IMF to get strengthened watchdog role, address quotas

• Pages: 113-121

Page 113

The IMF's policy watchdog role will be strengthened through changes that will be used to help tackle imbalances in the global economy under a new medium-term strategy approved by the IMFC. The Committee also called on de Rato to make concrete proposals by September on how to adjust country representation in the governance of the Fund to reflect changes in the weight and role of countries in the global economy.

Page 120

IMFC calls for rapid implementation of de Rato's plan

IMF Managing Director Rodrigo de Rato secured broad support at the Fund's Spring Meeting for his mediumterm strategy to revamp the work of the Fund. The International Monetary and Financial Committee (IMFC) on April 22 urged the IMF to complete considerations of the strategy and "move rapidly to implementation." In particular, the IMFC endorsed the Managing Director's proposal to strengthen IMF surveillance and said that to reflect changes in the weight and role of countries in the global economy, the IMF must adjust countries' quotas and representation in the governance of the institution (see box below).

High on the new agenda is the aim to give the Fund a larger watchdog role in the world economy at a time of rising oil prices and large global payments imbalances. De Rato said the IMF needed to complement its existing arrangements for individual country consultations with multilateral consultations, enabling the Fund to take up issues comprehensively and collectively with systemically important members and, where relevant, with entities formed by groups of members, such as the European Union.

IMF plans changes in country representation

Fair voice and distribution of quotas are central to the legitimacy and effectiveness of the IMF. In his report, IMF Managing Director de Rato referred to "important deficits that have emerged in members' sense of ownership and participation" in the Fund, which made clear the importance of making progress on the issue of country representation and voice. Country representation in the IMF has been slow to adapt to changes in countries' weights and role in the global economy and the Fund. In recent decades, a number of emerging market economies, in particular, have become more important on the world...