US Treasury Secretary Timothy Geithner Sunday urged the IMF to implement reforms that would give emerging market and developing countries more say in the financial institution. “A more representative, responsive and accountable governance structure is essential to strengthening the IMF's legitimacy,” Geithner said in a statement. He noted that G20 countries had committed to shift some control in the International Monetary Fund from countries with strong representation to those with little input. The Group of 20 includes developing economic powerhouses such as China, India and Brazil. Geithner said the IMF should outline how the proposed transfer of at least 5 percent of voting power within the institution can occur. “We call on the IMF to facilitate this process by providing scenarios of how the quota shift could be implemented in the very near-term,” he said. The remarks came at the IMF's annual meeting, held this year in Istanbul. They followed a decision at a Pittsburgh forum that the Group of 20 nations would become the world's main economic decision-making forum, effectively taking over the role of the G7 group of rich countries. Geithner said reform of the IMF's executive board was vital to modernizing the Washington-based institution, which represents 186 countries. The US recommends reducing the board size while preserving the current number of emerging market and developing country chairs. The IMF is usually headed by a European and the World Bank by an American. It has received pledges of more money to help poor countries struggling to emerge from the global economic crisis, and a broader range of nations wants to have more say in how the funds are handled. Aid agency OXFAM says current voting formulas at the IMF give Luxembourg more weight than the Philippines, which has almost 200 times the population. It said the 5 percent shift in voting power was insufficient. “They need to give more voice to the poorest countries, have fewer European seats on the Board, and get rid of the US veto,” said Caroline Pearce, OXFAM policy adviser. She said the IMF can only be relevant if it gives “countries hardest hit by the financial crisis a say in their own destiny.” The US has a 17 percent voting stake in the IMF, effectively giving it veto power because major decisions require an 85-percent majority to pass. In the past, the IMF has been criticized for allegedly imposing austerity measures on countries in exchange for loans and without sufficient regard for the impact on the poor. IMF officials say they have shown more flexibility in recent years. John Lipsky, the IMF's No 2. official, has said the IMF is undertaking “substantial efforts” toward internal reform that will provide “a fair shake for all our members.” At the Istanbul conference, a group of 35 heavily indebted countries welcomed the G20's new role as a leader in global economic decisions, but said poor nations also needed representation to express their financing needs. “We need at least one seat so that almost 1 billion Africans can express their views,” said Lazare Essimi Menye, Cameroon's finance minister. Meanwhile, a senior International Monetary Fund official said Saturday, the global economic crisis has increased Africa's debts but the deterioration has not yet reached levels that are a concern. In an interview with Reuters, IMF Director for Africa Antoinette Sayeh said that in countries where debt or high inflation are not a problem, fiscal and monetary policies should remain supportive. However, she said other countries will need to be ready to shift fiscal policy once a recovery has been established to prevent debts from escalating further. “We need to be careful because we've already seen some deterioration of debt sustainability indicators in some countries,” Sayeh said on the sidelines of the IMF and World Bank meetings here. In a report, the IMF said countries in debt distress include the Democratic Republic of Congo, Zimbabwe, Guinea and Liberia. Others with high debts are Central African Republic, Gabon and Burkina Faso. Africa's debt burden had eased in recent years thanks to international debt relief programs and better economic policies. But the financial crisis and higher food prices last year added to budget pressures, threatening to set back progress these countries made to cut debts and reduce poverty. The Fund has forecast that growth in Sub-Saharan Africa this year will rise by just 1.1 percent before strengthening to 4.1 percent in 2010 and 5 percent in 2011. Sayeh, a former Liberian finance minister, said a recovery in Africa would depend on a strong rebound in the global economy, increased global trade, higher commodity prices and a pickup in worker remittances. “I don't think trade numbers are showing a significant recovery in exports yet, but by next year we're anticipating that will be coming back,” Sayeh said. The IMF report said there are also questions over whether the subdued growth prospects for the global economy might delay Africa's recovery. There are added problems with droughts in east Africa and flooding in West Africa. The Fund has said that a global economic recovery has begun, but it has cautioned that the rebound will be sluggish, especially in advanced economies. Both China and India have sharply increased trade and investments in Africa, which could also aid Africa's recovery. The IMF report said South Africa's recovery is likely to be slow with growth expected to reach 1.7 percent in 2010 before rising to 3.7 percent in 2011.
