The blueprint approved on Monday, will be followed by a second stage of broader reforms by 2008 to make the fund’s governance more representative of its 184-strong membership.
The plan, which Rodrigo Rato, the IMF managing director, says will usher in the biggest shake-up in the fund in a generation, had drawn fire from some countries afraid of losing influence, and others upset they will not get more clout.
But Peer Steinbrueck, the German finance minister, told reporters the plan had won 90.6 per cent approval. The proposal needed 85 per cent support to go ahead.
“I think it is an important and a very good result that 90.6 per cent of the IMF members have approved the ad hoc quota increase for China, South Korea, Mexico and Turkey,” he said.
“Otherwise, it would have cast a shadow over the IMF meeting.”
The overhaul aims to correct the under-representation of countries such as China, which had fewer votes than Belgium or the Netherlands even though its economy, the world’s fourth-largest, is twice their combined size.
But the plan has exposed deep divisions in an agency searching for a new role in a world where fewer countries are turning to it for emergency loans and big countries are all too often ignoring its policy advice.
Warning against borrowing
Also on Monday, finance ministers backed a controversial new World Bank strategy for tackling corruption and warned against a borrowing binge by poor countries that could plunge them into a new debt crisis.
After lengthy haggling behind the scenes, ministers authorised Paul Wolfowitz, the World Bank president, to press ahead with a campaign against graft that he has put at the heart of the Washington-based lender’s activities.
But, in a reflection of concern among some countries that Wolfowitz is being overzealous, ministers said their representatives on the bank’s board would oversee implementation of the strategy and asked for a progress report next April.
Britain, France and Germany in particular have voiced concern that the campaign against corruption is slowing the flow of loans and punishing the poor.
Critics have also complained at what they see as the arbitrary way in which the bank suspended loans to countries including Kenya, Bangladesh, India and Cameroon.
Ministers also warned poor countries that have had their debts written off not to borrow so much new money that they fall back into a debt trap.
They worry that a flood of lending by a new breed of creditor governments, particularly China, will undo the benefit of writing off tens of billions of dollars owed to rich-country governments and multilateral development institutions.
“We cautioned against excessive borrowing after the relief, which may lead to the re-emergence of debt distress,” the development committee of the World Bank and International Monetary Fund said in a communique.