[OPE-L] The future of the IMF

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Dec 11 2006 - 11:38:55 EST

Jerry, here's an answer to a question you raised some time ago...

Is the IMF Irredeemably Irrelevant?
Commentary by Paranjoy Guha Thakurta

NEW DELHI, Dec 8 (IPS) - Has the International Monetary Fund (IMF) become
completely irrelevant? Is this world body, set up more than six decades ago
to foster global economic stability and help countries facing financial
crises, really reforming itself? And will it become more responsive to the
aspirations of developing countries?

Opinion is sharply divided on these questions as the IMF undergoes an
exercise to change its "quota and vote" system that is linked to the
financial commitments made by 184 countries that are its members. A member's
quota delineates basic aspects of its financial and organizational
relationship with the Fund, including its powers to vote and its access to

Three years ago, the IMF had loaned more than 100 billion US dollars to
various countries to help them tide over problems including management of
external balance of payments. This amount has now shrunk to less than 20
billion dollars a year. In fact, instead of primarily being a lender of
funds, the IMF has become a net receiver of funds with an inflow in excess
of 20 billion dollars in the form of repayments of past loans, much of it
from developing countries.

"The IMF has today become completely irrelevant," observed Prof. Jayati
Ghosh who teaches economics at New Delhi's prestigious Jawaharlal Nehru
University, in an interview with IPS. Not exactly, argue officials of the
Washington D.C.-headquartered organisation that was established in 1945
after the end of the Second World War in the wake of the historic Bretton
Woods conference. "We should celebrate the fact that countries do not need
the Fund in emergency situations," an IMF official told IPS.

Addressing a conference of finance ministers of Commonwealth countries in
Colombo on Sep. 13, India's Finance Minister Palaniappan Chidambaram
caustically remarked: "It is widely believed that the present quota formula
of the IMF is hopeless flawed and outdated. Obviously, an ad hoc quota
redistribution based on this flawed formula cannot provide a durable
solution. We need a consensus on a new formula. And we need it quickly.
There must be a deep commitment to fundamental reform and there should be no
postponement of a comprehensive review. My government firmly believes that
any exercise intended to enhance the credibility and legitimacy of the IMF
has to be based on fundamental reforms in the quota structure."

Complete story: http://www.ipsnews.net/news.asp?idnews=35770

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