IMF fails to agree on new formula for vote reforms

Thu Jan 31, 2013 12:50am EST
 

By Lesley Wroughton

WASHINGTON (Reuters) - The International Monetary Fund failed to meet a self-imposed Thursday deadline for agreeing on a new formula to determine member countries' voting power that would give emerging economies greater say in the global financial institution.

IMF member countries have wrangled for two years over specifics of the formula intended to reflect the rise of China, Brazil and other large emerging market economies.

The IMF said it planned to finalize a formula by January 2014, when it next reviews the voting shares of member countries.

An IMF statement on Thursday said there had been "important progress in identifying key elements that could form the basis for a final agreement on a new quota formula."

"The board has had an enlightening series of discussions during the past year, and the membership is now in a good position to agree on an improved quota formula in the context of the upcoming 15th general review of quotas," IMF Managing Director Christine Lagarde said in the statement.

Emerging economies blamed Europe for resisting change that would weaken its traditional domination in the fund.

Paulo Nogueira Batista, executive director for Brazil and 10 other countries, decried the lack of a deal after two years of negotiations and warned that the IMF would lose credibility unless it changed.

He said governance reforms had practically ground to a halt since 2011 when the fund failed to enforce voting changes agreed in 2010. "Now we have an attempt to paper over the fact the review of the quota formula has not been completed either," Nogueira Batista said in a statement. "The IMF is approaching what we could call a 'credibility cliff'".   Continued...