IMF Reforms Will Give Emerging Economies Increased Voting Rights to Reflect a Shift in Global Economic Power in Developing Giants Such as India and China

Lagarde Pledges IMF Reform in Bid to Woo Brazil (Excerpt)

May 30, 2011

Reuters - The 187-member IMF has approved reforms that will give emerging economies increased voting rights and board seats by the end of 2012. More than 6 percent of voting power at the fund will shift to developing countries such as China, which will become the third-biggest member nation.

In Brazil on Monday, French Finance Minister Christine Lagarde kicked off a worldwide tour to win support for her candidacy to head the Washington-based IMF. She said that the fund "must continue the reform process it began under Dominique Strauss-Kahn," who quit as IMF chief after being charged with the attempted rape of a hotel maid in New York this month.

Lagarde's visit to Brasilia is the first in a hastily arranged global tour that will also take her to India, China, Russia and Saudi Arabia. The IMF has a June 30 deadline to pick a successor.

The resignation of Strauss-Kahn has led to calls from developing countries to end the traditional European lock on the job.

EU nations are strongly backing Lagarde, arguing that a European leader is crucial at a time when the IMF is working with the euro zone to avert the risk of Greece defaulting on its loans and sparking wider financial fallout.

But some emerging economies have objected to another European IMF head, saying it is time to give other nations a turn to reflect a shift in global economic power to developing giants such as India and China.

South African Finance Minister Pravin Gordhan criticized the rich nation support for Lagarde, saying it breached a decision by the G20 group of leading economies for a more open selection process.

Brazilian Finance Minister Guido Mantega said Brazil had yet to decide whether to support Lagarde or her only declared rival, Mexican central bank chief Agustin Carstens. Mantega reiterated Brazil's stance that the next IMF leader should be chosen on merit rather than nationality, and that the growing influence of emerging economies should be recognized in the process.

Lagarde's main obstacle is the possibility of an inquiry into her role in a 2008 legal settlement involving paying 285 million euros ($408 million) to businessman Bernard Tapie, an ally of French President Nicolas Sarkozy.