E.U. Ministers Agree on Proposal to Overhaul I.M.F. Board

[pampango]

Source: New York Times

The European Union is ready to cede two of its seats on the board of the International Monetary Fund to emerging economies as part of a new power-sharing arrangement, ministers agreed Friday.

The United States, frustrated at Europe’s refusal to share more I.M.F. power with emerging economies, moved in August to block plans that would have kept Europe’s long-running dominance over the board, which could end in the board being cut to 20 members.

The current Europe-U.S. domination of the fund is a reflection of its post-World War II setup, but the order is now being challenged by the rise of China and other emerging economies. The I.M.F. board is one of the global lender’s main decision-making bodies. It has approved billions of dollars in emergency loans for countries hit by the global financial crisis and oversees the way the fund is run.

The board overhaul would be linked to a quota shift of at least 5 percent to “dynamic emerging economies and developing countries” and a shift of at least 5 percent from the overrepresented to the underrepresented, the ministers said.

Read more: http://www.nytimes.com/2010/10/02/business/global/02imf.html?src=busln

[polly7]

1. Great news. Hopefully a more equitable representation will change

some of it's brutal lending policies.

[fasttense]

2. Countries don't get the loans unless they kill most of their social safety net for their citizens.

And that is why the citizens of the countries that receive the loans are rioting.

"It has approved billions of dollars in emergency loans."

And has approved billions of dollars in austerity measures too. The loans are not given out unless government agrees to starve their citizens of any social safety net. They like countries that have only two classes - the uber rich and desperately poor. That way the uber rich on the board can funnel of the wealth of nations.