♠ Posted by Emmanuel in IMF
at 4/20/2012 09:06:00 AM
I am rather tired of reading news clippings about how LDCs are reluctant to give the IMF more money when their grievances are not given proper airing. If you're looking for a global governance dinosaur par excellence, then I will give you the IMF. Imagine that we were stuck in the Fifties, the White Man's Burden of civilizing various coloured people was still underway, and the global financial crisis that has greatly undermined the West's hegemony didn't happen.In this Mad Men-ish time warp, we'd expect a couple of things. First, the IMF head would always be a Caucasian Westerner despite all the changes that have occurred in the world economy during the postwar period. Check. Next, in the event that core Western nations were themselves in trouble--European nations borrowing in the hundreds of billions instead of lending and the United States piling on national debt at the rate of over a trillion a year--you would solicit money from the rest. Which is all well and good had you given them more voting rights to accompany their increased contributions, but it simply isn't so.
The particular problem here is that most recent LDC contributions have been funnelled into the New Agreements to Borrow (NAB), whose main distinguishing feature as far as we are concerned here is that no additional quotas are granted to contributors:
The NAB is a set of credit arrangements between the IMF and 38 member countries and institutions, including a number of emerging market countries. The NAB is used in circumstances in which the IMF needs to supplement its quota resources for lending purposes. Once activated, it can provide supplementary resources of up to SDR 370.0 billion (about $570 billion) to the IMF.In other words, contributions to NAB do not count towards additional voting rights as manifested by quotas. The obvious fear is that LDC contributions (which are unlikely to materialize in significant amounts anyway) will once again be shunted off to the non-quota NAB. For business types, it's alike purchasing preferred shares which are non-voting by convention. But, at the IMF, their holders are treated not preferentially but discriminatorily via stitch-ups for its leadership and lesser claims compared to plain old quota shares.
Why would you want to participate in such a rigged game? For all the talk about a "major realignment" of quota shares, the IMF's' ancien regime of top shareholders remains firmly in place:
UPDATE: Reuters has more on the domestic politics in the EU and the US delaying previously agreed-to reforms.
