IMF Managing Director Christine Lagarde and Singapore Finance Minister and IMFC chair Tharman Shanmugaratnam chat
The IMF, newly flush with a huge crisis fund, faced pressure Saturday to get moving on promised reforms to give a greater voice to developing countries and reduce Europe's clout.
With minor reforms agreed in 2010 not yet in place, the International Monetary Fund's steering committee heard pleas for new action after emerging economies stumped up support for the IMF "global firewall" fund.
On Friday the IMF announced that it had raised more than $430 billion for its emergency fund, to be used if Europe's debt crisis sharply deteriorates or in case of other countries' dire needs.
More than half the amount came from Europe. A significant portion, although the numbers have not been revealed, has been promised by the BRICS emerging powers, Brazil, Russia, India and China.
But being called on for more help to the IMF build up funds for more intervention in Europe has given the BRICS and other developing countries more cause to demand a faster pace of reform at the global crisis lender, which they see as overly dominated by the United States and Europe.
The IMF and the Group of 20 major economies have acknowledged the need for a new IMF formula on quotas, or voting rights, and governance that better reflects members' relative economic weights.
But the 2010 agreement that slightly shifts the voting weighting and representation on the executive board still lacks the needed level of endorsements from member governments to be implemented.
A key barrier remains because the United States, by far the single-largest shareholder in the IMF, has not ratified the 2010 deal. The White House has yet to even submit the deal to Congress for approval.
Yet in March, bowing to a promise to the BRICS and others, the IMF began formal discussions for a new quota formula, with a target set of having it crafted by January 2013.
The voting rights are crucial: the IMF directors vote to approve loan programs like the bailouts of Greece and Portugal, and both the United States and Europe each have the weight to veto programs.
IMF chief Christine Lagarde has set a target of having the 2010 reforms entered into force by its October 2012 meetings in Tokyo, to clear the way for the next quota rewrite.
Lagarde stressed Saturday that IMF members and the G20 had given "a strong endorsement" to meeting the October deadline. Still, she acknowledged: "We have a little way to go on the quota."
But the reality is that political opposition by the US Republican Party could easily prevent Congress from ratifying the deal, leaving the 188-nation IMF stuck with one unimplemented reform package while some key members are pushing the next one.
Brazil, unhappy with the limited 2010 changes, called Saturday for action on the new quota rethink.
"The reluctance that some countries are demonstrating in following through with the agreements we have on the comprehensive review of the formula is deeply damaging to this institution and to these countries' own credibility," Brazil's finance minister, Guido Mantega, told the International Monetary and Financial Committee (IMFC).
He pointed out that Brazil, the world's sixth-largest economy, had voting power equivalent to the much tinier Netherlands.
The Indian finance minister, Pranab Mukherjee, also urged greater movement at the IMF-World Bank spring meetings in Washington.
"Quota reforms should not be delayed and the two arrangements for 2010 should be explicitly implemented and negotiations on new formula which have to be completed by 2014 should be initiated," Mukherjee said Thursday.
US Treasury Secretary Timothy Geithner, meanwhile, called on Europe to deliver swiftly on a 2010 pledge to give up two seats on the IMF's 24-seat executive board to developing countries, which have not been identified.
"Full implementation of the reform of the Executive Board is critical to improving the legitimacy and effectiveness of the Fund," Geithner told the IMFC.
"I urge my European colleagues to move forward on Europe's Board reform commitments in time for the 2012 Board election," he said.