Despite the resignation of its managing director, Dominique Strauss-Kahn, the International Monetary Fund (IMF) seems set to broadly continue with its present structure and policies. This is wrong. The IMF no longer reflects the economic or political realities of the modern world and needs a radical overhaul. There is already broad agreement in the international community on the need to reform the IMF and the other major international financial institution, the World Bank. But, the talks have been bogged down as the established economies struggle to protect their interests, while emerging countries try to exercise their new influence and power. There is now a chance to inject new urgency in a process that is also mired in cumbersome international diplomatic procedures.
Brazil, China and South Africa, in particular among emerging countries, are pushing for an end to the convention of the head of the IMF coming from a European country. This is necessary because in many ways, the boot is now on the other foot.
Traditionally, the IMF provided financial support to struggling under-developed countries, while prescribing austere economic programmes. This has tainted the fund politically in many of the developing countries who are expected to drive economic growth in the coming decades. In the meantime, the US and European countries that ran the fund are now mired in unsustainable levels of debt. It is going to be a struggle for any European leader to credibly speak about fiscal responsibility. To give it more political and economic credibility as it tries to keep the international financial system stable in these difficult times, the IMF needs to broaden its leadership. Emerging countries need to put aside national interests and place their economic and political muscle behind a candidate for the leadership of the IMF. This could be their best chance to secure real change, fast.