Saudi Arabia's finance minister says it is too early to assess the impact of planned changes in voting power at the IMF and the World Bank. Policy makers at the summit of the Group of 20 developed and emerging economies agreed to raise the representation of emerging countries at the IMF through a transfer of at least five percentage points of so-called quotas, which determine voting shares and access to IMF loans, from countries with disproportionate influence.
They also decided to boost emerging nations' share at the World Bank by at least three percentage points. Any change to voting rights could affect Saudi Arabia, which is the most over-represented country under the current quota system, according to a G20 official, citing IMF evaluations. Argentina and Venezuela are also over-represented. China, the most under-represented country under the system, stands to benefit from the shake-up.
The Saudi Arabian finance minister, Ibrahim al Assaf, told reporters on Friday that it was too early to talk about what the impact would be on given countries and that the IMF board "will be working on formula and calculations". Saudi Arabia, the region's only member of the G20, has previously said it would support boosting the representation of emerging markets in the organisations. "The distribution of quotas should reflect the relative weights of its members in the world economy, which have changed substantially in view of the strong growth in dynamic emerging market and developing countries," leaders said on Friday in their concluding statement.
Under the agreement not all emerging countries will receive a quota increase. China has already overtaken Germany to become the world's third-largest economy and may soon be named the biggest exporter. It passed Japan a year ago as the main foreign investor in US government debt. However, China currently has a 3.7 per cent voting share on IMF executive board decisions, against 3.2 per cent for Saudi Arabia, whose economy is about one-eighth the size of China's.
Emerging markets are already due to have their share of the World Bank's votes increased to 44 per cent under a separate deal struck in February. "These are steps in the right direction, but we should not fool ourselves that this is going to bring any fundamental, structural shift in power and influence by itself," said Nancy Birdsall, the president of the Washington-based Centre for Global Development, an aid research group.
* with agencies tarnold@thenational.ae
