What's new

India, Brazil to get more power at IMF

foxbat

SENIOR MEMBER
Joined
Jan 31, 2010
Messages
4,093
Reaction score
-7
Country
India
Location
India
India, Brazil to get more power at IMF - The Economic Times

GYEONGJU (South Korea): Group of 20 finance leaders struck a landmark deal on Saturday to boost developing countries' power in the International Monetary Fund even as they failed to set targets for a wide-ranging global economic rebalancing.

The IMF deal was hailed by fund Managing Director Dominique Strauss-Kahn as a "historical" moment that will see Europeans give up two seats on its 24-strong board to powerful developing countries and transfer 6 per cent of votes to them. "This makes for the biggest reform ever in the governance of the institution," Strauss-Kahn, who heads the 187 country body, told reporters.

The G20 agreed a year ago to shift at least 5 per cent of voting rights to developing countries such as India and Brazil whose clout within the Fund has not kept pace with their emergence as major engines of global growth. Despite the surprise deal on the IMF, which had not been expected until G20 leaders meet in South Korea next month, efforts to firm commitments to enshrine numerical targets for current account deficits met with tough resistance.

Attempts to firm up rhetoric in the final communique to push emerging market countries to accept meaningful near-term appreciation of their currencies failed and all countries will commit to is to refrain from "competitive devaluation". "We're all committed to moving toward market determined exchange rates that reflect underlying fundamentals and refrain from competitive devaluation," said an official, who spoke on condition of anonymity.
The lack of a stronger pledge from the likes of China and the South Korean will likely hit the dollar, economists said.

A US official said the United States had no expectation its proposal of setting numerical targets on external balances would make it into the G20 statement. The US official said Washington knew that including specific targets for imbalances at this stage would be rejected by a number of countries with structurally high trade surpluses, including Germany and major commodity exporters. But it helped focus the discussions which initially were in disarray, he said.

A source with knowledge of the night-long discussions confirmed that the final statement would water down proposals on tackling external imbalances. "Persistently large imbalances would warrant an assessment," the communique would state, he said. Such an outcome is what other G20 officials had predicted, given the disparate views of the diverse group. China was against any limits on imbalances, another G20 source said on Friday. He also said there was a "rift down the middle" on currencies and International Monetary Fund reforms, and the final statement would be "bland".
 
.

Pakistan Affairs Latest Posts

Back
Top Bottom