Date: Mon Oct 17 2005 - 15:45:59 EDT
but it's not at all clear which _specific_ reforms they are in favor of. Still, the fact that they are talking about reform -- even if it turns out to be empty talk -- might be seen as a response to pressures from the international anti-globalization movement? Which reforms will they actually support? In solidarity, Jerry =================================================================== G20 calls for reform of IMF and World Bank By Andrew Balls and Richard McGregor in Xianghe Financial Times, October 16 2005 The G20 group of the world's leading rich and developing countries called for reform of the International Monetary Fund and the World Bank, to improve their governance, strategy and operations. The G20 said that the governance of the fund and the bank has not kept pace with changes in the global economy – notably the growth of Asian economies, including China and its southeast Asian neighbours. "The G20 underscores the critical importance of achieving concrete progress on quota reform by the next International Monetary Fund and World Bank Meetings in Singapore," its statement at the conclusion of the weekend meeting said. IMF quotas determine a country's capacity to borrow from the fund and also its shares of the votes on the IMF board. It is expected that reforming the IMF board would pave the way for a similar reform at the bank. Finance ministers and central bankers, who met over the weekend in Xianghe, just outside Beijing, also highlighted the risks to the global outlook from sustained high oil prices, trade imbalances and building protectionist pressures. The G20 members pledged to pursue policies and reforms to reduce imbalances in the global economy, though there was little discussion of the specific actions required. The group – which brings together the leading industrialised countries, large emerging markets and oil exporters – is seen as more of a discussion forum than a decision-making body. The G20 statement said that the risks to the world economic expansion were on the downside, warning of that the high oil price and trade imbalances threatened to "exacerbate uncertainties and aggravate global economic and financial vulnerabilities. "Bearing in mind our shared responsibilities, we are determined to implement the necessary fiscal, monetary and exchange rate policies, and accelerate structural adjustments to resolve these imbalances and overcome these risks," it said. The build-up of foreign exchange reserves in Asian countries, which is contributing to global trade imbalances, is seen in part as self-insurance against future troubles in financial markets, so that countries do not have to borrow from the IMF again as they did in the 1990s. Rodrigo Rato, IMF managing director, has made the need to increase Asia's weight in the fund a key part of his own strategic review of the body, saying that the "legitimacy" of the institution has been called into question by outdated governance. Mr Rato's IMF review has received plaudits for making governance reform a priority but otherwise has received mix reviews, with critics saying he has raised a number of questions about the role of the fund while providing few answers. The G20 called for greater clarity in the roles of the two organisations. Past efforts to reform IMF quotas have collapsed because large countries were not prepared to accept a reduction in their overall share of the votes and some countries continued to resist the reforms during the weekend meeting, ministers said yesterday. It is not clear how an agreement will be reached, but the G20 has at least given the matter greater prominence than it has had in the past. As well as voting shares, another item on the agenda is representation on the board. Eight of the 24 seats are filled by Europeans. The US view is that that the eurozone countries should consolidate to one seat to allow a more representative board and reduce the overall number of seats. The G20 statement also said that the senior management of the IMF and the World Bank should be selected "based on merit" – but it was silent on the matter of selecting the managing director of the fund and the president of the bank, where the jobs are traditionally divided up by Europe and the US.
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