Global financial bodies like the International Monetary Fund and the World Bank badly need reform but the world remains divided on how to improve them, U.N. Secretary-General Ban Ki-moon said on Wednesday.
“The world institutions created generations ago must be made more accountable, more representative and more effective,” Ban said at the opening of a three-day meeting of the U.N. General Assembly on the global financial crisis and its impact on the developing world. “I regret that financial institutional reform has divided (U.N.) member states,” he said.
The question of reforming the IMF, World Bank and other international financial bodies was one of the issues that the 126 nations participating in this week’s financial crisis had struggled to agree on during months of negotiations on a set of proposals for reforming the global financial system. A 15-page draft outlining the proposals, which delegates hope to approve today, does call for improving the IMF. The draft, obtained by Reuters, said nations “recognise that it is imperative to undertake, as a matter of priority, a comprehensive and fast-tracked reform of the IMF ... to increase its credibility and accountability, its legitimacy and effectiveness”. But the only specific reform it calls for is that the decision-making power of emerging market and developing states be increased in the next IMF quota review by early 2011.
The draft, which is still being negotiated, also calls for the heads of global financial institutions to be appointed in a manner that takes geography into consideration. Diplomats said that meant different regions should take turns chairing them and that regional monopolies on certain jobs be abolished. Ban said the world was “struggling to overcome the worst ever global financial and economic crisis since the founding of the United Nations more than 60 years ago”. He chided the world’s wealthy nations for reneging on pledges to boost aid to Africa. “Surely if the world can mobilise more than $18 trillion to keep the financial sector afloat, it can find more than $18 billion to keep commitments to Africa,” Ban said.
The conference had originally been scheduled for June 1-3, but General Assembly President Miguel D’Escoto postponed it to this week when it became clear negotiators had no agreement on financial reform proposals. Although the meeting has been billed as a summit, no Western leaders are attending. Around a dozen presidents and prime ministers, mostly Latin American and Caribbean, showed up. Others taking part have sent lower-level delegations. Western diplomats said that reflected widespread dissatisfaction with the way D’Escoto, a leftist former foreign minister of Nicaragua and Roman Catholic priest, organised the meeting. The run-up to the conference highlighted sharp differences between radicals who want to give the 192-nation General Assembly much more say in tackling the financial crisis and major powers intent on keeping control in their own hands.
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