Christine Lagarde urged the US on Thursday to stop blocking reform of the International Monetary Fund as she mounted a trenchant defence of its role as a crisis-fighting machine.
The managing director’s criticism of the IMF’s largest shareholder came as she opened the annual meetings on the fund’s 70th year, when its ownership and governance appear increasingly irrelevant to the new realities of the global economy.
This week, the IMF’s economic database showed China has overtaken the US as the world’s largest economy in 2014 in terms of the goods and services that each produce. Yet the Washington still has veto powers over the fund’s decisions and holds more than four times as many voting rights as Beijing.
This imbalance between the structure of the IMF and the changing landscape of the global economy has drained the fund of some of its legitimacy, critics warn. To address this discrepancy, a partial rebalancing of shareholdings, called quotas, was agreed in 2010, but has not yet been ratified by the US Congress.
“The 2010 governance and quota reform is an absolute must. It has to be implemented and everybody knows that it is currently stuck before the US Congress,” Ms Lagarde said.
