April 10, 2007

Inter Press Service: Finance

Article Excerpt By: Emad Mekay

WASHINGTON, Apr. 10 (IPS/GIN) -- The International Monetary Fund needs to become more responsive to its members and aggressively improve its accountability and transparency, a high-level panel advised Tuesday.

The recommendation was just one suggestion issued by the New Rules for Global Finance Coalition, which is conducting a review of the IMF's role in the global economic architecture. The coalition also advised the Washington-based institution to change how it selects its managing director, how its board operates and how it communicates with the outside world.

The panel submitted the report to the IMF Executive Board for its consideration prior to the April 14-15 Spring Meetings of the IMF and its sister institution, the World Bank, when dozens of finance ministers and central bank governors descend on Washington from across the world.

Questions about the Fund's governance, effectiveness and responsibilities have emerged recently and are coming from many sources, including from within the IMF and its membership.

During its last annual meeting in Singapore in September 2006, the IMF's membership approved a program to modernize the governance of the institution. Some steps were taken to modify quotas and the allocation of votes within the Fund's Executive Board as part of the so-called medium-term strategy.

The agreement approved increases in the quotas of China, Korea, Mexico and Turkey.

However, critics say these reforms pay little attention to equally pressing issues such as participation, transparency and accountability.

This is what the panelists -- who include Marc-Antoine Autheman, former IMF and World Bank executive director; John Odling-Smee, former deputy chief economic advisor of Britain's Treasury; and Djoomart Otorbaev, former deputy prime minister of Kyrgyzstan -- tried to address in the report.

"The current weak form of oversight of the Executive Board by Governors means the Executive Board is neither accountable for its actions vis--vis the global community nor are all Board members accountable to the countries they represent in their constituencies," they said in their report.

The Fund's Executive Board runs the day-to-day business of the IMF while the Board of Governors is a body comprised of the finance ministers of IMF member nations.

The new report calls on the Board of Governors, the highest governing body of the Fund, to set up a committee whose main job would be to review how the Fund's Executive Board is doing.

The panelists urged the Board to set up its own internal committee to monitor its work and arrange for periodic evaluations by independent external evaluators.

On the transparency issue, the IMF was advised to release the minutes of Board meetings within a publicly known schedule.

"The Executive Board should consider the precedent of the Security Council of the United Nations as a model."