A Stronger Voice at IMF

DPM Kwon thanks IMF action and pledges to set up $30 million fund in IBRD to help Africa

Korea's quota at the International Monetary Fund (IMF) has been increased from 0.764 percent to 1,346 percent at the 61st IMF/WB Annual Conference held in Singapore on September 17-20, the Ministry of Finance and Economy said.
The ministry said the quota, which represents the country's rights in the international financial organization, has expanded nearly 10 times since the country's first quota when it joined the IMF in 1955 amounted to 0.14 percent and boosted the Korea's ranking to 19th from 28th.
The ministry went on to say that the IMF general conference approved the quota increase 90.6 percent, which also raised the quotas for three other countries such as China, Mexico, and Turkey.
IMF's press release on the quota increase said "On September 18th, the Board of Governors of the IMF adopted a Resolution on Quota and Voice Reform in the IMF. Members Representing 90.6 percent of the total voting power cast votes in favor of the Resolution.
Votes of Governors exercising 85 percent of the total voting power were required for adopting the Resolution."All of the IMF decisions are decided by member countries quotas and therefore, the quota increase will give Korea a stronger voice at the IMF, ministry officials stressed.
The quota increase this time was likely to have been owed to Korea's serving as a director country in the past and it will also increase the chances for Korea to serve as a director country on many times more than before, the officials said. It also holds a special meaning for Korea, which experienced a foreign exchange crisis in 1998, because the country had to sustain quite a few sacrifices including a fall in credit ratings, rises in fees, and delays in loan releases due to the small quota.
But the quota increase this time will increase Korea's SDR from $7.2 billion to $13.5 billion. Korea has realized the large quota increase this time among four countries that had their quotas increased, a notable achievement for Korea's diplomatic efforts.
The government worked hard to have the quota increased. The ministry mobilized all of its ability at international financial events to form a consensus to have its target ranging from IMFC meeting in April last year, the IMF/WB annual meeting in September, last year, and financial experts meeting between China and Korea, and G-20 finance ministers meeting.
The focus was placed on the G-20 meeting in February whose agenda included the discussions on governance reform at the IMF to make the meeting a turning point for the IMF to take up the quota increase as its priority issue. The government had succeeded in having the meeting to take a two-stage approach, quota increase and IMF governance reform. At the time, Brazil and India were opposed to the approach, but Korea with the help of its allies was able to convince the finance ministers at the meeting to take up a two-stage approach. Its efforts again paid off at the IMFC meeting in April, where IMF Managing Director Rodrigo de Rato decided to draw up a detailed plan for the first stage quota increase by September and included it in the joint agreement at the meeting. The Korean delegation argued for quota increases for four countries, which needed their quotas increased badly, including China, Mexico and Turkey, besides Korea at the G-20 deputies meeting in June and got the approval of the board of directors on July 5th.
Deputy Prime Minister and Finance and Economy Minister Kwon O-kyu, who led the Korean delegation to the Singapore meeting, thanked the IMF for increasing its quota during his keynote speech. He said it will send a strong message to the global community that the Fund is on the right track to achieve its governance reform. He also called for efforts should made to redistribute the quotas of some Asian countries according to their improved positions in the global economy, and he expected similar efforts to be made in the World Bank as well.
Reminding Korea's strong commitment to the Millennium Development Goals, he said Korea has decided to set up a $30 million fund in the IBRD and a $1.5 million fund in the IFC this year. Korea will triple its ODA to Africa by 2008, according to the Africa initiative announced by President Roh Moo-hyun this spring. He also said Korea will invite 1,000 African to Korea to receive vocational training in the three years. The DPM also called for the resumption of the stalled DDA negotiations and continuation of aid for trade. nw

(photos from right) Deputy Prime Minister and Finance/Economy Minister Kwon O-kyu; President of the World Bank Paul Wolfowitz; IMF Managing Director Rodrigo de Rato.