Failure to reform western bureaucrats
mindset to reflect a multipolar world will derail
efforts to reform global economic governance, South
Africas finance chief has claimed.
The head of the South African delegation at the annual
meetings, Pravin Gordhan, said IMF and World Bank bureaucrats
are still failing to reflect the views and priorities of poor
The bureaucrats need to demonstrate that they are
developing new mindsets or a new consensus to reflect the
growing power of emerging markets, he said in an interview in
He said the meetings were far too focused on the US-China
relationship, while reports published by the IMF and World Bank
are excessively focused on cyclical trends that do not
incorporate structural shifts in power.
He urged the institutions: Dont leave out that
[poorest] 10% of the world. Inclusivity [of countries] today is
as important as [reflecting global economic] balance.
He argued that the crisis had shown that it is in the
self-interest of rich nations to consider how to grow the
economies of developing countries that presently comprise a
small share of the international whole.
It is now consensus that demand in the global economy
is not going to come in from old sources [Western markets], new
demand has to come from new sources.
Gordhans comments found some support from Jim
ONeil, chief economist at Goldman Sachs, who told
Emerging Markets in Istanbul on Sunday: We have
given the emerging markets world more importance but when you
listen to the discussions here at the annual meetings you would
not have realized this. He added: The bureaucrats
are particularly guilty of being backward looking.
Gordhans claims come as his predecessor Trevor Manuel,
in a recent interview with Emerging Markets, denounced
the IMFs 24-member executive board for obstructing reform
of the institution that would boost the representation of
However, South Africas power in prosecuting the role
of emerging markets in global economic governance is limited to
the small size of its economy, said analysts.South Africa
is just too small really... so they are not that important,
unfortunately, said ONeil.
He believes that South Africa probably punches above
its weight on the global stage... since it is really Nigeria
that will become the important country in Africa due to
its larger population and energy wealth.
South Africa has a structural current account deficit, and
so can not serve as a net exporter of capital for Western
markets. Africa as a whole holds just 1.3% of world stock
market capitalization, 0.2% of debt securities and 0.8% of bank
assets, according to the World Bank.
Jacko Maree, CEO of Standard Bank, told Emerging Markets
in a recent interview: I dont think the centre
of gravity has shifted away from the developed world to the
developing world in our region because the [economic] numbers
speak for themselves.
In other comments, Gordhan said he would announce a
medium-term fiscal framework that put a clear plan on how
to decrease the deficit, clarify debt borrowing plans and
find ways to improve the quality of fiscal