The IMF’s annual meetings in Morocco have ended: consensus was not reached on many issues

Members of the International Monetary Fund (IMF) could not reach an agreement at the Morocco meetings on increasing the fund’s credit resources and a joint declaration, without affecting voting rights, due to the influence of the fight for influence between the United States and China.

The annual meetings of the IMF and the World Bank held in Marrakech, capital of Morocco, have ended. During the meetings, members of the International Monetary and Financial Committee (IMFC) could not agree on a joint statement due to disagreements over the language to be used for the Russia-Ukraine war and the Israeli-Palestinian conflict.

At the end of the meetings, in the statement issued by the Spanish Minister of Economy and Digitalization, Nadia Calviño, who chairs the CMFI, committed to finding a solution to the reform of quotas in the IMF before December 15.

The statement called for new quota contributions to maintain the current scope of the IMF’s resources and said: “We ask the Board of Directors to propose transition arrangements to preserve the current scope of the Fund’s resources until the quota increase comes into effect. vigor”. It was said.

IMFC members agreed to appoint another member of the IMF Executive Board to represent African countries and asked the IMF Executive Board to “propose options for changes to the fund’s shareholding formula by June 2025.”

While IMF member countries agreed in meetings to make a “significant increase” in the fund’s credit resources by the end of the year, a plan backed by Washington to increase IMF financing without giving more shares (voting rights) to other major Developing countries such as China and Brazil’s failure to reach an agreement attracted attention.

THE US-CHINA COMPETITION WAS EFFECTIVE

While the IMF and the World Bank should have more financial power, given the economic crises experienced in recent years, an agreement could not be reached among member countries on increasing voting rights in the IMF due to The United States and China compete for influence.

Countries such as China, Brazil and India, whose economies are growing significantly faster than those of Western developed countries, have long called for quotas and voting rights to be readjusted to reflect their growing economic weight.

IMF quotas, which are adjusted based on the size of a country’s economy, determine how much financing a country must provide to the IMF, its voting power, and the maximum loan amount it can receive.

While the United States had the largest share of IMF quotas at approximately 17.43 percent, it is noteworthy that China’s share, which constitutes approximately 18 percent of global economic output, was 6.4 percent. .

While member countries’ equity stakes correspond to voting rights in the fund, the US has 16.5 percent of voting rights in the IMF. This means that the United States has a minority that blocks decisions. China’s voting rights are 6.08 percent.

While the United States strives to proportionally increase quotas in the IMF, in return it aims to maintain voting rights at the same level by contributing the corresponding amount of money. China demanded quota reform to increase its share of voting rights, arguing that quotas should reflect economic power.

While Washington and Beijing disagree on debt relief for poor countries, the US reportedly wants to limit China’s growing influence in the global financial system by using the IMF and World Bank.

In addition to the United States’ determination to strengthen the IMF financially, it also aims to secure its influence over the Fund by blocking China.

Although in recent years there has been more debate about the influence of the United States in the IMF, it is worth noting that this discussion gained new strength at the Marrakesh meetings.

While the World Bank focuses on fighting poverty and climate change, the United States wants the IMF to focus on its core mission of helping heavily indebted countries with loans and demanding reforms in return.

The Washington administration has prepared an important reform plan for the IMF and the World Bank. While former US President Donald Trump wanted to reduce funding for global financial institutions like the IMF, it did not go unnoticed that Joe Biden’s administration demanded more funding in his reform plan.

While China has secured its influence by lending to many countries in recent years, especially in Africa, the United States is said to view the World Bank as a tool to prevent Beijing in this regard. (AA)