Abstract:

The IMF has a generally well-thought out governance structure and has been a relatively effective organization able to adopt and implement complex decisions in a cooperative and timely fashion. The constituency system allows reconciling the legitimacy of an almost universal membership with efficient decision-making and collegiality of a not-too-large Executive Board. Weighted voting based on relative economic strength gives confidence to creditor countries to commit financial resources to the IMF, while consensus decision-making confers some protection to the interests of minority groups, making weighted voting acceptable to debtor countries and may lead to better decisions that are easier to implement.

However, a number of important governance deficiencies need improvements. The influence of developing countries in decision-making is less than desirable, given the major role played by the IMF in these countries and the growing importance of such countries in the world economy. Conversely, there is excessive influence of a small group of large industrial countries and a large part of the membership does not actually participate in a meaningful way in the choice of the main officer of the institution.

The topics discussed in this paper to improve the governance of the IMF centre around increasing the independence and accountability of the Executive Board; moderately improving the aggregate voting share of developing countries; making the selection process of the Managing Director more open and transparent; nurturing the consensus decisionmaking approach; improving the efficacy and representation of the constituency system; and upgrading the IMF's role as the main forum for international economic policy cooperation.