Netherlands will not give up IMF and World Bank seats

The Netherlands is not prepared to give up its permament seats on the boards of the International Monetary Fund (IMF) and the World Bank. 'We are a relevant country.'

The IMF and World Bank seats have become an issue because there is increasing pressure from the US and China for EU countries to consolidate its their seats to give more weight to emerging economies in the Brenton Woods institutions. EU members currently hold eight out of 24 board seats at the IMF and the World Bank.

The US secretary of the treasury, Timothy Geithner, has said he wants to reduce the number of seats from 24 to 20, which would bring it in line with the G20, the group of the twenty largest economies which has lately been gaining importance over the G7. Emerging economies and developing countries want a bigger voice in the IMF and the World Bank in order to reflect the changes in the world economy. Geithner has also proposed giving emerging nations more voting shares.

Dutch development minister Bert Koenders suggested over the weekend giving equal voting power shares to countries who pay for development aid and those who receive the aid from the World Bank. But he said there could be no question of the Netherlands giving up its board seats. The Netherlands is an important donor country, Koenders said, and it also represents the interests of several other countries, including Moldavia and Israel, at the World Bank and the IMF.

Deputy finance minister Jan Kees de Jager said he doesn't see the point of the discussion. "We are a relevant country if you look at our economic weight, our exports and direct foreign investments and the size of our financial sector," he said.

Belgium was considered a more obvious candidate for loosing its IMF seat. But Belgian finance minister Didier Reynders said he thought the current IMF structure was 'attractive'. "We are one of the main contributors to the fund," Reynders said. "The European countries are having to finance the fund very strongly so we have to take into account the size of each country's participation in the fund." Belgium represents Turkey, Kazachstan and several European countries.

The issue is also tied to the refinancing of the IMF. During this months G20 summit it was agreed to triple the IMF's capital to 750 billion dollars to be able to assist countries that have been hit hard by the recession.

So far only Japan has come through with 100 billion dollars. Europe's pledge of 100 billion dollars is fairly certain, but the US is having trouble getting its 100 billion dollar pledge approved by congress. In order to allow emerging countries like China and Brazil to participate in the capital injection, the IMF is considering issuing bonds for the first time in its history.

At a meeting of the G7, last weekend, the finance ministers and central bankers of the seven largest industrial countries, were cautiously optimistic about the world economy. It was noted that the economic slowdown is showing signs of slowing down.

The IMF's managing director, Dominque Strauss Kahn, said the stimuli packages adopted by IMF member countries for 2009 seem to be sufficient. Last week, the IMF made a very pessimistic prediction for the future of the world economy, which is expected to shrink by 1.3 percent for the first time since World War II.