IMF mulls new council to empower emerging nations

By Lesley Wroughton

WASHINGTON (Reuters) - International Monetary Fund member countries, keenly aware of the need to give emerging nations more say in running the global economy, are considering a new policy-setting council that would more accurately reflect their rising economic clout.

According to people familiar with the discussions, the council of ministers would be similar in make up and size to the Group of 20, and shift power more towards rising economic powers from the handful of industrial giants that have dominated post-World War Two policymaking.

A meeting of Group of Seven finance ministers in Rome this weekend is likely to hear about the proposal but it is expected to be debated at length in the run-up to the Group of 20 meeting in London on April 2.

Domenico Lombardi, president of the Oxford Institute for Economic Policy and a former IMF board member, said the move would increase political involvement in IMF decisions on the global economy and thereby boost its relevance.

"The IMF has lost relevance in recent times mostly because member countries have withdrawn their political capital," Lombardi said.

"Setting up a council would increase the political accountability of its member countries, it would foster the political engagement of member countries into the institution, which is absolutely crucial to have the IMF at the center of the international monetary system," added Lombardi, who is also a senior scholar at the Brookings Institution.

The council, which is already provided for in the Fund's Articles of Agreement, would replace the 24-member policy-setting International Monetary and Financial Committee chaired by Egypt's Finance Minister Youssef Boutros-Ghali.

The idea of a council as the IMF's ultimate decision-making body was raised last year by the Fund's internal watchdog which looked at how to improve the IMF's governing structures.