Reformation of the IMF: Saudi Thesis

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These measures have helped the banking system to remain profitable and well-capitalized" ("2009 Article IV," IMF, 2009). This indicates that Saudi Arabia views low levels of speculation to be salutary for its own financial status, which is dependant upon economic growth and a high, steady worldwide demand for oil.

The main area of contention between Saudi Arabia and the IMF has been its undervaluation of its currency, the riyal, which it only recently agreed to peg to the U.S. dollar. This is also keeping with the IMF's policy on a free flow of capital: "The IMF has also generally opposed capital controls, which can help governments stem the loss of reserves, currency crashes, and other problems associated with large capital outflows" (Weisbrot 2009, p.1).

Another criticism of the IMF is how its proportion of voting shares are allocated: the U.S. currently has 16.5%, while high oil producing nations, including Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Brunei, and Bahrain, collectively only have 4.3% (Weisbrot 2009, p.

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21). But Saudi Arabia has not been particularly vocal in securing itself a larger share of voting rights, in contrast to the less economically secure nations within the framework of the organization. Members of the developing world have been highly critical of the disproportionate levels of U.S. influence at the IMF. But although not always characterized as part of the industrial or developed world, Saudi Arabia's financial status and its interest in maintaining steady economic expansion and production ensures that its interests often ally with those of the United States in Europe, in terms of stabilizing the global economy and curtailing inflation. It also has taken a relatively conservative position in terms of hemming in the use of speculative financial instruments.

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