The IMF, under pressure to move with the times, backed reforms Saturday to give low-income countries a stronger voice in its decision-making and defended its response to recent financial market upheaval.
Policymakers from the International Monetary Fund also bowed to insistence from member contries that the Fund shore up its shaky finances, pledging to cut costs and boost efficiency.
The commitment came in a final statement issued after a meeting here of the IMF's steering committee, held as the 63-year-old Fund was being pressed to accord greater representation to currently under-represented non-Western countries.
The committee said reforming the IMF "should enhance the representation of dynamic economies, many of which are emerging-market economies, whose weight and role in the global economy have increased."
Such countries should see their voting share increased, the committee said, adding that "the voice and representation" of poor countries would also be strengthened.
It said all elements for an internal reform package, including an increase in the quotas that determine a member's voting rights, should be in place by the time of its next meeting in April 2008.
The IMF in September took an initial step toward overhauling its management structure by raising the quotas for four rising economies, China, South Korea, Mexico and Turkey.
The Fund is now in the midst of a second round of reforms, which was under discussion here.
While the action taken Saturday was hailed by some IMF officials as a clear advance, outgoing IMF Managing Director Rodrgio Rato cautioned that "we are in an interim moment."
"Today there has not been any final agreement," he said, adding that details of the reform still needed to be thrashed out.
Brazilian Finance Minister Guido Mantega earlier in the day implied that the IMF had in fact been slow to act on reform, attributing the hold-up to "resistance to change on the part of developed countries, which are over-represented in terms of voting power."
The distribution of quotas is determined according to complex mathematical formulas. Moves to adjust the share-out have been the subject of sometimes bitter debate, with certain industrialized nations reluctant to give ground to emerging-market members.
The Fund also came in for criticism from the Group of 24 developing countries for what it said was the Fund's failure to foresee the recent meltdown on financial markets, which erupted following a collapse of the US high-risk -- or subprime -- mortgage market.
The G24 said the IMF should perhaps spend as much time monitoring advanced economies, where the turbulence originated, as it does the economies of less developed countries.
"Allow me to point out the irony of this situation," Mantega of Brazil said.
"Countries that were references of good governance, of standards and codes for the financial systems, these are the very countries that are facing serious problems of financial fragility putting at risk the prosperity of the world economy," he said, referring to major industrialized nations such as the United States.
"The Fund had little to say that was practical about this crisis," he said. "It has been excessively cautious in its recommendations. It justifies this caution by pointing to the unprecedented nature of the problems."
But Rato countered that the Fund last April was "already very clearly stating our worries about the subprime segment in the United States."
And at the Group of Eight summit in Germany in June, he said, he spoke in the name of the Fund and had made it clear the IMF was "worried about the complacency and the quality of some of the deals that were being done at the time in the markets."
The IMF, whose mission is to promote international financial stability, is also struggling with its own finances as many newly cash-rich countries repay debt, leaving it without critical interest payments.
The current situation had sparked calls from several committee members, notably from the Group of Seven industrialized powers, for the Fund to streamline its finances.
The committee said Saturday it "recognized" the need for more predictible and stable sources of Fund income, notably from a reduction in administrative costs and greater management efficiency. It said "a new income model" should be drafted for debate at its April meeting.
Policymakers from the International Monetary Fund also bowed to insistence from member contries that the Fund shore up its shaky finances, pledging to cut costs and boost efficiency.
The commitment came in a final statement issued after a meeting here of the IMF's steering committee, held as the 63-year-old Fund was being pressed to accord greater representation to currently under-represented non-Western countries.
The committee said reforming the IMF "should enhance the representation of dynamic economies, many of which are emerging-market economies, whose weight and role in the global economy have increased."
Such countries should see their voting share increased, the committee said, adding that "the voice and representation" of poor countries would also be strengthened.
It said all elements for an internal reform package, including an increase in the quotas that determine a member's voting rights, should be in place by the time of its next meeting in April 2008.
The IMF in September took an initial step toward overhauling its management structure by raising the quotas for four rising economies, China, South Korea, Mexico and Turkey.
The Fund is now in the midst of a second round of reforms, which was under discussion here.
While the action taken Saturday was hailed by some IMF officials as a clear advance, outgoing IMF Managing Director Rodrgio Rato cautioned that "we are in an interim moment."
"Today there has not been any final agreement," he said, adding that details of the reform still needed to be thrashed out.
Brazilian Finance Minister Guido Mantega earlier in the day implied that the IMF had in fact been slow to act on reform, attributing the hold-up to "resistance to change on the part of developed countries, which are over-represented in terms of voting power."
The distribution of quotas is determined according to complex mathematical formulas. Moves to adjust the share-out have been the subject of sometimes bitter debate, with certain industrialized nations reluctant to give ground to emerging-market members.
The Fund also came in for criticism from the Group of 24 developing countries for what it said was the Fund's failure to foresee the recent meltdown on financial markets, which erupted following a collapse of the US high-risk -- or subprime -- mortgage market.
The G24 said the IMF should perhaps spend as much time monitoring advanced economies, where the turbulence originated, as it does the economies of less developed countries.
"Allow me to point out the irony of this situation," Mantega of Brazil said.
"Countries that were references of good governance, of standards and codes for the financial systems, these are the very countries that are facing serious problems of financial fragility putting at risk the prosperity of the world economy," he said, referring to major industrialized nations such as the United States.
"The Fund had little to say that was practical about this crisis," he said. "It has been excessively cautious in its recommendations. It justifies this caution by pointing to the unprecedented nature of the problems."
But Rato countered that the Fund last April was "already very clearly stating our worries about the subprime segment in the United States."
And at the Group of Eight summit in Germany in June, he said, he spoke in the name of the Fund and had made it clear the IMF was "worried about the complacency and the quality of some of the deals that were being done at the time in the markets."
The IMF, whose mission is to promote international financial stability, is also struggling with its own finances as many newly cash-rich countries repay debt, leaving it without critical interest payments.
The current situation had sparked calls from several committee members, notably from the Group of Seven industrialized powers, for the Fund to streamline its finances.
The committee said Saturday it "recognized" the need for more predictible and stable sources of Fund income, notably from a reduction in administrative costs and greater management efficiency. It said "a new income model" should be drafted for debate at its April meeting.
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