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The current reform effort began in earnest 18 months ago, when the Managing Director issued a paper on the implementation of the Fund’s Medium-Term Strategy, in which he proposed numerous changes in the activities of the Fund. Here is a partial list of those changes:
• Dealing with an impending financial problem confronting the Fund itself, because the recent fall-off of Fund lending has reduced its interest income;
• Streamlining the Fund’s surveillance of its member countries;
• Undertaking a new form of multilateral surveillance to confront systemic threats to the stability of the monetary system;
• Establishing a new Fund facility to provide precautionary financing for countries that follow prudent policies;
• Reforming the distribution of Fund quotas, which govern its members’ financial contributions to the Fund, their ability to draw on its resources, and their voting power, with the stated aim of recognising the increased economic importance of the emerging-market countries;
What has been achieved thus far with regard to these five matters?
The first item on my list has not yet led to visible reforms, but has led to a set of proposals by a committee appointed by the Managing Director. The committee’s report has proposed, inter alia, that the Fund sell up to 400 tons of gold and use the proceeds to establish an endowment, the income from which would finance some of the Fund’s activities. The staff of the Fund is examining this and other ways to deal with the budgetary problem, but has not yet come forward with its own proposals.
