Do developing countries have a say at the IMF?

• Pages: 33-37

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Developing countries account for a growing share of the world's output and trade, and newly industrializing countries have become major economic players, but they have yet to see their growing economic clout reflected in their representation in the IMF,Ariel Buira said.He and his coauthors argue that the governance of the IMF does not meet the standards of transparency, accountability, and legitimacy that it prescribes to member countries. This is troubling, he noted, because -with resources of over $300 billion, the IMF may well be the most important international institution, at least for most developing countries.-Page 35

Given the IMF's great influence, two questions on the quality of its own governance arise: how to attain adequate voice and representation for all members in the institution's decisionmaking process and whether the IMF meets the standards of transparency and accountability needed to ensure the legitimacy of its decisions, the ownership by member countries of the programs it supports, and the proper use of the public resources at its disposal.

Shifting the balance of power

How is voting power at the IMF determined? At the 1944 Bretton Woods Conference that created the IMF, participants weighed two approaches-one that linked votes solely to members' contributions, or quotas, and another that was based solely on the legal principle of the equality of states.A compromise was worked out whereby member countries were given one vote for every $100,000 of quota plus 250 basic votes.

Over time, however, basic votes have become irrelevant, Buira noted.With the nearly 37-fold increase in quotas over the past 60 years, the share of basic votes in the total number of votes has declined from 11.3 percent to 2.1 percent, as the IMF's membership has quadrupled from 45 to 184 countries. This has substantially shifted the balance of power in favor of largequota countries. The Group of Seven industrial countries currently have a combined total vote of 47.7 percent, and, together with the votes of the Swiss Director, they account for 50.3 percent. If the votes cast by the Dutch and Belgian Directors are added, the combined vote of these countries exceeds 60 percent. Imbalances also exist within the developed world. The European Union (EU), with a combined GDP somewhat smaller than the United States, holds virtually 30 percent of the total vote, versus the United States's 17 percent.

On top of this, Buira added, the IMF's Articles of Agreement stipulate that some decisions require a qualified majority of the votes cast, further concentrating power in the larger countries, which have a higher proportion...