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Gordhan to Lagarde: Reform IMF urgently

Johannesburg - Finance Minister Pravin Gordhan on Wednesday congratulated Christine Lagarde on her appointment as MD of the International Monetary Fund (IMF), and urged her to reform the body.

"As the global economy continues to be plagued with persistent economic challenges, the role of the IMF has and will continue to become crucial to global coordination and crisis management. I am confident that Ms Lagarde will be able to actively enhance that role even-handedly and effectively," he said in a statement.

Gordhan said that the IMF should strengthen its relevance and legitimacy among all member countries, and needed to take specific steps to do so.

These included the transfer of quota shares in favour of emerging and developing countries to increase their relative weights in the IMF decision-making process, in line with their dynamism in the world economy.

"Therefore, the reforms of the fund's quotas and governance in 2010 should be implemented at short notice, and a comprehensive review of the current quota formula should be approved," he said.

Gordhan also called for a commitment that the next IMF MD would not necessarily be a European citizen.

"Small countries should have appropriate voice. Since the global crisis, small countries have faced particular challenges that require greater attention from the IMF," he said.

He also added that there should be a focus on strengthening the International Monetary and Financial Committee and greater diversity in the IMF staff in terms of nationality, gender, and academic and professional backgrounds.

Other issues he felt needed to be addressed were improving the surveillance of systemically important advanced economies, deepening the understanding of national experiences on the management of capital flows, and rapidly developing guidelines for both "sending" and "receiving" countries without being prescriptive.

He also urged modernising the lines of thought, adapting them to the reality of global and domestic economies, and overcoming the prevalence of the dominance of policy perspectives of advanced economies.

"I trust that she will maintain the commitment to future governance reforms, including increasing the number of executive board chairs. This would enhance the representation of emerging markets and developing countries and improve the legitimacy of this important global financial institution," said Gordhan. 

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