The International Monetary Fund’s top advisory board failed to reach a consensus at its annual meeting, with Russia’s war in Ukraine again complicating its attempts to speak with a unified voice on key issues.
(Bloomberg) — The International Monetary Fund’s top advisory board failed to reach a consensus at its annual meeting, with Russia’s war in Ukraine again complicating its attempts to speak with a unified voice on key issues.
As it has in previous meetings since the invasion in February 2022, it released a so-called chair’s summary rather than a communique, which needs to be agreed to by all representatives of its 190 member countries.
Separately, the IMF panel — officially known as the International Monetary and Financial Committee — agreed to update its voting shares in the future to better reflect the economic heft of its members. That effort sets the US, the most-powerful voice, at odds with China and other emerging economies who are seeking larger shares.
Statements from the IMF and Group of 20 this week at the IMF and World Bank’s annual meetings in Marrakech, Morocco, have reflected the geopolitical rifts stymieing the organizations’ attempts at multilateralism in an era of fragmentation.
For the G-20, it reached a consensus only by omitting a direct reference to the Israel-Hamas war, avoiding any gridlock the issue would create among its members — developed and emerging economies representing more than 80% of the global economy.
Read more: G-20 Finance Heads Omit Specific Mention of Israel-Hamas War
On the IMF, some European nations had sought to include harsher language to describe Russia’s invasion of Ukraine and worked through the night in their vain effort to reach agreement, according to people familiar with the situation.
“Most members recognized that Russia’s invasion of Ukraine has continued to have massive humanitarian consequences, as well as a detrimental impact on the global economy, and they strongly condemned it,” the chair, Spanish Economy Minister Nadia Calvino, said in the statement. “There were other views and different assessments of the situation.”
The IMFC also said Friday that the group has committed to “meaningful” increases in its quotas by the end of the year, which refers to the share of funds each member contributes. The goal is to support the IMF’s finances from all members, replacing some ad-hoc bilateral funding agreements that it relies heavily on now.
As for changing the voting share, the committee said the IMF executive board should develop by June 2025 “possible approaches as a guide for further quota realignment, including through a new quota formula.”
Any change in voting share would need approval from US Congress, which is loathe to advance policies that increase the influence of its geopolitical rival China.
US Treasury Secretary Janet Yellen this week showed little willingness to embrace the change in voting shares, which would give China and other developing countries significantly more say in how the world’s go-to emergency lender is run. She reiterated US calls for an “equiproportional” increase of IMF quotas, which means raising the overall resources required by members without undertaking a simultaneous shift in voting weight.
Countries like China, Brazil and India — whose economies have grown significantly faster than those of developed nations – have long called for a re-division of quotas to reflect their growing heft. China, for example, accounts for about 18% of global economic output but holds just a 6% share at the IMF.
Brazil Finance Minister Fernando Haddad said on Friday that he made clear to IMF Managing Director Kristalina Georgieva that while he understands the political reality in the US, failing to eventually update IMF voting shares would weaken the organization in the medium and long term.
(Updates with comment from statement in seventh paragraph.)
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