Sixty-first General Assembly

Second Committee

Special Briefing (PM)

International Monetary Fund, world Bank officials brief Second Committee,

outlining road ahead following annual meeting in singapore

 

The International Monetary Fund (IMF) would have its work cut out for it over the next 18 months in carrying out the governance and voice reforms pledged during its annual meeting in Singapore last month, Masood Ahmed, its Director of External Relations, said during a special briefing to the Second Committee (Economic and Financial) this afternoon.

In a two-hour interactive briefing on the outcome of the 2006 IMF and World Bank annual meeting, he said the Fund had overwhelmingly agreed to a two-year programme on reforming and modernizing quotas so that the weight given to member countries reflected their relative weight in the world economy and not that of 20 or 30 years ago.  The decision to increase the quotas for China, Republic of Korea, Mexico and Turkey -- a central outcome of the annual meeting -- was viewed as a starting point for deeper reforms that would eventually involve many more under-represented countries.

Mr. Ahmed said quotas served three purposes at the IMF:  to determine how much money a country contributed to the Fund, with higher quota-bearing countries contributing larger amounts; to establish how much money it could draw from the Fund; and, when approving IMF policies, to determine how much a country’s vote compared to that of another, as a percentage of the total.

Moderating the briefing, Jomo Kwame Sundaram, Assistant-Secretary-General for Economic Development in the United Nations Department of Economic and Social Affairs, noted that, of the 184 IMF member countries, almost 30 had dissented.

[Some delegations, including those of Argentina, Brazil and India, said the reforms had not gone far enough and that the whole decision-making structure should have been overhauled.  Those nations would have to wait at least two years to see their voting shares adjusted under the reform plan.]

Even so, Mr. Ahmed said, many members at the annual meeting had asked for an increase in the IMF’s surveillance functions, as they were unsure how to handle the interplay between traditional macroeconomic policies and today’s lively global financial and capital markets.  The Fund would seek to stimulate a discussion among those experiencing large imbalances and those whose actions would help ensure they were narrowed down while preserving global growth.  That discussion would begin with a small number of members, to be opened up to the wider membership.

Also briefing the Committee, Kevin Kellems, the World Bank’s Acting Vice-President for External Affairs, Communications and United Nations Affairs, said today’s update on the annual meeting was designed to contribute to the Committee’s deliberations on sustainable development, migration and financing for development.

He said the Bank was uniquely placed to help middle-income countries, which, even with greater access to private capital, still accounted for two thirds of the world’s poor.  In the next year, the Development Committee -- the Bank’s policy body -- would provide those countries with the Bank’s “soft factors”:  information, expertise and partnership.  A quota reform process similar to that of the IMF would soon be undertaken to give the Bank greater legitimacy, since it had a ratio of 24 executive directors per 184 countries, with only 2 for the whole of sub-Saharan Africa.  Meanwhile, the Bank’s service to low-income countries would continue apace.

In the ensuing question-and-answer session, delegates asked pointed questions about the governance reform process and the IMF’s quest for the perfect quota revision formula.  Many questioned whether it could be done in two years, and one delegate commented that, even given the necessary political will for change, it would be difficult to win the agreement of some national parliaments on quota revisions.

Mr. Ahmed replied that, in the end, it all depended on how quickly the countries wanted to bring the matter to closure.

Other delegates asked what the Second Committee could do to help advance the goals of both the IMF and the World Bank, and what the two institutions would do, in turn, to enhance their dialogue with the United Nations on scaling up the ambitions of developing countries.

That led Oscar Avalle, World Bank representative to the United Nations, to liken the Bretton Woods institutions and the United Nations to two tango dancers.  While the “dancing rules” might be strict, they were still helpful in outlining what steps to take.

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For information media • not an official record