2023-10-11 22:27:03
Weak global growth, wars and global crises characterize the annual meeting of the International Monetary Fund and the World Bank, which began in Marrakesh, Morocco. Institutions are coming under increasing pressure to reform so that they can better help countries overcome the challenges. The rich industrialized countries are campaigning to significantly expand the World Bank’s financial firepower and to activate more private capital to fight global crises.
A conflict is emerging over the future role of the International Monetary Fund, which was warned by the American government before the start of the annual meeting to focus on its core business of bringing countries with macroeconomic expertise on track. The warning, which was formulated by the responsible secretary of state in the US Treasury Department, Jay Shambaugh, is interpreted as harsh criticism of the head of the International Monetary Fund, Kristalina Georgieva.
Under their aegis, loans were granted to countries such as Argentina without complying with the structural reform requirements associated with the loans. The Monetary Fund should resist the temptation to address any issue that distracts it from its core mission, Shambaugh warned. The IMF should not become an expert on climate change, but rather limit itself to the macroeconomic perspective.
USA promotes proportional increase in capital shares
The so-called quota review of the International Monetary Fund, which is to be carried out by this year, is controversial. The quotas correspond to the capital shares of the member states and at the same time to the voting rights. The Americans are campaigning to increase the quotas proportionally. This is less about increasing the IMF’s lending capacity and more about replacing temporary loan pots. The IMF has a rough lending capacity of $1 trillion, of which around $150 billion has been awarded.
US Treasury Secretary Janet Yellen’s now repeated call for a proportional increase in quotas contradicts the principle that the quota allocation should reflect the relative strength of the national economies in the global economy. China, India and Indonesia are currently underrepresented and therefore require a quota adjustment that reflects their increased weight.
But this cannot be done with the United States, which neither wants to see its veto position (15 percent of voting rights) threatened nor does it want to tolerate greater influence from China in the institution as long as the country, in the US’s perception, does not follow the rules of the game international trade. The German government takes a more conciliatory stance on the issue of quota sharing and, if in doubt, would accept a small loss of power in order to enable a compromise.
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