Friday, June 09, 2006

IMF to Consider Rebalancing Member Representation

Source: Financial times

The first deputy managing director of the IMF, Anne Krueger, announced a desire to increase the voting share of underrepresented countries. This would favorably impact Asian countries, such as China and South Korea, whose economies have grown much larger than their voting share.

The changes are expected to be agreed to when the IMF members meet in Singapore in September. Kruger stated, “I would like to see something that more accurately reflects appropriate weight in the international economic system. In addition, I hope that when we get that – which won’t happen in the first stage – we can agree on some sort of automatic adjustment mechanism so we would not run up against this problem again.”

The proposal is opposed by some European countries, who believe that adjustments should be limited.

An example of the current disparity in the voting power is shown by looking at China and Belgium. China currently has 2.98 percent of the IMF vote, while Belgium has 2.16 percent. The difference lies in the fact that China’s economy is much larger than Belgium's, as evidenced by China's GDP, which is 6 times greater.

Other organizational topics to be considered are a rebalancing of the managing board and the procedures used to elect executives.

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