Reforms for Major New Roles of the International Monetary Fund? the IMF Post-G-20 Summit

By Griesgraber, Jo Marie | Global Governance, April-June 2009 | Go to article overview

Reforms for Major New Roles of the International Monetary Fund? the IMF Post-G-20 Summit


Griesgraber, Jo Marie, Global Governance


For much of 2008, the International Monetary Fund (IMF) looked moribund. The Fund's only loans outstanding were costly ones to low-income countries (LICs). For the first time ever, the Fund had cut staff (by about 13 percent) but still faced a $300 million deficit over the next four years. No new customers were in sight. Former customers among the emerging market economies were self-insuring, all to avoid future dealings with the Fund. In April, the IMF's executive board had approved a minor reform of the formula for allocating quota shares, and hence voice and vote, among its members. Under-represented countries would receive some additional shares; tripling of base votes ensured that low-income countries would not lose shares. The two African constituencies would each gain a second alternate executive director to ease workloads. The reform package also proposed selling a portion of IMF gold, the profits of which would constitute an endowment to cover future administrative costs. The final step would be approval by member states' parliaments whose laws required such action--hence the power of the US Congress with its power of the purse making it genuinely independent of the executive. (1) The main question heading toward 2009 would continue to be whether or not the IMF was worth rescuing: Did it have a major role in the crisis of the global system? Should Congress approve the "reform" package?

On 15 November 2008, however, the Fund became a phoenix. The G-20 summit, led by the European Union, assigned it new roles along with substantial new funding. The summit's Action Plan referred to the IMF in two sections. Under "Enhancing Sound Regulation, Regulatory Regimes, Immediate Actions by March 31, 2009," the G-20 called for a single action: "The IMF, expanded FSF [Financial Stability Forum], and other regulators and bodies should develop recommendations to mitigate pro-cyclicality, including the review of how valuation and leverage, bank capital, executive compensation, and provisioning practices may exacerbate cyclical trends." (2)

In early 2009, Congress was to consider the IMF "reform" package. But now the questions had become more complex. Back in April 2008, it seemed a clear yes or no whether or not the IMF was worth keeping, with the weight pointing toward no, unless inertia won. By 16 November, most of the G-20 had approved the reform package, and its summit's concluding statement indicated that the IMF would assume new responsibilities and money conditioned on additional governance reforms! The G-20 summit understood the need for reforms far beyond those proposed by the IMF in April. The Summit Declaration, Section 9, "Reforming the International Financial Institutions," stated:

  We are committed to advancing the reform of the Bretton Woods
  Institutions so that they can more adequately reflect changing
  economic weights in the world economy in order to increase their
  legitimacy and effectiveness. In this respect, emerging and
  developing economies, including the poorest countries, should have
  greater voice and representation.

The same intention appears in the "Action Plan to Implement Principles for Reform" in which the summit participants commit to medium-term actions on reforming international financial institutions.

One has to ask: Where were the emerging markets when the April reforms were being negotiated? Why do the Europeans ask for additional change in November 2008 when they insisted in April 2008 that they could go no further? And the United States announced that this was the best possible reallocation of quotas and votes? The best guess was that under the pressure of the international financial collapse of 2007-2008, and the proximate pressure of the non-G7 economies in the room, the status quo powers of the United States and Europe agreed that additional changes in voice and vote were needed, without agreeing to any specific formula or any reform, such as removing the US veto. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Reforms for Major New Roles of the International Monetary Fund? the IMF Post-G-20 Summit
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.