Japan Asks IMF Bigger Roles for Asian Nations

Give Asian nations a bigger role by reviewing quota system IMF employs for allotting more voting powers said Japanese Finance Minister Sadakazu Tanigaki. The current way the IMF distributes voting shares, commonly referred to as quotas, ``represents another form of unsustainable global imbalance,’’ Tanigaki said in speech at the IMF meetings in Washington. ``Many emerging market economies, including those in Asia, are markedly underrepresented’’ in terms of their economic strength and that causes ``distortions and unfairness’’ in determining their access to IMF resources.

Japan, China, South Korea plus the ASEAN group of Indonesia, Malaysia, Thailand, Philippines, Singapore, Vietnam, Myanmar, Brunei, Cambodia and Laos, combined control a 13 percent voting stake in the IMF. That group accounted for 19 percent of world gross domestic product in 2003 combined, up from 9 percent in 1960, according to IMF and World Bank figures.

The U.S. holds a 17 percent voting stake in the IMF, the largest share, while Germany holds about 6 percent, and the U.K. about 5 percent. Japan has a 6 percent stake, the most of any Asian nation, and China holds just under 3 percent.

The Japenese economy is world’s second largest economy and has strengthened with due course and following the above fact the dismal quota allocation is really unfortunate.

The IMF more than doubled its 2005 economic growth forecast for Japan this week, citing a pick-up in consumer spending. The economy will expand at a 2 percent pace in both 2005 and 2006, the fund said in its semi-annual World Economic Outlook. In April, the fund predicted growth of 0.8 percent this year.

The Japanese economy ``has steadily strengthened,’’ buoyed by domestic demand such as business investment and consumer spending, Tanigaki said in the speech.

The world’s second largest economy grew at a 3.3 percent annual pace in the second quarter, three times the initial estimate, a government report showed on Sept. 12. Spending by businesses increased 3.6 percent, the fastest pace since the fourth quarter of 2003. Consumer spending, which accounts for more than half of the economy, expanded 0.6 percent.

Japan’s central bank will maintain its four-and-half-year old policy of pumping cash into the economy and holding interest rates at almost zero to support economic growth until it can be sure deflation is beaten, Tanigaki said.

In his speech, Tanigaki also Japan decided to contribute $2 million to the World Bank’s the International Finance Corp., to encourage private-sector business expansion in African nations.

With these serious anomalies pointed out the IMF have to take a view at this Asian behemoths demands.