The ‘gentleman’s agreement’, which has ensured that the IMF managing director has, for 75 years, been European and the World Bank president a US national, is undemocratic and illegitimate.
Bretton Woods Project, alongside our global partners, has drafted a campaign letter to be sent to IMF executive directors, governors and deputy governors, calling on them to bring about a genuinely open, democratic, merit-based, transparent process, that goes beyond rhetorical commitment, and allows any government, regardless of nationality, to put forward candidates on an equal footing.
If you are a civil society organisation or an academic interested in supporting the campaign, send an email to email@example.com, who will send you a copy of the letter to sign. The deadline for signatures is close of play on Thursday 15th August.
75 years is enough – It is time to end the ‘gentleman’s agreement’.
The maximum age for a candidate to be appointed Managing
Director is currently under 65 years old, and currently stipulates that this
person cannot hold the position of managing director beyond their 70th
birthday. However, rumours have been circulating as to whether the Fund will
scrap this to shoehorn in a favoured European candidate.
Kristalina Georgieva, who is currently the World Bank chief
executive and a Bulgarian national, is rumoured to be backed by the French in
the leadership race. France plays a particularly powerful role in the selection
process as Bruno Le Maire, the French finance minister, is coordinating the European
selection process. Georgieva is however 65 years old, meaning that should she
be appointed, the IMF would need to change its age limit rule.
It was reported
in the Financial Times on July 26 that France had floated the option of
changing the age limit, but that did not attract support from the board on
Friday . The Financial Times article added that “Nonetheless, people familiar
with the matter said the age limit could still be tweaked at a later stage if
Ms Georgieva emerged as the board’s choice.”
Just on the same day as the publication of the article – and on the same day that France floated the age limit change – the IMF published an update entitled “Frequently Asked Questions on Managing Director (MD) Selection”. The update had a section at the very bottom of the page entitled “How can the age limit be changed? When can it be changed?”, which noted that: “The Fund’s By-Laws would need to be amended by the Board of Governors by a majority of the votes cast. The age limit could be changed either before or after the nomination period closes. A nominee who is above the age limit could not be appointed Managing Director until the By-Laws were amended to remove or modify the age limit.”
Continue reading “Will the IMF change its managing director age limit to suit the Europeans?”
As the IMF is set to publish its 15th General Review of Quotas by the October World Bank and IMF Annual Meetings, the US has suggested that it will block reforms of quotas in favour of extending the portion of ‘New Arrangements to Borrow’ (NAB), which are designed as a backstop to the Fund’s quota-based financing mechanism (see BWP Observer Spring 2019, see Update 79).
IMF quotas are defined as “the building blocks of the IMF’s financial and governance structure” where a “member country’s quota broadly reflects its relative position in the world economy” and determines its voting share on the IMF executive board. The current formula used to guide the distribution of quotas is calculated in accordance to GDP (50 per cent), economic openness (30 per cent), economic variability (15 per cent) and international reserves (5 per cent).
Quota reviews are supposed to take place every five years. While member states had originally committed to completing the 15th review in January 2014, the US used its veto to delay the approval of the 2010 14th review until 2016 (see Observer Winter 2016, Autumn 2015). Moreover, the delayed 2010 reforms resulted in many low-and middle-income countries losing substantial shares of their voting power – such as Nigeria by 41 per cent, Venezuela by 41 per cent, Libya by 39 per cent and Sri Lanka by 34 per cent (see BWP Observer Winter 2016).
This review corresponds with a crisis of multilateralism engulfing international institutions, which could intensify should the IMF uphold the ‘gentleman’s agreement’ to appoint another European its new managing director (see BWP Observer Summer 2019).
Continue reading “Quota reform impasse likely as IMF faces legitimacy crisis”