IMF Reform in the Aftermath of the Global Financial Crisis: Let the IMF Speak Truth to Power

Many proposals for a reform of the global financial architecture place the International

Monetary Fund (IMF) at their center – as lender of last resort, supplier of authoritative

economic analysis, or supervisor of global financial markets. This policy brief argues instead for a more modest approach. The IMF appears to be the only international institution that has the analytical capacity and political standing (potentially at least) to hold all national governments accountable to the same benchmarks and standards for macroeconomic policies and financial market regulation. Thus the IMF has a crucial role to play in the international coordination of macroeconomic and financial market policies that will be key to preventing global financial crises in the future. Therefore, the current momentum should be used to strengthen the

stature of the IMF, make it more independent from member state governments, and achieve

substantial but realistic reforms:

• recalibrate voting power to give all members, including borrowers, an effective say in

decisions by the IMF Executive Board;

• lower the highest threshold for qualified majority voting such that no single country

enjoys veto power over important decisions;

• ensure that new sources of loanable resources do not create political liabilities for

IMF governance;

• provide dependable funding specifically for the IMF’s monitoring and surveillance

activities whose importance will grow;

• promote a culture of comprehensive public debate on IMF policy documents and

country reports, involving governments as well as civil society, to ensure that findings

are taken seriously (if not literally) by all member states;

• continue to apply policy conditionality to IMF loans to ensure that necessary economic

reforms supported by loans are undertaken even when they are politically difficult.