Rising Powers and IMF Governance Reform

Abstract

The International Monetary Fund (IMF) has long been under fire for not adapting to the changing world order. Quotas and votes of a number of emerging markets and developing countries (EMDCs) are said to be out of line with their growing economic weight. Another element of con-tention is the actual veto power of the United States, given the 85% threshold for a range of important decisions. In contrast, the BRICS (Brazil, Russia, India, China and South Africa) as a group lacks a veto. Europe, in its turn, with eight of the 24 chairs, seems to be overrepresented in the Executive Board, the Fund’s most relevant decision-making body. A 2010 reform package was meant to address these shortcomings. However, on closer inspection it appears to be quite modest. What is more, most of the package has not been implemented yet, with several deadlines already missed. This chapter discusses the reform and its follow-up, and advances explanations for the outcomes. Part of the research is based on interviews. Between March 2011 and April 2012, we carried out 19 interviews of six Executive Directors, four Alternate Executive Directors, five Senior Advisors, both from advanced economies (9) and EMDCs (6), as well as four senior IMF staff members. We also interviewed three European officials involved in IMF matters. The interviews were granted upon condition of anonymity.