Calls grow louder to reform International Monetary Fund’s ‘undemocratic, neo-colonial’ system 

Spread This News

By Staff Reporter

A NON-PROFIT organisation is lobbying for immediate reforms to the International Monetary Fund (IMF)’s voting share structure, as gamesmanship by the European Union (EU) supported the financial agency’s managing director to run for a second term.

ActionAid said the announcement by European governments supporting a second term for IMF managing director, Kristalina Georgieva, is a slap in the face of efforts to make the institution more representative.

In a statement this week, ActionAid said the perpetuation of the ‘gentlemen’s agreement’ which has ensured that the IMF managing director has for 80 years been European and the World Bank president a US national, is undemocratic and neocolonial.

Instead, the non-profit said, it expects to see a transparent, merit-based process for IMF leadership selection.

“As long as the ‘gentlemen’s agreement’ on the selection of the IMF’s leadership continues to exist, the institution not only disenfranchises lower-income economies in the Global South, but undermines its legitimacy and ability to address global economic challenges.”

“It is woefully unacceptable to keep both informal and formal decision-making power in the hands of a small group of wealthy countries, especially considering the IMF’s role in stewarding public funds for a global good that is economic stability,” said Roos Saalbrink, the Global Economic Justice Lead at ActionAid International.

Saalbrink underscored that the current system, where voting rights remain heavily skewed in favour of wealthy Global North governments, raises serious questions about accountability and representation of the Fund.

Additionally, the recent failure to reach an agreement to redistribute voting power based on current economic realities in the IMF’s 16th Quota Review reaffirmed the imbalance.

“There is a need to recognise that the global economic landscape has shifted dramatically since the IMF’s inception. This unwavering support for the status quo by European countries invokes unacceptable memories of colonial-era power dynamics and practices.

“The IMF needs to embrace true multilateralism, where all member states have an equal voice in shaping the global economic agenda. This is part of many demands about systems change,” said Arthur Larok, the Secretary General of ActionAid International.

Countries in the Global South currently do not have an equal voice and are not fairly represented. This needs to be addressed urgently.

African countries still have very little say in decision-making in the World Bank and the IMF with less than a 10 percent vote share in the IMF board -and the

Only two executive directors represent 46 countries in sub-Saharan Africa.

But the power International Financial Institutions (IFIs) hold over African governments significantly undermines their policy autonomy.

“Beyond some great PR around the IMF’s commitments to climate and gender from the managing director’s office, we do not see these changes to the IMF’s longstanding austerity approach reach country advice or surveillance,” added Roos Saalbrink.

“As ActionAid has documented again and again, the IMF keeps imposing austerity policies, undermining health, education and gender equality. Rather than seek systemic solutions to the mounting debt crisis in Africa, and exploring obvious alternatives such as progressive tax reforms, the IMF continues to enforce cuts to public spending that hurt women and disadvantaged groups most acutely.

“The IMF needs to walk the talk on gender equality, accountability, and governance. There should be an overhaul of its governance system, and in the next quota review, where vote share adjustments can be made, this needs to materialise.”

Saalbrink said the IMF should publicise advice given to countries, loan programmes to be discussed and agreed in Parliament, and resourcing of the assessments of its bread-and-butter policies that impact gender equality.

ActionAid is a global federation with more than 41 million people living in 71 of the world’s poorest countries. It endeavours to see a just, fair, and sustainable world, in which everybody enjoys the right to a life of dignity, and freedom from poverty and oppression. It works to achieve social justice and gender equality and to eradicate poverty.