emerging market and developing economies as a whole," the IMF committee said.

The panel said a formula for calculating the increases should be based on both the size of a country's economy and its purchasing power, one of the demands of developing countries.