"Delays in ratifying historic changes to give emerging markets more power at the International Monetary Fund have threatened the lender's credibility and raised questions about its future funding and governance structure.
The IMF's board agreed nearly three years ago to reforms aimed at giving emerging markets a greater say in the global lender, in part by making China the third-largest member and cutting Europe's representation on the board.
But the changes have been held up by the lack of approval from the United States, the fund's biggest and most powerful member, and prospects for action before year-end are slim.
The U.S. Congress has to sign off on shifting $63 billion from an IMF crisis fund to the Fund's general accounts to ratify the agreement. But some Republicans view that as tantamount to approving fresh funding in a tight budget year, and the request has taken a back seat to more urgent issues.
Emerging market nations will likely vent frustration at the lack of action when top finance officials meet next week for the annual meetings of the IMF and World Bank, peeved that their growing economic power is not recognized.
Over the past decade, the IMF has tried to rebuild its credibility with emerging markets. It has been forceful in giving policy advice to Europe, put more of an emphasis on protecting vulnerable parts of society and softened some of its prior dogmas on austerity and capital controls.
The reform of the IMF quotas, or voting shares, is part of that process. The quotas determine how much each country contributes to the IMF and how much it may borrow.
As part of the agreed reforms, emerging markets are also due to get more representation on the IMF's 24-member board, where critics say Europe is over-represented, with eight seats.
The lack of progress could add more impetus to the creation of alternative sources of aid, such as a proposed $100 billion fund by the so-called BRICS nations Brazil,Russia, India,China and South Africa that is aimed at steadying currency markets. The BRICS are also working on a development bank to rival the World Bank"
Source: Reuters
Source: Reuters
