Egypt one of 50 developing countries to oppose overall package
Reuters
WASHINGTON: Africa endorsed a proposal adopted by the International Monetary Fund last week to increase the voting power of emerging economies, despite heavy opposition from major developing nations concerned that the plan may fail to reduce U.S. and European dominance. Damian Ondo Mane, one of two African directors on the IMF s 24-member board, said Africa backed the proposal only after it was assured its own voice would not be diluted. The IMF changes are intended to reflect the rise of emerging markets in the global economy and restore the institution s relevance as an international lender and guardian of financial stability. The fast economic growth of countries such as India and China has led them to complain that the current dominance of the United States and Europe is an anachronism. I cannot say I am satisfied with the entire package, Onde Mane told Reuters in a weekend interview. We supported the package after we were given the minimum assurances our shares would not be eroded. The proposal, to be ratified by the IMF board of governors at meetings in Singapore in two weeks, offers an initial down payment of increases in the voting power, or quotas, of China, South Korea, Turkey and Mexico, the most under-represented of emerging economies. Quotas determine how much money each member contributes to the IMF and how much it can lend, and are the main factor in decision-making power. A second phase will see an increase in members so-called basic votes, as Africa has campaigned for, and a further round of quota adjustments for emerging economies. The basic votes are another component of voting strength in the IMF and African countries view them as more important. The package was adopted on Thursday with the backing of the Group of Eight industrial countries, which have the biggest voting power in the IMF. Onde Mane said Africa went along with the proposal after last-minute additions by IMF Managing Director Rodrigo Rato to ensure that Africa s clout would be protected regardless of other changes. The overall package was opposed by more than 50 developing countries represented by Brazil, India, Argentina, Egypt, Malaysia, Iran and Saudi Arabia, which either rejected the package or abstained from comments during Thursday s meeting chaired by Rato. A statement issued on Friday by the IMF failed to note the opposition, which signaled strong doubts among developing countries that the proposed reforms will restore the legitimacy of the IMF. Ondo Mane said Africa pushed for increases in basic votes because they are more relevant to the fund s poorest members, which have small quotas. The basic votes have been eroded from 12 percent to 2 percent as quotas have increased and we feel we cannot continue like this because it is part of the articles of agreement, said Ondo Mane.
