(ShanghaiDaily, Sept 19, 2006) THE 184-member International Monetary Fund yesterday approved reforms to increase the voting shares of emerging economies China, South Korea, Turkey and Mexico to reflect their growing economic sway, according to Germany's finance minister.

The move, the first part of a two-phase plan, aims to boost the credibility of the IMF, which six decades after its founding is facing criticism for giving the United States and other Western powers too much influence.

Voting shares in the IMF matter because they affect countries' say in the decisions of the Washington-based institution and how much they can borrow from the fund.

"(The) 90.6 percent approval is an important and very good result," said Peer Steinbrueck, the German minister.

The proposal needed to win 85 percent of the vote.

The IMF works to promote global economic stability and provide emergency loans to members - akin to a financial firefighter.

The reform measure was the most important agenda item at the IMF's annual meeting, held in Singapore along with its sister institution, the World Bank, which lends money to countries to fight poverty.

Argentina, Brazil, some other South American countries and some North African countries voted against the proposal, Steinbrueck said. They said the reform package doesn't go far enough.

Within two years, the IMF plans a second step that will overhaul the voting structure of all member nations.

When the IMF was founded in 1945, it focused on the needs of the United States, Europe and Japan. Over time, the importance of emerging economies has grown. The reforms seek to redress these changes.

The weight of each member's vote is tied to its quota, or financial commitment to the institution. Quotas are determined by the size of their economies and currency reserves as well as openness to trade and capital flows.

The US vote, for example, is about 17 percent of the total and Japan has 6.1 percent, while European nations together account for about a third. Argentina has a voting share of 0.99 percent, while the Pacific island nation of Palau has 0.01 percent.

The new plan will raise China's voting share to 3.65 percent from 2.93, South Korea's to 1.329 percent from 0.76, Mexico to 1.431 percent from 1.196 and Turkey's to 0.548 from 0.453.
source:ShanghaiDaily
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