Monday, September 21, 2020

IMF review to benefit developing countries

Botswana parliament this week moved to allow countries in Africa to have a say at the International Monetary Fund (IMF) when it supported the International Financial Organisations (Amendment) Bill, 2009.

The minister of Finance and Development Planning, Kenneth Matambo, said member states of the IMF who are the beneficiaries of the amendment, were expected to have had accepted the amendments by end of 2009.

The Bill was approved by cabinet in November 2009 together with the amendment to the Articles of Agreement of the IMF and the drafting of a Bill effecting the consequential amendments.

Matambo said the objective of the Amendment to the Articles of the Agreement of IMF is to institute a process of quota and voice reform in the IMF.

The move will align quota shares with economic weight in the global economy, enhance the participation and voice of low income and transition countries by providing for the appointment of additional alternative executive director.

It will also broaden the investment authority of the Fund as part of the new income generating model.

When tabling the Bill, Matambo said it proposes to amend the articles in a bid to enhance the investment authority of the Fund and allow it to use a member’s currency held in the Investment Account for investment as the Fund may determine.

“The amendment will allow the Fund to generate revenues from a variety of sources. This will enable the Fund to increase the average expected return on investment and adapt its investment strategy over time,” said the minister.

Equally, it sets out conditions for the appointment of a Second Alternative Executive Director. “The objective is to enhance the capacity of the offices of Executive Directors who represent large number of countries, thus recognising their special challenges and heavy work load”, he said.

Matambo said the situation is true of the offices of two African Executive Directors who represent very large constituencies such as Africa Group I Constituency to which Botswana belongs.

He added that as a result of the reforms, sub Saharan Africa has been allocated a second Alternate Executive Director position for each of the two constituencies.

The Bill also introduces a new provision on the increase in the overall votes and realignment of votes of the members of the IMF.

Matambo revealed the IMF and Financial Committee (IMFC), which is the policy arm of the IMF at the level of governors, decided on a doubling of basic votes and that the total quota increase should be in the order of 10 percent.

“This is a key measure for enhancing the voice and participation of low income countries,” said the minister adding that the IMFC has also decided on a shift in the quota share by at least three percent from over-represented countries to under-represented countries, mainly emerging and developing countries.

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