IMF winds of change

The Group of 24 which on Friday sharply criticised the selection process for the naming of a new head of the International Monetary Fund (IMF) as undemocratic and secretive should not stop there. The Group’s Chairman, Trinidad and Tobago’s Junior Minister of Finance, Senator Conrad Enill, has emphasised that the apparent candidate to head the IMF, Spain’s former Finance Minister, Rodrigo Rato, is “a very good candidate and one that we can work with.”

Central Bank Governor, Ewart Williams, has also praised Rato, adding that at an IDB meeting last month, Latin American officials had expressed support for him. “He is someone with the kind of experience that the developing countries have been asking for... someone who is sympathetic to the challenges being faced by the developing world.” Nonetheless, even as both Junior Finance Minister Enill and Central Bank Governor Williams saluted Rato, the question of the undemocratic and less than transparent manner being adopted to select the Fund’s new managing director was what had guided their approach to the issue.

It is clearly not enough, however, for the Group of 24 merely to be critical of the method being adopted to select a new IMF head, as principled as this position is. Instead, the Group must also hit out and seek to have changed the IMF’s institutionalised system of weighted voting, written into its constitution when it was established at the Bretton Woods Conference in July of 1944. It is no secret that the IMF is almost certainly going to be a European, and the World Bank an American. Under this undemocratic mode of conducting business, one country, the United States has approximately one-fifth of the IMF’s voting power. This is so because the voting power of a Member State is in proportion to its quota of annual contributions to the Fund.

So even though the Group of 24 should win out on the issue of transparency in voting, there is still the stumbling block of the weighted voting. It is a problem which has plagued not only the IMF but the Security Council and the International Bank for Reconstruction and Development. Before the IMF meeting, Williams was adamant that it was time for the Fund to change its policies. Developing countries must have a voice at the highest level, he said. Only time will tell.