05/09/2009
Saudi Arabia, a major oil exporter, backs plans to increase emerging nations say in the International Monetary Fund but would not accept a reduction in its own voting rights, its finance minister said on Friday.The United States is pressing for a meeting of the Group of 20 nations to agree on the issue of giving emerging market countries greater voting power in the IMF, G20 officials said this week.
The matter will be raised at a meeting of G20 finance ministers in London that begins on Friday and followed up at a leaders' summit in Pittsburgh on Sept 24-25.
But there are wide differences among the IMF's 186 member nations over how much more voting power emerging economies ought to receive and at which countries' expense.
Some G20 sources have said the United States suggested a 5 percent shift in IMF quotas to underrepresented emerging countries.
But European G20 sources said they would prefer to see the shift come from overrepresented nations to all underrepresented nations, no matter whether the member is a developed or a developing country. The sources gave examples, including Spain, which they said was underrepresented and Saudi Arabia, which they said was overrepresented.
"There are proposals from several countries. One of the proposals is to recalculate the quotas of the countries to reflect the changes in the world economy by giving countries whose participation in the international economy has grown, a larger quota at the expense of countries whose quota will be reduced," al-Assaf told Reuters before the G20 meeting in London.
"This should not be at the expense of other emerging and developing countries. It should come from the share of developed countries that are overrepresented. This is the position of the Kingdom of Saudi Arabia, and ... the position of many members of the IMF," he said.
"With regard to the Saudi position specifically, it is that this does not affect the quota or capital of the kingdom in the IMF."
QUOTAS
Each of the IMF's 186 member countries are assigned quotas, or subscriptions, which broadly determine a members' voting power, its financial contribution to the IMF and how much it can lend from the Fund.
IMF quotas are calculated according to a complex formula that is designed to reflect such things as the size of a country's economy, trade and its international reserves.
Al-Assaf said Saudi Arabia's position as a major player in international oil markets means it should retain its weight in the IMF.
"The reason is that the kingdom is an important player in the world economy, given the impact of developments in the oil market on the world economy at large," he said.
"For these reasons, we see and affirm that the kingdom's quota should not be affected in any of these changes."
Emerging powers such as China, Russia, Brazil and India have long argued for an increase in their voting power in key financial institutions like the IMF and the World Bank to accurately reflect their growing weight in the global economy.
Giving major emerging economies a bigger say in the IMF has become more pressing as the world emerges from recession and countries look to the IMF to assist.
"The issue is being studied. It is too early to talk about whose quota will be increased and whose will be reduced," al-Assaf said.
