Chorus for Change in IMF and World Bank

[chlamor]

My Comment: Perhaps the chorus needs to sing a song not of reform but of dissolution of these violent institutions.


Apr 19, 2005

Chorus for change in IMF and World Bank
Emad Mekay

WASHINGTON - Developing nations have issued a statement strongly condemning the "democracy deficit" in two of the most powerful wardens of the current global economic system - the World Bank and the International Monetary Fund (IMF). During the joint meetings of the governors of the two Washington-based institutions, the Group of 24 (G24), which operates as an association of minority shareholders in the IMF and the World Bank, said that the lack of representation of poor nations and developing countries was alienating the two financial institutions from their clients.

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The ministers complained that the current under-representation of developing countries in the IMF and the World Bank executive boards undermines the legitimacy and effectiveness of these institutions. Decision-making in the two financial bodies is far removed from the principle of one country-one vote. The 46 sub-Saharan African countries, for example, have only two executive directors representing them at the World Bank and the IMF, while eight northern nations have one executive director each. Directors from countries of the Group of Seven (G7) most industrialized nations now control more than 60% of votes at the two institutions, while the US administration has veto power over any extraordinary vote that requires a super-majority vote of 60% or more.

<snip>

The officials complained that the issue of fair representation has been on the table for many years with "very little progress". The developing nations argue that the current system was created at a different time in world history, and is no longer relevant in today's reality. Then, the US, which holds decisive power in the two institutions, was the largest creditor nation and the largest source of capital exports. Today, it is the world's largest debtor country, and is absorbing 80% of international capital flows.

http://www.atimes.com/atimes/Global_Economy/GD19Dj01.html

[American in Asia]

1. Reform yes...

But why should we call on their abolishment? What would replace them as sources of aid and finance for investment for poor countries? There are problems with other models as well - private finance comes at much higher rates, and increases the debt problem. Bilateral aid is often "tied" to hiring consultants and buying goods from the donor country. Aid from NGOs is great - but again the investment decisions are often driven by the donor nations who implement their programs through those NGOs (and "voice" of the poor countries themselves is also a problem here, as is effectiveness). Whatever the mechanism, the problem is with the willingness of the rich countries (particularly the US) to both (a) increase the amount they're willing to give to official development assistance; and (b) to be willing to do so without having control over how their citizens' tax dollars are spent. I'm not saying you're not right that reform is desperately needed - just saying it may be more complex than saying the IFIs are bad, so abolish them. Thoughts?