Saving Its Street Cred: How the IMF Hurt Its Credibility and How It Can Fix It

The International Monetary Fund is a Western dominated organization that favors Western nations and does not accurately represent the opinions of developing nations, where its decisions have some for their largest effects. This statement can accurately some up one of the major criticisms of the IMF. Many feel that the IMF does not give enough of a voice to developing nations, who depend on it for loans and feel the brunt of its decisions and loan requirements. They cite this fact as harming the credibility of the IMF, but is it too late to repair this credibility crisis? 

The IMF was created in 1945 near the end of World War II when the United States was the dominant power in international affairs, both militarily and economically. Because of the international situation at the time of the IMF’s creation, the United States was able to dominate the creation of the IMF and later the organization itself. The United States and its Western allies possessed and continue to possess a majority of votes under the quota system, which apportions votes according to the amount contributed by the nation. These Western nations also dominate the Executive board, where the United States and seven other nations have permanent representatives while the rest of the nations are consolidated into groups that each elect one leader. Furthermore, the position of Managing Director, the individual who runs the IMF, has always been held by an individual from a Western Nation. Taking these factors in to account, there is an evident Western slant in the leadership of the IMF.

On the other hand, these Western nations are not the nations that are receiving the majority of loans and having to conform to loan conditions. The majority of nations who rely on the IMF for loans are developing nations and therefore they are most effected by the policies of the organization. Additionally while they rely on the financial aid of the IMF the most, developing nations do not hold a share of the votes and therefore do not have a majority voice in the decisions the organization makes. Because of this, the decisions of the IMF, especially those concerning the conditions of receiving aid, often do not accurately reflect the opinions and desires of the nations that are most affected by them. The developing world is underrepresented in the IMF where they feel the brunt of the policy choices made. This seriously harms the credibility of the IMF, instead of being seen as an impartial body whose goal is to aid the member nations it’s often seen as being dominated by the West and looking out for the West’s needs.

The good news is that this situation is rectifiable, the IMF can save its street cred in the international community.  The organization should seriously consider greatly reapportioning its quota and vote system. This idea has been visited in the past; in 2011 there was a 2.8% shift in the proportion of votes in the favor of developing nations. The organization should reconsider doing this on a much grander scale. This would be a definitive sign to developing nations that the organization was willing to consider their opinions and work with them. Additionally when it comes time to elect a new Managing Director, an individual from a Non-Western country should be strongly considered. This has never happened before but it would be a huge step towards proving that the organization is truly an international body that represents all of its member states. I think both of these measures would greatly improve the organization’s credibility and symbolize its willingness to grow and improve itself.

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