IMF reform key to rebalancing global economy

The Group of 20 summit faces the daunting challenge of agreeing on governance reform of the International Monetary Fund to make it relevant in a new age.

The meeting in Seoul in November is expected to become another stage for a tug of war between the U.S. and Europe over how to give a bigger say in the international lender to emerging economies. 

The 2008-09 crisis catapulted the IMF to the center of international monetary coordination, an undertaking which could not succeed without emerging powers like Korea, China, India and Brazil playing a greater role.

With most either almost unscathed or emerging rapidly from the crisis, developing economies are demanding more voting power in the IMF to match their growing share in world output. 

They also call for open, merit-based leadership selection and tougher monitoring of advanced economies.

Reforming the institution, which dictated global finance for more than half a century, will be a crucial test of the G20, which has become the main forum of multilateral economic diplomacy. 

Declared the premier forum of international economic coordination at its third summit in Pittsburgh last September, the summit faces questions of effectiveness and legitimacy as global cooperation is fizzling with the easing of the crisis. 

The G20 leaders voiced the need to reconfigure the decision-making of the IMF during the Pittsburgh summit. In the fourth summit in Toronto in June, they pledged to reach an agreement at the Seoul summit scheduled for Nov. 11-12.

“We called for an acceleration of the substantial work still needed for the IMF to complete the quota reform by the Seoul Summit and in parallel deliver on other governance reforms,” said the G20 communiqu, published after the meeting in June.