With 90 saying aye, IMF changes voting structure

The International Monetary Fund overwhelmingly approved a plan on Monday to boost the voting shares of China...

The International Monetary Fund overwhelmingly approved a plan on Monday to boost the voting shares of China and three other emerging economic giants to better reflect their clout in the world economy. The blueprint will be followed by a second stage of broader reforms by 2008 to make the fund8217;s governance more representative of its 184-strong membership.

The plan, which IMF Managing Director Rodrigo Rato says will usher in the biggest shake-up in the fund in a generation, had drawn fire from some countries that fear losing power and others upset they will not gain enough influence.

But German Finance Minister Peer Steinbrueck said the plan had won 90.6 per cent approval. The proposal needed 85 per cent support to go ahead. 8220;I think it is an important and a very good result that 90.6 per cent of the IMF members have approved the ad hoc quota increase for China, South Korea, Mexico and Turkey,8221; he said. 8220;Otherwise, it would have cast a shadow over the IMF meeting.8221;

The overhaul aims to correct the under-representation of countries such as China, which has fewer votes than Belgium or the Netherlands even though its economy, the world8217;s fourth-largest, is twice their combined size.

But the plan has exposed deep divisions in an agency searching for a new role in a world where fewer countries are turning to it for emergency loans and big countries are all too often ignoring its policy advice. India, Argentina, Egypt and Brazil said the plan did not give them enough power. Others objected that they would lose influence.

As the votes on the reform plan were being tallied, finance ministers backed a controversial new World Bank strategy for tackling corruption and warned against a borrowing binge by poor countries that could plunge them into a new debt crisis.

After lengthy haggling behind the scenes, ministers authorised World Bank President Paul Wolfowitz to press ahead with a campaign against graft that he has put at the heart of the Washington-based lender8217;s activities.

Story continues below this ad

But, in a reflection of concern among some countries that Wolfowitz is being over-zealous, ministers said their representatives on the bank8217;s board would oversee implementation of the strategy and asked for a progress report next April. Britain, France and Germany in particular have voiced concern that the crusade against corruption is slowing the flow of loans and punishing the poor.