A report commissioned by the G24 group of Southern governments has called for a revamp of the IMF‘s governance structure to reflect the role played by developing countries within the global economy. The report, by a former IMF Executive Director Ariel Buira, argues that the Fund’s voting system has resulted in the concentration of power in the hands of the industrialised countries, leaving developing countries with little say in the formulation of Fund policies. Yet the IMF exerts significant influence over a wide swathe of domestic matters in developing countries. Buira notes that political difficulties block reform.
The report proposes to:
- restructure the Executive Board to increase the number of Directors representing developing countries and reduce the number of Directors from industrialised countries;
- revise quota formulas and relate overall quotas to world trade and capital movements or to world GDP rather than capital contributions to the Fund.
Prof. Daniel Bradlow, American University, also finds that the IMF is failing because its decision-making structure and procedures have not adapted to its changing functions and role in the global economy. This results in poor policy decisions and causes distortions in the IMF‘s relations with its member states, non-state actors, and other international organisations. Calling for “broad-ranging reform” of the IMF‘s structure and operating principles, his recommendations include: allowing participation of a member state’s governor or Executive Director in Board discussions relating to his/her country; establishing formal procedures for consultation with non-state actors; establish an ombudsman to receive and investigate complaints; increase the number of alternate directors.
Daniel Bradlow, Stuffing new wine into old bottles: The troubling case of the IMF?, Journal of International Banking Regulation, Vol3 No.1
See also New briefing on IMF reform proposals