Tuesday, September 19 2006 18:35 Hrs (IST) - World Time -

Singapore: The International Monetary Fund's (IMF's) decision to overhaul members' votes in the lending group is a 'great start' for further reforms giving more clout to emerging states, IMF Managing Director Rodrigo de Rato said today (Sept 19, 2006).

Speaking a day after an overwhelming number of IMF members voted to immediately boost voting rights for China, South Korea, Mexico and Turkey to reflect their growing economic stature, Rato said the voting reforms were vital for the future of the fund.

Rato told the annual meeting of the IMF and the World Bank that the agreements reached would enhance our effectiveness and add legitimacy to all of the reforms we are implementing.

IMF members also agreed to hammer out a new formula allowing for a further shake-up of voting rights of rich and poor nations over the next two years.

The revamp - described as the most ambitious in the organisation's 60-year history was agreed Monday by 90.6 percent of votes cast by the IMF's 184 members. A total of 85 percent of votes was required to approve the blueprint.

Once in place, the reforms were expected to give the fund more credibility in poorer nations and reflect the rising economic power of China and other emerging nations.

Rato also called for immediate efforts to resume the World Trade Organisation's crippled Doha round of talks, saying the failure to clinch a new deal to expand trade had increased the threat of protectionism.

"The stakes are too high to accept failure," said Rato, saying that rich nations must act quickly to put the Doha round back on track.

The IMF chief vowed to sharpen surveillance of exchange rates and said the fund was also determined to focus on crisis prevention.

Meanwhile, German Finance Minister Peer Steinbrueck said IMF's reform drive must take into account interests of the EU as well. He said "Underrepresented EU countries should also be brought into focus."

Germany has often argued that as the third largest global economy -after the US and Japan - it must have a greater voice in IMF policymaking.