Wednesday, November 11, 2015

Times of Oman: Pending IMF and World Bank Reforms

In this new article in the Times of Oman we once again see frustration over the stalled out governance reforms at both the IMF and the World Bank. While the article clearly seeks to try and promote these changes happening sooner, the reality is that it admits that change is a very slow process. Below are some quotes.


"Created soon after the end of the Second World War, the International Monetary Fund (IMF) and World Bank are powerful international financial institutions which hold immense sway in orchestrating efforts to deliver the elusive fruits of prosperity to the majority of countries in the world, which are still considered to be in the transitional phase of becoming developed.

The World Bank lends money and provides advice to developing countries for programmes aiming to boost economic growth and reduce poverty. The IMF provides funds to countries in financial crisis, particularly in order to ensure that they can pay their international debts, to ensure stability of the broader international financial system. The ability of both these entities to fulfil their lofty aims, however, remains a question of much contention around the world. In fact, the very manner in which these two entities are themselves governed is also an issue which continues to be mired in controversy.

While on paper, the World Bank and IMF are governed by, and held accountable to, all 188 member countries, in effect both these entities are controlled by just a small number of economically powerful nations. Since a handful of countries choose the leadership and senior management of both the IMF and the World Bank, critics allege that it is their economic interests that dominate, despite the fact that the main borrowers from the World Bank and IMF are developing countries."
. . . . .
"The G20 endorsed the need for IMF quota rebalancing, whereby the large, dynamic emerging market countries, Brazil, China, India and Russia move up to be among the top 10 shareholders of the IMF.

However, developing countries have become increasingly frustrated with the slow pace of these promised reforms. The IMF and World Bank annual meetings held earlier in October this year represented the ideal opportunity for a comprehensive reform resolution. But despite the usual platitudes about the need for structural reforms within the IMF and World Bank, this process has been stalled once again."
My added comments: When this blog began in January 2014 it seemed as though major changes in the global monetary system were about to take place. We had talk of a "reset" showing up everywhere in official circles. It was expected that the reforms mentioned in this article would be happening right away. The reality has been much different. Here we are two years later and the reforms are still stalled. For now, it does not appear that the US Congress will favor this changes any time soon.  What we have learned from all this is that change takes place very slowly over many years and decades unless there is a major crisis motivating change to take place sooner. No one shoul d want a crisis to happen. If we avoid one any time soon, we likely will continue to see change happen very slowly.

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