Access the paper here.
After long awaited negotiations, the IMF concluded its 16th General Review of Quotas with no meaningful reform to shift the balance of power in favour of emerging economies to ensure a more accurate representation of countries in the global economy. As the global system faces complex challenges of a slower growth outlook, high inflation and surging debt levels, reform of the IMF represents a key prerogative to tackle systemic crises. Lack of greater representation of emerging markets and developing countries within these international institutions is creating a further rift between BRICS and western economies at a time when multilateral fragmentation is on the rise.
The paper A way out for IMF reform takes up the long-standing issue of IMF reform, identifying key governance reforms feasible in the current economic and geopolitical context. The approach followed tries to avoid two starkly opposed poles: on the one extreme, the so-called “pie-in-the-sky” approach that insists on putting forward the traditional aspirations of developing countries of fundamental changes in governance through a fairer distribution of decision-making power in the IMF; on the other extreme, the conservative attitude normally taken by the developed nations who are reluctant to relinquish influence within the IMF, blocking any attempt to give more weight to dynamic emerging market and developing countries.
The paper argues that a way out of this impasse requires developed and developing members converging on feasible and practical reforms that would respect two conditions. First, they would bring positive changes in the workings of the IMF, making it more attractive to developing countries, especially the low-income and more climate vulnerable. Second, they should not run up against the veto of the major shareholders to any proposals that could threaten their traditional and cherished hold on the Fund.
This reform agenda would include the following points:
- Reform of conditionality to make it more flexible;
- A reduction in the costly surcharges applied to large and longer-term lending;
- A bolstering of concessional financing for low-income members;
- An increase in the overall resources available to the Fund by making the future roll-back of borrowing lower that the quota increase approved in December 2023;
- A higher proportion of basic votes to increase the voting power of smaller nations;
- A third chair for Sub-Saharan African countries in the executive board;
- A fifth deputy managing director position to ensure a greater presence of middle- and low-income in the IMF’s administration.
This report has been produced as part of BWP’s economic governance advocacy work. For any questions related to the project or the report itself please contact Mihaela Siritanu, BWP’s Economic Governance lead, at msiritanu@brettonwoodsproject.org
Access the paper here.
On July 12th, the Bretton Woods Project in partnership with Paulo Nogueira Batista Jr., former IMF Executive Director representing the Brazil constituency between 2007-2015, presented the paper in a webinar titled, A way out for IMF reform. Together with other distinguished panelists such as Daouda Sembene – former IMF Executive Director representing 23 African countries, Emma Burgisser – Economic Justice Lead at Christian Aid, and Robert Wade – Professor of Political Economy at the LSE, Nogueira discussed future prospects for IMF governance reform in the current economic and geopolitical context.
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