Tuesday, May 23, 2006

The IMF Lecture

I've had a couple of pretty exciting lectures in Economic Development this past week. The most recent was from Cyrus Rustomjee, a former 4-year board member of the IMF (he represented 21 African countries) and 4 years as executive board member for South Africa with the World Bank. He really explained the functions of the IMF in Washington DC and the how the structure play for the 184 country member "shareholders", the 24 executive board members, and the 2000+ staff within the organization. The gist of the lecture dealt with the unequal balance of quotas (think of it as a credit union's shares) given to developing countries. Developing countries have 26% of the voting shares. Specifically for Africa, if we total the 45 African members out of 184 members, they only receive 4.4% of voting representation. Let's compare this to the US with 17% share and the EU with 32% share. Basically, if the developing countries wanted to affect policy or affect the decisions made in regards to the conditionalities for countries to receive a loan, they will really need to work hard to convince the industrialized countries of their needs. Secondly, the failure of certain debt relief programs such as the Highly Indebted Poor Countries (HIPC) have been partially due to developing countries not being heard at the meetings with their minority voting share. Cyrus did bring up a very good point that he has seen developing countries pull themselves together to be a viable state but he has also seen the opposite. There is also a responsibility on the country to have the political will to change.

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