Fixing the IMF's governance
| Author | Camilla Andersen |
| Position | IMF External Relations Department |
| Pages | 349-357 |
Page 349
Proposals on how to better align decision making at the IMF with the needs of the 21st century abounded at an open forum organized by the IMF's Research Department. Some speakers called for less intervention by the Executive Board in the day-to-day running of the institution, while others argued the IMF could not survive without the political oversight and backing provided by the 24 Executive Directors.
Page 356
IMF "voice and representation"-a catchphrase for the distribution of power among the IMF's 184 member countries- have been hotly debated for at least the past five years. Various proposals to change the famously complicated quota formula that is the main determinant of each country's voting power have been discussed and then rejected. Countless opinions on how to reconfigure the IMF's 24-member Executive Board have been voiced, but none has been heeded.
On November 4, the IMF's Research Department hosted an Economic Forum in conjunction with its annual conference (see pages 354-55) that revisited these issues.
James Boughton, the IMF's official historian, shed some light on the inertia that seems to grip all attempts to redistribute power among member states. Today's quotas still reflect decisions that were made when the IMF was founded in 1944 because countries cannot agree on what basic principles should guide the redistribution of votes, he said. Two considerations compete for attention. First, it is desirable for countries to have roles commensurate with their importance and influence in the world economy. Second, it is desirable for all countries to have adequate representation, so that low-income countries and those with relatively little international trade are not shut out of the decisionmaking process.
Closing the gaps between the current distribution of voting power and both of these competing principles is probably impossible, Boughton said. Instead, he indicated ways to minimize the negative effects of reform inertia on the IMF's legitimacy. For instance, the importance of quotas can be reduced-and to some extent has been reduced-by breaking the link between member countries' financial contributions to the IMF and their quotas, as well as between the amounts member countries can borrow from the IMF and...
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