Major IMF reforms seen at G20 summit

By Xin Zhiming (China Daily)
Updated: 2009-03-24 08:00

The head of the Asian Development Bank (ADB) has said that he is confident that "substantial agreement on the reform of IMF's representation regime" will be reached at the G20 summit scheduled for April 2 in London.

"I think there will be substantial progress in improving its (the IMF's) representation and governance," Haruhiko Kuroda told China Daily yesterday.

The meeting, to be attended by leaders of major industrialized and emerging economies, aims to address the global financial crisis by coming up with coordinated measures.

The emerging economies will demand more representation in major international organizations, such as IMF, at the meeting and there would be progress on that issue, the bank president said.

At the meeting of G20 finance ministers two weeks ago, China, India, Brazil and Russia demanded more voting rights be given to developing nations at the London summit.

As the global financial crisis worsens, the emerging economies are expected to have more say in international financial decision-making since the IMF may seek more capital to help countries trapped in the crisis, analysts said.

Under the current IMF voting quotas, the EU has 32 percent and the US, 17 percent, compared with China's 3.7 percent and India's 1.9 percent.

Since major decision making at the agency requires at least 85 percent of the overall votes, the US has a de-facto veto.

China's voting stake in the IMF does not match the size of its economy - about 5 percent of the world total in nominal terms and 11 percent in terms of purchasing power parity, analysts said.

Australian Prime Minister Kevin Rudd will reportedly push for China having a more important role in the IMF at the G20 conference.

"Let's just get up with reality of the 21st century," he told Australian television over the weekend, adding the IMF's current voting rights reflect the balance of power in the wake of World War II.