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Last Updated: Tuesday, 23 September, 2003, 17:02 GMT 18:02 UK
Poor nations want IMF reforms

Andrew Walker
BBC economics correspondent in Dubai

Developing countries want a louder voice in the workings of the International Monetary Fund (IMF) and World Bank.

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Their dissatisfaction at feeling under-represented has become one of the undercurrents swirling through the two institutions' annual meetings in Dubai.

Developing countries want to see changes in staffing, top management and the voting system.

South African Finance Minister Trevor Manuel said there was a "deficit of democracy" in the two institutions.

Skewed voting

Ng'andu Peter Magande, the Zambian Finance Minister, complains that a continent the size of Africa has only two seats on the Executive Boards of the two institutions, which each have a total of 24 board members.

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In terms of staffing, he says, "a little bit of effort has been made, in particular by the World Bank, in terms of getting our people into decision making positions".

"We are very pleased that we even have a Managing Director (there are several of them) from South Africa".

But despite these developments, he says developing countries, "believe there should be a realignment of the belief that the majority shareholders should have the loudest voce. We want to be heard".

The voting systems in the two institutions don't do any favours for the poorest countries either.

The votes are weighted, in line with member nations' financial contributions, which in turn are loosely related to the size of their economies and certainly not their population.

But it is only a very rough and ready relation even to economic size.

The result is that the US has 17% of the vote in the IMF, whereas India, with more than three times the population has less than a third.

Denmark has the same IMF vote as South Korea, which has nine times the population and, by some measures, a six times bigger economy.

A group of developing countries (called the G24) met ahead of the main meetings here.

Stepping up pressure

They welcomed recent administrative steps to help African Board members. But their communiqué went on to say "these measures cannot be a substitute for an increase in developing countries' voting power".

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Of course, countries that have a disproportionate share of the vote are not inclined to give it up.

Mr Manuel acknowledged that "on the issue of voice, there will be deep disagreements". UK International Development Minister Baroness Valerie Amos also acknowledged there is a problem.

She said "there is a real issue here, but there are some very real differences amongst us. We have tried to be practical, to look at the things we can do in the short term as well, which will make some difference - not all the difference developing countries are looking for, but some difference".

In practice, divided votes are not very common. But those countries with big votes do carry more weight.

And on constitutional changes in the IMF, there has to be 85% support, so the US, with 17%, has a veto.

So what progress have the developing countries made on this issue?

Not much, but the issue has been put on the agenda. Mr Manuel describes it as "an issue we will return to at the annual meetings next year".

According to him, this is not a question issue that will be settled just by trying a bit harder - "I don't think you can ripen this tomato by squeezing it," he said.




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