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Top Ten Reasons Why the IMF Shouldn’t Take the Lead in Reform of Global Finance
By Mark WeisbrotBy Mark WeisbrotCo-Director of the Co-Director of the
Center for Economic and Policy Research (CEPR)Center for Economic and Policy Research (CEPR)
Thursday, October 9, 2008Thursday, October 9, 2008
10. The IMF totally 10. The IMF totally missed the two biggest missed the two biggest
asset bubbles in the asset bubbles in the history of the world.history of the world.
Home PricesHome Prices
60
80
100
120
140
160
180
200
Year
Per
cen
t o
f 19
54$
(1st
Qu
arte
r)
House Prices Rent
Price-to-earnings ratioPrice-to-earnings ratio
9. The IMF is 9. The IMF is unaccountable.unaccountable.
8. Developing 8. Developing countries have no countries have no significant say in significant say in IMF decisions.IMF decisions.
Voting Structure of the IMFVoting Structure of the IMF Pre-Singapore IMF Voting Rights
All Others37.2% Japan
6.1%
Germany6.0%
France4.9%
United Kingdom4.9%
United States17.0%
Korea & Singapore1.2%
Australia & New Zealand
1.9%
Mexico1.2%
Brazil1.4%
India1.9%
Russia2.7%
China2.9%
Canada2.9%
Italy3.2%
High-Income Oil Producers*
4.5%
* High-income oil producing countries include: Saudia Arabia, Kuwait, the United Arab Emirates, Qatar, Brunei, and Bahrain
Source: Bryant, Ralph C. (2008). "Reform of IMF Quota Shares and Voting Shares: A Missed Opportunity." Washington, DC:
Brookings Institution (April 8). http://www.brookings.edu/~/media/Files/rc/papers/2008/0409_imf_bryant/0409_imf_bryant.pdf
Voting Structure of the IMFVoting Structure of the IMF Current IMF Voting Rights
All Others37.7% Japan
5.9%
Germany5.8%
France4.8%
United Kingdom4.8%
High-Income Oil Producers*
4.3%
China3.6%
Italy3.1%
Canada2.8%Russia
2.6%India1.9%
Korea & Singapore1.7%
Mexico1.4%
Australia & New Zealand1.8%
Brazil1.4%
United States16.5%
* High-income oil producing countries include: Saudia Arabia, Kuwait, the United Arab Emirates, Qatar, Brunei, and Bahrain
Source: IMF, 2008. "IMF Members' Quotas and Voting Power, and IMF Board of Governors." http://www.imf.org/external/np/sec/memdir/members.htm
7. The IMF is at the 7. The IMF is at the head of a creditor’s head of a creditor’s
cartel that has cartel that has pressured developing pressured developing
countries to adopt countries to adopt harmful policies over harmful policies over
the last three decades.the last three decades.
6. The IMF made a 6. The IMF made a mess in the last set mess in the last set
of financial and of financial and economic crises: economic crises: Argentina, East Argentina, East Asia, Russia…Asia, Russia…
Per Capita GDP in Asian Crisis Per Capita GDP in Asian Crisis Countries, (1997=100)Countries, (1997=100)
Per Capita GDP in Argentina, 1990-Per Capita GDP in Argentina, 1990-20082008
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
9,000.00
10,000.00
11,000.00
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
5. The IMF has 5. The IMF has shown no serious shown no serious efforts at reform efforts at reform despite repeated despite repeated
failures.failures.
4. The IMF’s economic 4. The IMF’s economic projections can be projections can be way off target and way off target and may be politically may be politically
influenced.influenced.
IMF Projected GDP Growth for IMF Projected GDP Growth for Argentina and Actual GrowthArgentina and Actual Growth
3. The IMF’s 3. The IMF’s recommended recommended
economic economic policies have, in policies have, in general, failed.general, failed.
Latin America's Latin America's Unprecedented Long-Term Unprecedented Long-Term
Growth CollapseGrowth Collapse 82.0
9.0
14.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
1960-1980 1980-2000 2000-2007
To
tal
Gro
wth
(%
)
Western Hemisphere: Total growth in per capita real GDP (Purchasing Western Hemisphere: Total growth in per capita real GDP (Purchasing Power Parity)Power Parity)
Slowdown in Economic Slowdown in Economic GrowthGrowth
2. The IMF has been a 2. The IMF has been a champion of the champion of the
de-regulated global de-regulated global financial flows that financial flows that
played a huge role in played a huge role in the current mess.the current mess.
1.The IMF is run 1.The IMF is run mostly by the mostly by the
Treasury Treasury Department.Department.
U.S. Treasury U.S. Treasury Secretary Secretary Paulson. Paulson. CompensatioCompensation at Goldman n at Goldman Sachs in Sachs in 2006: 2006: $164 $164 millionmillion..