An expert committee has suggested greater representation of emerging market economies in a package of measures to make the International Monetary Fund (IMF) more effective in the midst of the global economic crisis.
"The world needs a multilateral institution at the centre of the world economy to help anchor global financial stability," says the committee of eminent persons, including Indian Nobel laureate economist Amartya Sen, on governance reform.
The IMF "is well placed to be this institution, but it needs a re-energised multilateral mandate to reflect the evolution of the world economy and to increase its legitimacy and effectiveness in addressing today's global challenges," said the committee chaired by South African Finance Minister Trevor Manuel.
Noting that few of these conditions are currently being met, the committee proposed among other things "a recomposition of the Executive Board to reflect economic realities by allowing greater representation of emerging market economies".
The "global economy has entered a period of unprecedented turmoil, with the prospect of a prolonged economic downturn, heightened financial volatility, and social instability," it said in proposing a series of governance reform measures as a single package.
"Weakly coordinated macroeconomic policies among major world economies, deficient financial regulation, and insufficient commitment to financial stability as a public good have each contributed to the current global economic conditions," the panel said.
A key proposed step is the formation of a high-level ministerial council to foster political engagement in strategic and critical decisions in a timely and effective manner.
Other steps include acceleration of the quota and voice reform begun last year, a broader mandate for surveillance, clearer lines of responsibility and accountability between various decision-making entities in the Fund.
It also calls for the introduction of an open, transparent and independent of nationality selection process for the Managing Director.
"The report of Trevor Manuel and his committee comes at a critical time, when the need for effective engagement between senior policy makers to tackle the global crisis-and forestall future ones-has acquired new urgency," IMF Managing Director Strauss-Kahn said.