Source:
IFIs Latin American Monitor
Wed Aug 30 2006
30/08/06 - While the International Monetary Fund analyses reform proposals in Washington ahead of its Annual Meeting in Singapore, MERCOSUR countries coordinate a joint position to be put forward at the Assembly. Governments are already aware of the resistance brought about by their proposals.
The early cancellation of most debts owed by MERCOSUR countries to the IMF places them now in a strong position to question the institution. Ahead of the IMF-World Bank Annual Meeting, MERCOSUR economy ministers will be meeting in Rio de Janeiro to unify their position.
The Argentine economy minister, Felisa Miceli, advanced information regarding the plans of the regional bloc in a seminar recently organised by her ministry in Buenos Aires about “Global Imbalances and International Financial Architecture”. This meeting included the participation of UN economist Jan Kregel, and economist Ariel Buira, director of the G-24 Secretariat.
"The IMF should stop being part of the problem to become a part of the solution”, stated Miceli, revisiting a concept used by Miceli herself and her predecessor, Roberto Lavagna, to refer to the role played by the IMF in Argentina.
During her presentation, at the seminar’s closing session, Miceli anticipated that in the next IMF annual meeting to be jointly held with the World Bank in Singapore, Argentina will demand the institution to aim its revisions of the world economy at sustainable growth and the social situation of member countries rather than exclusively focusing them on fiscal accounts and adjustment.
The minister argued that “a change is needed at the IMF so as to better reflect the presence of developing countries in the global economy”. For that purpose, she also demanded a modification to the formula used to calculate the quotas allocated to member countries: as it was explained, they should not only be determined according to the current size of economies but to the countries’ purchasing power parity. The IMF reform should be “a profound one, not just a cosmetic or quota reform”, she pointed out.
Miceli also proposed that the Fund should start to provide contingent credit lines for automatic disbursement in the event of crises, but admitted that such proposal would render the conditions the Fund currently imposes in exchange for financing ineffective. The IMF should be playing once again the role of “lender of last resort”, she highlighted. Conditionalities only manage to intensify the situation of those countries that are granted finacing.
Another initiative to be put forward by the bloc is for the IMF to act as a sort of pledger of public bonds issued by countries, which would thus reduce interest rates for those placements.
However, the minister acknowledges that all her ideas brought about strong resistance among IMF staff, which has still not revised its position in spite of the systematic mistakes made in recent years.
African countries are found in the same situation as MERCOSUR governments and are also analysing a joint position to be put forward in Singapore, with regards to a reform of the quota system aimed at increasing their representation at the institution.
Moreover, different civil society organizations call on to demonstrate against the IMF and World Bank during the next annual meeting in Singapore, by holding parallel seminars and events. According to a consensus paper disseminated by the organization Focus on the Global South, the IMF is perhaps at its most vulnerable state in years.
The institution is suffering a triple crisis – a crisis of legitimacy, a budget crisis and a role crisis – that is unparalleled in its 62 years of existence. These circumstances provide critics of the IMF with an opportunity to radically shrink, disempower, if not decommission it altogether. If not seized, this opportunity can slip by, and circumstances might come together to reinvigorate and save the Fund.
Source: Página 12 newspaper (Argentina)
Related Information:
Why Africa wants more representation in World Bank, IMF (allAfrica website)
Ministers Seek More Powers in IMF/World Bank (allAfrica website)
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