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Last Updated: Friday, 1 September 2006, 07:31 GMT 08:31 UK
IMF to give China a greater say
IMF headquarters, Washington
The IMF knows it must give developing nations a bigger say
The organisation charged with keeping the global economy stable has agreed to give China and other developing nations a greater voice in its decisions.

The International Monetary Fund plans to give China, South Korea, Turkey and Mexico more voting power to reflect their growing economic importance.

The fund, set up after World War II, lends money to emerging nations, usually in return for economic reforms.

Critics have said it fails to represent the needs of most developing countries.

Currency revaluation

The changes being proposed would give the four countries voting rights more in line with their weight in the global economy.

At the moment Belgium has more voting power than Brazil, India, Mexico or South Korea, despite having a much smaller economy.

"I think that all members recognise that relevant quotas and voting shares do not adequately respond to the reality of the world economy," IMF managing director Rodrigo de Rato said.

A teller counts Chinese yuan notes
US critics claimed China kept the yuan low to boost exports

In return for giving them a greater say in decision-making, the IMF hopes that China and other fast-developing economies will listen to calls to revalue their currency.

The US, in particular, blames the weak value of China's yuan for an explosion in exports and a big part of its huge trade deficit, which hit a record $805bn (423bn) last year.

"It is in China's interests to implement more forcefully the exchange regime it gave itself last year and let market forces determine things in China in a more clear way, certainly the value of the currency," said Mr de Rato.

The changes were approved by the 24 IMF directors on Thursday, but final approval will need to be sought at the fund's annual meeting in Singapore on from 19-20 September.

The 184-member IMF said it would also work on changing the voting rights, or quotas, of more emerging countries, and take measures to ensure that poorer, mainly African economies would also be represented.


SEE ALSO
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