By Cho Jin-seo
WASHINGTON - South Korea's finance minister said Friday that the reform of the International Monetary Fund (IMF) should be the top priority for the G20 meetings, despite facing overt protests from some countries such as Saudi Arabia.
Strategy and Finance Minister Yoon Jeung-hyun said in a statement to the IMF on Friday that time is against the IMF as countries have so far failed to close the gap of conflicting national interests and the momentum of reform could eventually die out.
“We should also remind ourselves that time is a luxury that we do not have,” he said in the statement, sent to the annual meeting of the IMF which started on the day in Washington. “I expect member countries to approve the agreement promptly so that the shareholding realignment results can be finalized as quickly as possible.”
On Thursday, Yoon met Saudi Finance Minister Ibrahim Abdulaziz Al-Assaf, and found the oil-rich nation was not happy with the reform debate. Saudi Arabia is likely to lose a large part of its voting shares at the IMF to emerging economies if the allocations need to be redistributed in proportion with the size of national economy.
“Minister Yoon empathized with the Saudis, but still he asked them for corporation in a larger perspective,” the ministry said in a press release.
The G20 countries agreed last year that they would shift at least 5 percent of the voting share, which is called the quota, from advanced or rich economies to emerging ones. They also agreed to improve the boardroom structure of the organization, in order to better reflect the voices of underrepresented nations.
According to the plans in general, countries such as China, Brazil and India are likely to gain more say, while small European nations will have to yield some of their shares. But the G20 has so far made no agreement on how and when the shares will be redistributed, because of conflicting national interests.
On Thursday, a meeting of G20 vice finance ministers in Washington could not make progress on this thorny issue by much, an official of the Korean government told The Korea Times.
Multiple sources at the government have expected that the compromise can, and will, be made in the last minutes of the Seoul Summit, by the influence of political leadership. For example, it was the prompting of U.S. president Barack Obama who forced countries to agree on the term of the shift of “at least 5 percent” of quotas from advanced to emerging economies last year, they said.
Apart from the reform issue, Yoon said that the establishment of links between IMF and regional financial safety nets is the second most urgent issue for the IMF and for the G20 Seoul Summit, which is to be held in November. This agenda is also facing oppositions from some countries including Saudi Arabia, who are concerned that providing more safeguards would cause a moral hazard in the global financial system.
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