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IMF undergoing biggest power shift in 2 decades

 Brazilian Finance Minister Guido Mantega says the monetary fund’s rotation plan is cosmetic.

reuters

Brazilian Finance Minister Guido Mantega says the monetary fund’s rotation plan is cosmetic.

WASHINGTON — The International Monetary Fund’s executive board is undergoing the biggest reshuffle in two decades in a shift that emerging markets, including Brazil, say remains insufficient to reflect their rising economic power.

Starting next month, some Western European countries are realigning to give nations such as Turkey and Hungary more say under a 2010 pledge to give up two seats on the 24-seat board. Changes are also taking place among emerging markets, with Colombia leaving Brazil’s group to join Mexico’s.

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The overhaul reflects ‘‘significant economic realignments at the global as well as regional levels,’’ said Eswar Prasad, a Cornell University professor and a former IMF official. ‘‘Small countries are jockeying for position to make sure their voices are heard while some of the larger but less dynamic economies are trying hard to preserve their clout despite their diminishing economic significance.’’

The changes are the largest since the early 1990s, when the Soviet bloc collapsed and a flurry of new countries joined the fund. The attempt this time is to give more clout to economies representing a growing share of the world’s economy just as the IMF’s 188 member countries clash over how to calculate voting rights in 2014.

‘‘Emerging markets remain concerned about the slow pace of reforms of the governance structure of the IMF,’’ Prasad said.

The 2010 agreement on Europeans’ board representation is part of a package that also boosts emerging economies’ voting rights and makes China the fund’s third-largest member country. It is not in effect yet, mainly because the United States, the IMF’s largest shareholder, has not ratified it.

European nations, including Belgium and the Netherlands, are implementing changes starting Nov. 1. The plan, which partly relies on a system of rotation between emerging and developed economies, was called cosmetic by Brazilian Finance Minister Guido Mantega, who says they advantage Eastern European countries and Europe as a whole. ‘‘This, of course, fails to correct the over-representation of Europe in the board, sending yet another negative signal to the outside world,’’ he said.

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