Urging a move away from shareholders “micromanaging the Fund”, former IMF secretary and Counsellor to the managing director Leo Van Houtven has argued for reforms. He has recommended both a strengthening individual executive directors through the provision of more expert staff and strong alternate directors and reforms to the size and country composition of the Board.

Presently, member votes and representation are skewed in favour of creditor nations (see Update 39). Any new formula for calculating voting weights can only be considered during periodic reviews of the ‘quotas’ assigned to each country. According to the Fund’s articles of agreement general quota reviews happen every five years. The twelth and latest such general review was concluded at the end of January 2003 with no proposal to increase quotas.

Van Houtven proposes identical quotas for the US and EU given that they have “comparable GDP levels” and a reduction of the board size to 18 chairs arguing that the current 24 is too large to be effective. He proposes a single chair for the 25 EU member countries currently represented by seven. Under this formula, developing countries (including Russia and other transition economies) would get twice as many chairs as the industrialised nations. He believes such reforms would lay to rest persistent questions about the IMF’s legitimacy.

A report from the Centre for Economic and Policy Research echoes the sprit of these proposals. The authors argue for better alignment of the Board with the relative economic importance of individual IMF members. They propose a reorganization of the governance structure of the IMF through “streamlining of the European representation to make room for new significant players”. They suggest a consolidation of the representation of the EU into two constituencies, one for the members of the euro area and the other for the rest of the EU countries.

Measures to increase the voice of developing countries within the IFIs boards are being explored by a team led by South African finance minister Trevor Manuel. Detailed proposals and analysis are expected by spring 2005. A progress report will be presented to both the Development Committee and the IMFC at the annual meetings.

The G24 will hold a seminar on governance with the participation of ministers of finance or deputies and central bank governors from China, India, Brazil, Nigeria and possibly South Africa during the annual meetings.