President Thabo Mbeki on Sunday called for enhanced legitimacy through representation and accountability as well as recapitalisation of the World Bank and the International Monetary Fund (IMF).
Addressing the International Monetary Conference in Cape Town, he said it was difficult to overstate the importance of the bank and the IMF to countries requiring their resources to avoid major reductions in their public spending or severe adjustments to their balance of payments.
They played a key role in signalling to private investors and major global financial centres of the readiness of countries for foreign investment.
Both institutions needed recapitalisation to enable them to meet the development challenges of the countries that would make up their core clientele in coming years.
Low-income countries would continue to draw heavily on a wide range of macro- and micro-economic policy advice linked to financing needs.
”International financial crises are more likely to be a hazardous feature of our common future than a phantom of our past — this is one price we pay for a liberated international financial system and a steady elimination of national controls on capital flows.
”It is a cost that we can help to mitigate and to ensure against by working to improve the multilateral financial institutions.
”Parts of that effort should also be to enhance legitimacy, and this should be achieved by a better representation and accountability.
”The distribution of voting shares in the funds and bank need reform the better to reflect the more plural economic world we live in now, compared to that of the 1940s, as well as to prepare for the changes to come.”
Mbeki said gains to legitimacy would translate into gains in effectiveness. ”We must have the courage to make them happen.”
Legitimacy could also be enhanced with reform of procedures by which heads of the funds and bank were chosen.
The recent resignation of Paul Wolfowitz from his position as head of the bank had reopened the debate about that process.
While Robert Zoellick was to be congratulated on his appointment, the position articulated by the G20 that future appointments should be made using an open and transparent election process with candidates not restricted by nationality, should be supported, he said. – Sapa