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By raising the voting shares of four previously under-represented members, including China, the International Monetary Fund (IMF) on Monday officially launched an overhaul that, hopefully, will leave the 61-year-old institution more effective as a result. The IMF's reform plan won support from an overwhelming majority of member countries, which bodes well for the prospects of the reform. In the next stage, the reform will involve adjusting a bigger range of voting rights in favour of developing countries and an attempt to install a new operating mechanism. Reform is known to be an extremely difficult business at any international organization. So for those who are concerned with the future of global economic relations, this broad agreement among IMF members can serve as a small comfort, especially after the debacle at the World Trade Organization over the Doha Round. Ultimately, the goal of IMF reform is for it to better perform its role as the key guardian of global financial stability. The IMF's work in providing emergency funding assistance and policy consultation in past decades deserves recognition. But many of the remedies it imposed on crisis-hit countries were far from being effective. Some of the IMF's relief packages were even interpreted as tools to intervene in member countries' domestic affairs and have led to resentment and wariness towards the organization. Judging by the global economic status quo, the likelihood of financial failures is not likely to lessen, leaving the IMF with an even more challenging task. Instead of working as a fire fighter after crises flare up, the IMF should strengthen its work in surveillance and policy co-ordination among its members to forestall economic catastrophes. But this will depend on the IMF's ability to enhance its credibility. The redistribution of its voting rights will be the first substantial step in achieving that end. For more than half a century, the IMF's voting structure reflected the global economic landscape at the time of its inception. Obviously, this is unfair to emerging economies, which have disproportionately low weight in the IMF's decision-making. The current reform plan should also include the establishment of a mechanism for future adjustments, since the economic map will not remain static in the future. Tough negotiations will be unavoidable in the next stage of the plan's implementation because it will involve what many see as a realignment of interests. For those who mastermind the reform, wisdom and tactics are needed to present a well-accepted, calculating method. But the reform's success will hinge on member states' determination to grasp this opportunity to reinvent the IMF. (China Daily September 20, 2006) |
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