Developing countries say IMF reforms pace 'unacceptable'

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WASHINGTON, Oct 20 (AFP): Developing countries yesterday dismissed the International Monetary Fund's pace of reforms to increase their voice in the troubled institution as "disappointing and unacceptable."
The Group of 24 developing countries, representing the majority of the IMF's membership but only an impotent minority in its operations, reiterated its call for a greater voice and democratic representation in the 185-nation Fund.
"A significant redistribution of voting power in favor of emerging market and developing countries as a group should be the overarching objective of the reform," said the G24, which represents African, Asian and Latin American countries, including powerhouses Nigeria, India and Brazil.
"The proposals tabled to date are disappointing and unacceptable as they fall far short of the reform's fundamental goals," they said in a joint statement after a meeting here ahead of this weekend's IMF and World Bank meetings.
The developing countries' exasperation comes as the 63-year- old IMF struggles with a reform program launched by outgoing managing director, Rodrigo Rato, who will step down after the meetings nearly two years before his term ends.
His successor, Dominique Strauss-Kahn, a former Socialist finance minister of France, has pledged to make reform the core of his five-year mandate.
Argentina's vice economy minister, Oscar Tangelson, representing the chair of the G24 at a news briefing, said the group had taken "the fundamental step forward" of achieving a unanimous agreement on the basic criteria for redistributing the quotas, or voting rights, of member countries.
"There's no magic figure that we agreed on," Tangelson said in Spanish in response to a question. "We agreed on a process."
Tangelson said the process was more important, because "any rigid institution would be out of step with the times."
The developing countries were the engine of global growth in the past five years, he said.
"We are living in an unprecedented situation. Today it is the advanced countries that are facing crisis conditions and the developing countries must offset the consequent decline in global demand," he said.
The G24 also criticised the IMF's failure to fulfill its mission of promoting global financial stability, citing the current crisis in the risky US subprime mortgage sector, where loans were given to homebuyers with poor credit.
As US housing slumped and foreclosures rose, credit seized up, rattling markets worldwide in August. The market turmoil forced the IMF this week to slashed its 2008 global economic growth forecast to 4.8 per cent from 5.2 per cent, and warned that continuing fallout could slow growth further.
The ministers "underscored the need to improve the Fund's surveillance of advanced economies, putting as much focus in evaluating their vulnerabilities as it does in emerging market economies," the communique said.
They also repeated their call for "at least a tripling of basic votes in order to enhance the voice of low-income countries."
Oxfam International has denounced that reform measure as not enough.
"Even tripling, or quadrupling the basic vote would not mean any effective increase in the say the poorest countries have over the running of the IMF," the non-governmental organisation said Thursday. "If the poorest members of the Fund have almost no say, we cannot call this a true reform."