Global Biz

Call to complete IMF quota reform

(China Daily)
Updated: 2010-10-06 08:20

BRUSSELS - European and Asian leaders on Monday called for the completion of the quota reform of the International Monetary Fund (IMF) by the upcoming G20 summit late next month.

The reform of the international lending body is one of the subjects under discussion at the eighth Asia-Europe Meeting (ASEM) summit, some of whose current 48 members come from beyond the two continents.

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"We support the implementation of the IMF quota reform by the G20 summit of November, to adequately reflect the relative weight and responsibilities of the IMF members in the world economy," European Union (EU) Council President Herman Van Rompuy said after chairing a session on Monday.

With one month to go before the G20 meet in Seoul, the ASEM summit is seen as an opportunity for European and Asian leaders to build momentum for the reform of the IMF.

"The IMF quota shares must be shifted to dynamic emerging markets and developing countries by at least 5 percent from overrepresented to underrepresented countries," Van Rompuy said.

G20 leaders agreed to such a shift in quota share at their 2009 summit in the US city of Pittsburgh, where they also committed themselves to completing the reallocation when they meet in the Republic of Korea (ROK) in November.

The Seoul summit must deliver on the promised IMF quota reform, and any failure would put the credibility of the G20 at risk, said Rhee Chang-yong, secretary general of ROK's Presidential Committee for the G20 Summit.

"In order to maintain the effectiveness of the G20, I think our leaders have to deliver this outcome," Rhee told reporters on the sidelines of the ASEM summit.

"If you do not meet these things, I think media and public opinion would say that the G20 cannot deliver these important targets," he warned.

On the eve of the ASEM summit, EU finance ministers agreed to push for a completion of IMF quota reforms this year. They said on Friday that the EU was ready to cede two of its seats on the IMF board to underrepresented emerging markets.

Rhee described the EU's concessions as a positive development, but refused to say whether they were good enough to satisfy others. Some analysts have criticized the EU's offer as inadequate.

Van Rompuy said European and Asian leaders also agreed to give further momentum to their cooperation, with an aim to achieve strong, sustainable, balanced and inclusive growth in both continents.

The EU economy is still facing a high level of uncertainty due to the sovereign debt crisis, with recovery remaining fragile.

By comparison, Asian developing countries have seen a strong rebound.

Van Rompuy said ASEM members would work toward structural reforms while reducing excessive public deficits, non-sustainable debts and development gaps.

"Today, our challenge is to deal with the long-term effects of the crisis and to adopt measures in order to avoid the repetition of similar economic problems," he said.