G20: Emerging Economies Gain Representation
March 23rd, 2009 at 10:01 pm - by Tom Prout
At the upcoming G20 summit in London on April 2nd, there are promises that the International Monetary Fund (IMF) will amend its representation regime to better include developing nations, an expert with the Asian Development Bank (ADB) says.
The summit is to be attended by the Group of 20 (G20) developed and developing economies, and will address the urgent need for economic reform and the possibility of further financial stimulus to combat the recession. Emerging economies, and those which have taken off rapidly in recent years, will demand further representation in IMF matters, and finance officials in such countries remain hopeful of “substantial progress in improving [the IMF’s] representation and governance,” as well as other international institutions.
China, India, Brazil and Russia made such demands at a finance ministers’ meeting earlier this month, so it is clear that such reforms will be on the agenda. Currently, China is 5 percent of the economy nominally and 11 percent in terms of purchasing parity, creating an obvious disparity between international contribution and the 3.7 percent voting power it currently possesses.
The IMF presently gives the EU 32 percent and the US 17 percent of the voting power, compared to India’s only 1.9 percent. The US also possesses a de-facto veto, should the 85% quorum not be met. Critics are urging to the IMF to reform its procedure, and calls for the agency to “get up with the reality of the 21st Century” came from Australian Prime Minister Kevin Rudd.
Emerging economies will be crucial in the rebuilding of the global economy following the crisis, according to critics, and the G20 summit are being urged to realize this.