Update on IMF Reforms
By JC Collins
With so much financial news being fed to us with a fire hose, let’s take a few minutes to recap the status of the 2010 IMF Quota and Governance Reforms, and the deadlines which have been established.
The large number of substantial events which are scheduled for the month of September has some what overshadowed the IMF deadline on reforms, which has been set at September 15th. I will not list these events, as I’m sure most of you have already thoroughly researched and been made aware.
The International Monetary Fund has given the United States until Sept 15th to act on the legislation supporting the 2010 reforms. If action isn’t taken by the US Congress before that date, the mandate it to have an interim solution on reforms established by Sept 30th.
Moving forward from there, this interim solution on monetary reform will need to have the steps towards reforms completed by December 15, 2015.
That gives us dates of Sept 15th, Sept 30th, and Dec 15th.
The current status of voting by IMF members is as follows:
Executive Board Changes – 147 members support equaling 77.25% of the vote. A vote of 85% is required for this part of the reforms to be implemented.
Quota Increases – 165 members support, equaling 80.37% of the vote. A vote of 70% is required to implement quota increases. Even though the required amount of votes have been reached, the quota increases are tied to the executive board changes, and can not be implemented until those changes are implemented.
The IMF has stated that the full integrated reforms need to be implemented as soon as possible and are of the highest priority.
The US is not the only country which is holding back on the reforms, though they are by far the largest voting member which can make it happen or not.
Of the 188 members, not all countries have voted for both. Some have voted for only one or the other. As strange as this may be, taking a look at which members voted for which part of the reforms tells us very little about what may happen in the coming months.
Members who voted for the executive board changes but not the quota increases (weird) are:
Members who voted for the quota increases and not the executive board changes (mostly poor countries who can be manipulated by the US) are:
- Congo, Dem. Rep.
- Congo, Rep.
- Marshall Islands
- Solomon Islands
- St. Lucia
Though it is the US vote which will make all the difference. The voting powers of members will vary depending on what is being voted on.
As such, the US voting powers are defined as:
- Quota Vote Power – 17.68%
- Governance Vote Power – 16.74%
With either arrangement, the US can in effect veto either part of the reforms by simply voting against. So why would so many other members vote against the reforms?
The US could be leveraging the other members for a sort of moral support, to say…see, we aren’t the only ones against this…but I doubt that scenario, as the US Treasury Department and the Obama administration would very much like to see the reforms passed.
Keep this list of countries in mind as we watch the monetary and geopolitical events unfold int he coming weeks and months. Perhaps a pattern will appear and give us a heads up on something which previously slipped passed us. – JC