[stop-imf] IMF reform needed, should encompass quotas - Rato

[Robert Weissman]

IMF reform needed, should encompass quotas - Rato
Wed Sep 14, 2005 3:53 PM GMT167
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BERLIN (Reuters) - International Monetary Fund chief Rodrigo Rato
proposed on Tuesday a reallocation of countries' votes as part of a
broader reform of the global financial watchdog, now in its 60th year.

"Redefining the fund's mission is inseparable from reassessing IMF
governance," Rato wrote in the Financial Times newspaper, setting out
ideas he is due to unveil next week.

"The fund's legitimacy as a global organisation rests on fair
representation for all members. The current allocation of quotas --
capital shares in the IMF on which voting rights are based -- puts this
legitimacy at risk," he added.

He suggested African countries, where the Fund is heavily engaged, and
Asian countries, whose economies have grown rapidly in recent years,
should have more of a say.

"The reallocation of quotas is not a zero sum game if it results in an
IMF with widely held legitimacy and ownership," he wrote.

Countries are allocated quotas when they join the Fund broadly in
relation to their economic power. Quota allocations have been reviewed
regularly, roughly every five years, but critics say allocations remain
skewed towards the western powers that set up the Bretton Woods
institutions in 1945.

Each IMF member has 250 basic votes plus one for each 100,000 Special
Drawing Rights (SDR) -- the IMF's unit of account in which quotas are
denominated.

The U.S. has the Fund's biggest quota with 37.1 billion SDR. China has a
quota of 6.4 billion SDR -- the same as Canada's, but less than the
individual quotas of Italy, France, Germany and the United Kingdom.

The current quota review -- the 13th -- is not due to conclude until
January 30, 2008. It was not immediately clear if Rato was proposing the
review be accelerated.