IFI governance


Reforming the governance of the IMF / World Bank

Is the Singapore agenda enough? (14 April 2007)

27 April 2007 | Minutes


Peter Chowla, Bretton Woods Project, UK
Nancy Birdsall, Center for Global Development, USA
Amar Bhattacharya, G24 Secretariat
Ita Mary Mannathoko, Anglophone African EDs office
Juergen Zattler, German Ministry for Development (BMZ)
Moderator: Nuria Molina, Eurodad


Peter Chowla:

  • Things are definitely missing from Singapore agenda – look at the framework of accountability: participation, evaluation, transparency, and complaints mechanism
  • Three areas need more work: voice and vote, leadership selection, transparency
    • On leadership selection – need an open and democratic process
    • On transparency – need more disclosure including on board and policy documents, not just country documents
    • On voice and vote – the proposals on the table are insufficient – a double majority would create much more space for developing country voice
  • Also need to tackle the three-fold role of quotas – you can’t achieve three objectives with one formula

Nancy Birdsall:

  • Lessons from the IaDB – where the the recipients control the presidency and the soft lending window
    • This is the most important arm of the IaDB
  • One idea is to limit rich countries to 60% of their GDP shares – this could work
  • Double majorities would allow coalition building across income lines
    • Rich countries would consult each other AND developing countries better
    • There are incentives for developing countries to engage in agenda setting
  • Timing of governance reform
    • Double majority is most interesting in leadership selection
    • We should press for a quota formula to be agreed by this fall, otherwise momentum may unravel

Amar Bhattacharya:

  • The timing is critical – now is the unique window
  • Governance is multidimensional, and we should not try to tear down the IMF because it has institutional capital
  • On double majority and quota formula – we should not repeat the mistakes of 1945, we need to look to long-term, not short-term solutions
    • Need democratic underpinnings for governance – roles of state and population, need more than 2%
    • Economic weight should be dominant but you must measure it correctly; need PPP, get rid of openness, measure reserves, properly specifiy variability
    • Borrowers need adequate weight
  • This solution would give adequate regional representation; African would benefit more from a properly specified variability factor than from an increase in basic votes
  • Double majorities is an additional concern but not the main point

Ita Mannathoko:

  • We must recognize that the global architecture is changing – developing countries have most of the GDP at PPP, most of the reserves, 80% of population, 75% of IMF membership and are the sole users of resources
  • Concerns on the process – LICs may have at best same voice or maybe less
  • Basic votes are too small a proportion of the total, even a four-fold increase is not enough to increase African voice
  • Staff resources and capacity are also an issue – it needs to be decided on a pro-rata/volume of work basis
    • So far we have had disappointing outcomes and expect only token changes

Juergen Zattler:

  • We have discussed voice four times a row in the Development Committee, but still no real/satisfactory progress
  • Germany proposed three things four years ago:
    • Improved ownership through conditionality review, strengthened capacity
    • Basic votes to return to 10% of total
    • A pilot for double majority decision making (to test it out to see if it is a good solution)
  • This is a complex issue and consensus is difficult, people must try to understand the point of view of the other party
  • European countries must be constructive, but we have to match European consolidation to real convergence in Europe on views and regional institutions
  • We need a comprehensive package, but it should be phased with different deadlines; ned to recognize different roles and functions in IDA ; also LICs must take more responsibility, for example by paying their IDA subscriptions

Responses and Discussion

  • Jo-Marie Griesgraber (New Rules for Global Finance) – accountability is the key to reforms, reforms could mean nothing if there is no way to hold the board to account.
  • Iqbal Zaidi (Senior Advisor in Iranian EDs office) – I share Nancy’s concern on timing, pushing for double majority would not come fast enough to solve things; double majority may not help create positive agenda setting power for developing countries;
    • Leadership selection and ED office capacity should be obvious – this shouldn’t have to be included in a deal or bargain – these are non issues
    • Likewise the current quota formula is ridiculous – this must be fixed, we should concentrate on this debate not broaden things
  • Ondo Mane (Ex-ED for francophone Africa) – timing is the key, there must be political will behind the reforms, we need a clear timetable for decisions