Rethinking the governance of the IMF
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Host: G24
Sponsor: New Rules, BIC, BWP
Chair: Tom Bernes, IEO
Presentations
Ralph Bryant – main messages
- Much of the current proposals are gimmicks designed to get the membership to agree to a compromise. They are not useful in actually designing a durable quota system. These gimmicks include, voluntary foregoing of quota, filters, compression
- The proposals on the table are pointing in the wrong direction, not the right direction. More votes for rich countries, take votes away from low-income and developing countries
- Basic vote increases are good but not enough
- There needs to be a reconsideration of the basic variables to be used, especially we should reconsider the use of population as a variable. It provides a legitimizing element of a formula
- Ralph proposed a formula made up of 60% GDP (blended equally between MER and PPP), 15% population and 25% other variables
Karin Lissakers – main messages
- Four features are very important to governance: transparency, evaluation, participation, and complaint & response
- The IMF is lacking on all of these
- To introduce more accountability of governance – there a number of measure that can be taken (reference the New Rules high-level panel)
Peter Chowla – main messages
- Double majorities are a way you can represent different kinds of interests in the Fund, they would formalise and drive consensus decision making for the board
- How would you implement double majorities in practice is an important question
- Strauss-Kahn proposal does not create much advancement over the current system because he proposes counting chairs not members; They should do it by a count of members in the constituency if you want it to serve as a counterweight to the skewed weighting voting system
- Problems with double majority
- Doesn’t explicitly do away with economic-weighted voting
- Doesn’t immediately solve the problem of MICs – still need some quota reform
- Doesn’t fix chairs and constituency realignment
Discussion
Amar Bhattacharya of G24
- IMFC chair and MD selection problems have exacerbated feelings of mistrust
- On current quota proposals: country results are highly problematic (ie Belgium and Luxembourg)
- G24 has some differences – does not include population, but does support compression factors
- Agrees that double majorities can’t be based on chairs
- Transparency has limits in performance assessments, hard to assess transparency
Butch Montes of UN
- Too much use of the word ‘governance’, what we are talking about is power
- One person, one vote should be viewed as a conservative idea for a public institution, not a radical idea
- Question: What do the electorates in Europe think about debate, what is their opinion on the European government position?
Per Kurowski
- We should consider some non-geographically based representation – look at the case of migrant workers – they may not be represented by any government effectively
- Board effectiveness is a key way to increase voice
Jan Aart Scholte
- Who is accountable for what and how? Then ask by what means
- Stakeholders are being fundamentally left out of the discussion on governance and reform. This is a big mistake
Some one from Argentina
- Why does Ralph Bryant reduce the weight of openness, reserves and volatility?
Antonio Tricarico
- Why not hit the Europeans on the # of board chairs, embarrass them to force the issue
Rick Rowden
- We should broaden the reform agenda to other aspects of the Fund – ie, mission teams should be more accountable and transparent in taking input.
Karin Lissakers
- Expanded board is at the prerogative of US. They should drop the bomb so to speak – force the board size down and make the Europeans pay the price for forcing the Africans out while they still hold 8 or 9 chairs
Peter Chowla
- Electorates in Europe are ignorant
- On the stakeholder question – this would be irrelevant if the IMF’s governance structure was well designed and well functioning to let developing countries have policy space and effectively represent their own interests on the board and in the institution. Then stakeholders can better use domestic accountability mechanisms to influence their own governments and institutions.
Ralph Bryant
- No deal is better than a bad deal and we should be happy that the bad deal didn’t go through.
