President Jacob Zuma says it is time for leaders to take the initiative with regard to the reform of the International Monetary Fund (IMF), and that they need to work towards being ready to deliver a package of reforms at the South Korea Summit.
Speaking at the G20 summit in Toronto, Canada, on the weekend, Zuma said that the need to speed up the reform of international institutions has been raised in the past. “Our reform of the World Bank shows that the slow movement on IMF reform is not necessary,” he said.
He said leaders need to demonstrate political will by ensuring that the necessary compromises are reached to deliver on the Pittsburgh commitments.
“Failure to move regarding the IMF and other urgent reforms of the international financial institutions [IFI] endangers the goodwill earned through the effective action of the institutions in response to the crisis,” he said.
The IMF is a quota-based institution and quotas determine the amount of resources that could be made available by the IMF, he said.
“Our strongly held view is that quotas must shift to developing economies as their need for the IMF resources is higher. The shift must essentially be from developed countries to developing countries. We must ensure that no emerging and low-income countries lose quotas as a result of these reforms. We must play a greater role in providing strategic direction to the IMF,” he said.
Equitable representation
He added that leaders must also ensure that an equitable representation is achieved on the board of the IMF to reflect appropriate regional representation. This could be achieved through reforming the composition of the board, as was done at the World Bank, to afford an additional chair for sub-Saharan Africa, he suggested.
“We also wish to argue that the appointment of the head of the IMF must be based on merit without regard to nationality or gender. These institutions belong to all of us. The appointment of the heads from Europe and the United States is a long-standing practice, but it has no basis in the Articles of Agreement. As leaders, we must just take this decision as the finance ministers are expecting leadership from us on this matter,” he said.
“Our firm decision on this matter is important for the credibility and legitimacy of the G20,” he added.
“The IFIs have risen to the challenge of the crisis. If we act now on the reform issues, we can consolidate their new vitality. We have a good opportunity to take this matter forward in a manner that will seriously assist the movement towards a more just economic order in the world,” he concluded. — I-Net Bridge