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Last Updated: Monday, 26 April, 2004, 06:37 GMT 07:37 UK
Outsiders want seat at IMF table
By Andrew Walker
BBC economics correspondent in Washington

There is a very clear front runner to take over as managing director of the International Monetary Fund - the former Finance Minister of Spain, Rodrigo Rato.

There has been a lot of praise for him personally, but real resentment about the process which will probably end with his appointment.

The root of the problem is an informal deal dating back to the early days of the IMF and the World Bank in the 1940s.

The unwritten rule is that the IMF boss is a western European, the World Bank president an American.

Line up

Needless to say, countries outside this little magic circle think it indefensible.

Most of them are developing countries, but there are some rich ones too who don't much like it. Japan, for example, nominated one of its own finance officials when the job last came up for grabs in 2000.

He didn't get it.

Every IMF managing director has indeed been European.

Mr Rato would continue that tradition. And his candidature emerged in the first instance from the European Union, after a period of wrangling between EU members over whether the French national in charge of the European Bank for Reconstruction and Development, Jean Lemierre, should be the EU candidate.

Top slot

Finance officials from many countries have said pointedly that the new boss should be the best candidate for the job, regardless of nationality. They have also said the process should be transparent.

There have been five nominations, including Mr Rato.

Three were put forward by the Egyptian executive director at the IMF. Two of them are non-European (up to a point at least.)

One is an Egyptian, who is also said to have French nationality; the other was born in Zambia, but now has American nationality. Also nominated are a British former finance official and the Bulgarian finance minister.

More say

For many developing countries, the selection process is part of a more general grievance about what they consider an inadequate voice in the IMF and the World Bank.

IMF headquarters in Washington
Developing countries want more say at the IMF table

The boards where most decisions are taken have weighted voting systems. The weights are very crudely related to economic size, certainly not to population.

The United States for example has 17% of the vote in the IMF. India with more than three times the population has only 2%.

Contested votes are very rare in the boards of the organisations but it still annoys those who feel under-represented. Many feel that in practice those formal voting weights do represent the real balance of power in the two organisations.

A study published in 2002 by the IMF, written by a former senior IMF official (though not representing official IMF views) described the voting arrangements as a "system that requires greater equity".

Doing the rounds

Other member countries of the IMF have been consulted about Mr Rato. Gordon Brown, the British chancellor of the exchequer, has been doing that on behalf of the EU.

And complaints about the selection process are not about Mr Rato personally. He has the support of many Latin American countries. Many others have said he is well qualified for the job.

The IMF's board, made up of representatives of the member countries, meets on Tuesday to discuss the appointment.

The job became vacant unexpectedly last month, when Horst Koehler resigned after being nominated for the position of President of Germany.

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