India loses 2nd round vote for key IMF policy committee post

India’s bid to become the first developing country to head a major International Monetary Fund committee was thwarted as an alliance of countries...

India’s bid to become the first developing country to head a major International Monetary Fund (IMF) committee was thwarted as an alliance of countries opted in favour of keeping industrial countries in top policy spots at the global financial institution. Finance minister P Chidambaram’s chances of chairing the International Monetary and Financial Committee (IMFC) were dashed in a second round of voting when a group of Anglo-African countries, led by Nigeria, left the Indian camp in favour of Italy. The reasons for the move were not made public, IMF insiders said.

A run-off vote starting today will be between Canadian finance minister Jim Flaherty and Italian finance minister Tommaso Padoa-Schioppa. The vote comes as the IMF is searching for a new role in a changing world where rising powers like China, India, Brazil and Russia want to shake up institutions like the fund to better reflect their growing economic weight.

India’s bid for the IMFC chair had the backing of many large developing countries including China, Brazil and Russia. But there have been deepening divisions among the rapidly growing emerging countries and less developed ones, especially in Africa, which still rely on rich nations for aid. Canada was backed by the US, Saudi Arabia and Franco-African countries, while Italy was backed by other European members.

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The Fund is currently reviewing proposals that would revamp its voting structure to give China and other emerging powers more of a say in decisions of the IMF, which has long been dominated by the US and Europe. The IMFC top post became open after Britain’s Chancellor of the Exchequer Gordon Brown resigned in July to become prime minister.

The IMFC job has always been held by a European except briefly in the early 1980s when Canada filled the seat. The first round of voting surrounding the IMFC chairmanship was overshadowed on Friday by the appointment, as expected, of former French finance minister Dominique Strauss-Kahn as the IMF’s new managing director.

Earlier, Strauss-Kahn, speaking at his first news conference since been appointment to succeed Spaniard Rodrigo Rato in November,said the fund needed to adapt to a new global economic order or face becoming irrelevant. “At the end of the day, the very existence of the fund will be at stake,” he said, adding that the world economy must take account of the rise of China, India, Brazil and others that require European concessions of power in the organisation.