IMF assumes major economic role

Fund committee endorses G20 plan for recovery as it pledges to maintain stimulus growth.

    Finance ministers meeting in Istanbul that while the global economy is improving, risks remain [AFP]

    Emphasising that it will continue its role in providing economic stimulus to struggling nations, the IMF said that the global recession is easing, but that fears remain due to rising unemployment and a weak banking sector.

    Dominique Strauss-Kahn, the IMF head, said: "We are off to the right start ... [this is] a unique opportunity to reshape the post-crisis world, to usher in a new era of collaborative global governance."

    Hirohisa Fujii, the Japanese finance minister, said: "After going through the financial storm, I expect that the IMF will play increasingly important roles to effectively develop a more solid and stable global financial system."

    The IMFC said that stimulus spending would continue until "a durable recovery is secured" and vowed to "revive credit, recover lost jobs, and reverse setbacks in poverty reduction".

    Voting rights

    In another move, a plan by the G20 - a group of major developed and developing countries - to augment voting rights by five per cent for under-represented nations in the IMF was approved by the IMFC.

    This is viewed as a measure to assist the IMF's legitimacy, as emerging markets are earmarked to make the most significant contribution to the global recovery.

    Lasrt week the IMF said that emerging markets and emerging economies would grow by 5.1 per cent in 2010, compared to the predicted 1.3 per cent rise in advanced economies.

    China has a projected growth of nine per cent this year, with India at 6.4 per cent. Meanwhile, the US is expected to grow by only 1.5 per cent.

    Still unrepresentative

    Yet, the realignment of voting rights has been criticised for still being unrepresentative.

    Bernice Romero, the director of Oxfam, said that "rich countries are still making decisions for the rest of the world".

    The Argentine finance minister, Amado Boudou, concurred, saying that "the voice and representation of developing countries, including the poorest, must be significantly

    "There will be no 'new IMF' without a more representative and democratic governance structure," he said.

    SOURCE: Agencies


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