WASHINGTON: The International Monetary Fund s directors approved a major change in its voting mechanism Friday, giving some larger developing countries more of a say in how the 185-nation lending organization operates. The board stopped short of major reforms that critics had demanded. Dominique Strauss-Kahn, who took over as head of the IMF last September with a vow to make the IMF more relevant, said the change will help restore the 68-year-old organization s credibility. Today s agreement is a major step forward, Strauss-Kahn said at a news conference. But it is only a first step. The beginning of moving is better than staying where you are. China, South Korea, India, Brazil, countries with booming economies who for more than a year have been demanding a bigger role in IMF decisions, are among the largest gainers under the new formula. Iran, Russia and Saudi Arabia opposed the voting share change, while Egypt and Argentina abstained. Britain, France and Canada backed the changes even though the plan will cost them some voting power in the short term. Strauss-Kahn said these nations recognized they may be better off with the new formula over the long run. The United States, the leading contributor to the IMF and its biggest shareholder, agreed to forgo an increase in its stake to which it was entitled, the IMF said. The changes must be approved by the IMF s governors before April 28 and will be discussed when they meet April 12 in Washington. Strauss-Kahn, a former French finance minister, predicted the proposal would have more than enough support to pass, as countries that abstained in Friday s voting register their votes for or against. We can expect that finally the result will be higher than the result of today, he said. The IMF is a global financial watchdog with a mandate to monitor the health of the world economy and provide technical and financial help to its members. In the past it has lent billions of dollars to nations as they faced financial crises, but in recent years its lending, and the income it made from the loans, has been steadily declining. Some critics have started questioning its relevance as a player in global markets. One of those critics, the development group Oxfam International, said the voting changes were little better than the status quo for some countries and a setback for the majority. Clearly this cannot be the end of a process for an institution desperately seeking credibility, said Liz Stuart, Oxfam s senior policy adviser. Mr. Strauss-Kahn should quickly put options on the table for genuine reform. The new structure backed by IMF members would for the first time take into account purchasing-power parity in determining voting share, rather than gross domestic product as determined by market currency exchange rates. The result is that developing countries on the whole will gain somewhat more voice, moving from 39.4 percent in quota share to 42.1 percent when Friday s changes are taken into account together with share increases approved in 2006, the IMF said.
