29 June 2010

South Africa: Zuma Calls for G-20 to Initiate IMF Reforms

Photo: G20
Malawi's President Bingu wa Mutharika, with his wife, Callista Chimombo, represented Africa at the G20 Summit in South Korea in his capacity as chairman of the African Union.

Johannesburg — PRESIDENT Jacob Zuma has reiterated SA's long-held view and called for international financial institutions to be overhauled to give developing economies a greater say.

Addressing a session of the Group of 20 (G-20) in Toronto at the weekend, Mr Zuma said it was time for the group's leaders to take the initiative with regard to the reform of the International Monetary Fund (IMF). "Our reform of the World Bank shows that the slow movement on IMF reform is not necessary.

"As leaders, we need to demonstrate political will by ensuring that the necessary compromises are reached for us to deliver on our Pittsburgh commitments."

Traditionally, developing countries complain about how global financial institutions are dominated by developed economies, and SA is no exception. Moreover, in SA, the ruling party's leftist allies are critics of the economic policy advice offered by the IMF and World Bank, which these organisations claim is often aimed at cutting social spending, which in turn negatively affects development objectives in SA.

Mr Zuma said failure to move regarding the IMF and other urgent reforms of the institutions endangered the "goodwill" earned through the effective action of the institutions in response to the global financial crisis. Mr Zuma said the IMF was a quota-based institution and that quotas determined the amount of resources that could be made available by the IMF.

"Our strongly held view is that quotas must shift to developing economies as their need for the IMF resources is higher. The shift must essentially be from developed countries to developing countries. We must ensure that no emerging and low-income countries lose quotas as a result of these reforms," he said.

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