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Washington - Brazil’s Finance Minister, Guido Mantega, has urged policymakers to start exploring ways to overhaul the International Monetary Fund (IMF) voting structure without the approval of the US Congress.
“The IMF cannot remain paralysed and postpone its commitments to reform,” he said in a statement to the IMF steering committee on Saturday. “Alternatives to move forward with the reforms must be found while the major shareholder does not solve its political problems.”
Congress is stalling implementation of a 2010 pact by IMF members that would increase emerging markets’ shares, or quotas, in the fund and boost its permanent lending capacity to about $739 billion (R7.7 trillion). The Group of 20 finance ministers and bankers said on Friday they were “disappointed” by the delay and vowed to explore “options for next steps” if change was not completed by year-end.
Mantega said a way to unlock the deal was to decouple the quota increase from a measure changing the composition of the IMF executive board. The provisions are linked under the IMF overhaul plan. On its own, the quota would only require a 70 percent majority, which the IMF obtained. Such a move “is legally feasible and would allow us to move forward regardless of what happens in the US Congress”, he said.
Brazil’s proposal reflects what French Finance Minister Michel Sapin described as the “frustration” of emerging markets around the table. Under the proposed changes, China would become the IMF’s third-largest member and nations from South Korea to Turkey would gain voting rights.
Sapin, with IMF managing director Christine Lagarde and Singapore Finance Minister Tharman Shanmugaratnam, who chairs the steering committee, said it was best to focus on a year-end target. “Plan A is going to be explored to the end and in depth and if that doesn’t work, we’ll worry about plan B, but it’s premature,” Lagarde said.
Treasury Secretary Jacob Lew renewed the US commitment to “fulfil our pivotal responsibility” in getting the measure approved this year.
Failure could lead to “disruptive change”, Shanmugaratnam warned. If the 2010 agreement was not implemented “we are more likely over time to see a weakening of multilateralism, the emergence of regionalism, bilateralism and other ways of dealing with global problems, and that will not be a better world for all of us”, he said. – Bloomberg