Time for change at the IMF

• Author: Camilla Andersen
• Position: IMF Survey
• Pages: 301-305

Page 301

Scholars, politicians, and practitioners of international finance had some sharp advice for the IMF at a September 23 conference in Washington, D.C., organized by the Institute for International Economics. An underlying theme was that the IMF risked losing relevance if it failed, for example, to take bold steps to redistribute voting power and exercise more vigorous surveillance over exchange rates. IMF Managing Director Rodrigo de Rato sketched his own blueprint for reform over the medium term.

Page 304

Critics say IMF must change or risk becoming ineffective

The subject of IMF reform is a hardy perennial. The recently concluded Annual Meetings of the IMF and the World Bank saw the Fund's membership endorse the thrust of IMF Managing Director Rodrigo de Rato's proposed mediumterm strategy for the institution. But that has not precluded others from voicing their own views. At an oversubscribed conference held on the eve of the Annual Meetings, the Institute for International Economics (IIE) assembled an impressive array of experts-many of them former IMF staff-to discuss what the IMF needs to do to stay relevant in the 21st century.

The conference's ambitious agenda covered almost all aspects of the IMF's governance and work, most notably the distribution of voting power among member countries, exchange rate surveillance, the IMF's role in capital account liberalization, and lending. A common thread running through many of the presentations was that the IMF's influence has waned in recent years. IIE Director Fred Bergsten argued, for instance, that "the IMF has become weak and ineffective."Yet there was also praise for de Rato's strategy. U.S. Under-Secretary of State Timothy Adams, while offering critical advice in other areas, referred to de Rato's strategy paper as a "good first step" and urged everybody to pay close attention to what it had to say.

Redistributing voting power

With about 17 percent of the total voting power, the United States is the IMF's largest shareholder. On the issue of voice and representation, Adams made clear that while the United States favors a rebalancing of quota shares to fix the underrepresentation of countries such as Korea,Mexico, and Turkey, which have recently experienced...