Riyadi Suparno, The Jakarta Post, Singapore
The International Monetary Fund's shareholders have approved a reform package that will increase the IMF votes of China, South Korea, Mexico and Turkey, but countries opposed to it say it does not address the core problem of the imbalance in representation.
The proposal, drawn up by the IMF's managing director, Rodrigo de Rato, won 90.6 percent of IMF members' votes in a vote that closed Monday night. It needed 85 percent to pass.
""These governance reforms are tremendously important for the future of our institution. They will enhance our effectiveness and add legitimacy to all of the other reforms that we are implementing,"" de Rato told the board of directors meeting Tuesday.
The package, which IMF chairman Gordon Brown described as ""the biggest reform to the governance of IMF for 60 years"", bolsters the IMF's surveillance power and puts greater emphasis on crisis prevention rather than crisis resolution and debt relief for the poorest member countries.
The first stage of the quota reform will involve increases for underrepresented members. The second stage will involve the revision of the formula to determine quotas and an increase in the voice of emerging economies. The basic votes have dwindled from 11.3 percent when the IMF was established to a mere 2 percent today.
The decision gives China, South Korea, Mexico and Turkey -- four countries considered underrepresented in the fund relative to their economic weight in the world -- more votes at the IMF, while the voting power of some other countries, mostly developing countries, will decrease proportionally.
China's voting power will increase to 3.72 percent of the total votes, from 2.98 percent before, South Korea's to 1.35 percent from 0.77 percent, Mexico's to 1.45 percent from 1.21 percent, and Turkey's to 0.55 percent from 0.45 percent.
The voting rights of most other developing countries will decrease. Indonesia's voting power, for instance, will decrease from 0.97 percent to 0.96 percent and Malaysia's from 0.70 percent to 0.68 percent.
The increases for the four countries implies an aggregate increase of quotas of 3.8 billion special drawing units (SDR) (about US$2.54 billion) over the next two years.
Indonesia's Finance Minister Sri Mulyani Indrawati, who sits on the boards of directors of both the IMF and the Bank, welcomed the quota reform, which she described as ""long overdue"".
She said it should improve both IMF policies and results.
However, 23 developing countries, spearheaded by India and Brazil, voted against the reform package.
Speaking at the board of governors meeting, P. Chidambaram of India refused to acknowledge defeat, saying the 23 countries that voted against the resolution ""may have lost the vote but have not lost the argument"".
He said the two-stage reform process was based on a flawed formula, noting that all reforms -- the new quota formula, realigning country quotas and the increase in basic votes -- could have been adopted simultaneously as a package, and not in two stages.
The two-stage process will mean that some developing countries, and not the developed countries, will be asked to yield a portion of their quotas in favor of some other developing countries.
""Let me make it clear that we support the increase in quotas of the four countries,"" Chidambaram said. ""We would have been happier if this increase was the result of a comprehensive reform that reflected accurately the economic weight of member countries and required countries that are overrepresented to yield ground.
