This week more than 15,000 people met during the Annual Meetings of World’s top financial institutions in Istanbul, Turkey in an attempt to forge a way forward as economies recover from the financial crisis.
The IMF’s policy steering committee, the International Monetary and Financial Committee (IMFC), asked the IMF to move forward in four areas: Updating the IMF’s mandate in light of the big changes in the global economy witnessed during the past decade ,reviewing the IMF’s financing role, beefing up its role as a lender of last resort, rethinking multilateral surveillance, with the idea of introducing peer review of economic policies and giving more representation to the dynamic emerging market and developing countries
These Istanbul decisions, Strauss-Kahn said, will be a focal point for the IMF’s work in the coming year.
Another impressive development at the meetings was the joint World Bank-IMF advisory body, the Development Committee that is committed to the G-20’s call for more resources to help developing countries respond to the global economic crisis.
The Development Committee also agreed on reforms which will ensure that developing countries get a bigger say in how the institution is run—an increase of at least 3 percentage points in voting power, in addition to the 1.46 percent already agreed.
This is important as it will allow a shift in IMF quota shares by at least 5 percent from over-represented to under-represented countries by January 2011.
More specifically the reform means that low income countries can access more money from the IMF’s Special Drawing Rights, a lending facility where countries are allowed to borrow in proportion to their quotas.
Recently, the Board of Governors of the IMF approved a general allocation of SDRs equivalent to US$250 billion to provide liquidity to the global economic system by supplementing member countries’ foreign exchange reserves.
Of this sum, an equivalent of nearly $100 billion of the general allocation will go to emerging markets and developing countries, of which low income countries will receive over $ 18 billion.
The need for reform was also echoed by World Bank President, Robert Zoellick in a speech at the beginning of the annual meetings, saying if developing countries are part of the solution, they must also be part of the conversation.
Reform of the World’s biggest financial institutions is critical specifically at this time of crisis, as it will help to address the needs of developing and low income countries which are often not given priority in the World Debate.
The World Bank has made it clear that as a result of the global crisis, about 90 million more people will be living in extreme poverty by the end of next year; up to 59 million more people will lose their jobs this year; and an additional 30,000 to 50,000 babies may die in Sub-Saharan Africa.
For IMF and World Bank to be effective in its work, their decisions need to involve more than just a handful of rich countries.
And on the other hand like Zoellick has said paper pledges, will not put seeds in soil or food in hungry mouths. What is needed is to turn commitments made at these meetings into a reality.
The author is a journalist with The New Times