3.5 Persistence of large imbalancesAccording to Coleman who argued that when designing the constitution of the a voting body it is necessary to consider not only the power of each individual member but also that of what he called the collectivity in other words the power to act. This implies that if this principle is adopted by the IMF’s Board of Governors, then it would serve the purposes of the benefit of all members rather than those with enough resources to inject in IMF as compared to developing countries and yet all are member States.
According to Iluminada TSICAT,The IMF’s capacity to influence its members has been seriously put into question. On the one hand, the global imbalance is an indication that the IMF has somewhat been ineffective in persuading large member countries to follow its policy advice. On the other hand, more and more emerging economies that are potential borrowers prefer to self-insure by accumulating massive amounts of foreign reserves rather than relying on the IMF’s multilateral insurance.
Many of these economies are even pooling their reserves in regional agreements. These actions point to a lack of confidence in the capacity of the IMF to assist member countries. Some perceive that its governance structure is inconsistent with its multilateral nature and is dysfunctional to its purposes. There are also economists who are of the view that there is an ideological bias in the IMF’s policy advice that prevents it from being responsive to citizens’ concerns and the challenges posed by globalizationGiven this situation, there is risk that the quota reform and increase of the Fund could not help emerging and developing countries as it was expected due to all those factors mentioned above. It is also obvious that IMF failed to treat its member States on equal footing and has privileged a system that gives more power in the decision-making to its main funders while blocking others to gain influence through the increase of their respective quota as and thus have a stake in the management of the Fund. As a matter of fact, it is believed that the impact of quota reforms to developing countries can have far reaching implications. A report of experts from the IMF and World bank leaders who met in Tokyo to discuss the problems facing IMF points out that IMF leaders failed to implement the governance and quota reforms agreed to in 2010 in advance of the October 2012 annual meeting in Tokyo, causing great consternation from many emerging markets and developing countries. Four international experts weigh in on the prospects for meaningful reform of the IMF’s governing structure. For D. Gross. , the “most glaring” challenge facing the IMF is the “continued over-representation of European economies, and in particular that of the euro-area economies. Implying that, if even experts from such institutions made such statements, it shows obviously that there is a problem of IMF to recognize the emerging and developing countries based on the agreement that was ratified by all member States and such negligence would amount to failure of the IMF and even the World Bank.Another statement that is similar to the one mentioned above points out that at the G-20 Summit in 2009, global leaders announced that the heads of international financial institutions should be appointed through an open, transparent, and merit-based selection process.” In 2011, however, European leaders failed to honor their promise and insisted on a European to replace Dominique Strauss-Kahn as director of the IMF. In 2012, the OBAMA administration nominated Jim Yong Kim as its choice to be the new World Bank president. Osama’s nomination of Kim essentially ensured his selection, causing exasperation among emerging powers for the United States’ failure to consider the Nigerian candidate NgoziOkonjoImweala who was widely thought to be more qualified. Considering these two examples, we are of the view that even reforms in quota will not benefit anything to developing countries and actually emerging countries in terms of the participation in the IMF’s decision- making and management.In this regard, it is worth noting that despite numerous crises, the international monetary system is still functional and while many may disagree with the impact of IMF’s economic philosophy, there is also no denying the valuable role they play in maintaining the global financial order.3.6 Increasing Level of PoliticizationIncreasing level of politicization of IMF can be specified as an additional issue that is proving to be obstruction in achievement of core aims and objectives of the organization. It has been argued that IMF lending is not a technocratic process; rather, the Fund is a highly political institution whose policies depend on the interests of not only its largest shareholders but also its bureaucrats, both of whom exercise partial incomplete control over IMF policy making.To put it simply, rather than dealing with its aims and objectives in a direct and timely manner, IMF is being hostage to bureaucracy and geopolitical ambitions of specific countries. The USA is considered to be the most powerful member of IMF with exclusive privileges that include powerful institutional linkages between the IMF, US Treasury Department and Congress, the ability to veto IMF decisions and modify its budget and quota and there is a popular viewpoint that this position is taken advantage of US government for political purposes. Moreover, high level of politicization of IMF is proving to have detrimental impact on the organizational image of IMF, especially amongst developing countries and newly emerging economic superpowers. Having mentioned all the above, it is simply shows that IMF is not independent at all in their day to day operations even to determine the quota that will be contributed by member states.3.7 Financial impactBy all means quota reform will positively impact the financial status to the member countries of IMF. The current proposals for reform at the International Monetary Fund (IMF) will not bring about benefits for the majority of its developing-country members, nor will they restore the Fund’s credibility or improve its efficacy as a multilateral financial institution, according to a leading developing- country representative at the IMF.This means that there is a need to change even some fundamental principles that governs IMF. In pursuit of global influence on governance in relation to the International Organizations that involve many countries including rich and poor decisions are taken without considering what I call minority in the game since the policies are set in such way that favors the big contributors and results to overwhelming capacity to decide on the other party that are not able economically. 3.8 ConclusionTo wind up, it is important to recall that international monetary fund was established in 1945, as part of the bretton woods conference convened in the aftermath of world war II with aim to solve financial crisis, to ensure stability of the international monetary and financial systems and finally to help in promoting growth and to alleviate poverty to the member countries. As it is well known that, the United Kingdom, the United States, and their allies convinced the international economic and financial cooperation through intergovernmental institutions to form up IMF.Secondly, we must also remember that, as an institution which is multinational in nature it has got the standard rules and procedures that must be respected by all member states equally without discrimination, a member country’s quota determines its maximum financial commitment to the IMF, its voting power, and has a bearing on its access to IMF financing when a country joins the IMF, it is assigned an initial quota in the same range as the quotas of existing members of broadly comparable economic size and characteristics. This must reflect in a manner that all rules are respected by all stake holders. We have seen many examples that really indicate imbalances for no good reasons and some of them are contrary to IMF articles of agreement, also the research elaborated on some cases that some member states have lodged complaints about the malpractices of the scheme that up now some of them haven’t been solved and the chapter also proposed or suggested some solutions.