The board of directors of the International Monetary Fund (IMF) on Tuesday approved a proposal to increase the quotas allocated to members by 50 percent, compared to their current quotas. The proposal will now be considered and put into effect by the Board of Governors as part of the finalization of the 16th general review of the quotas.
The proposal follows guidance from the International Monetary and Financial Committee (IMFC) at its 2023 annual meetings.
“The proposal is centered around a 50 percent increase in quota allocated to members in proportion to their current quota. The increase in quotas would increase the IMF’s permanent resources and strengthen the quota-based nature of the fund by reducing dependence on loans and thus safeguard the primary role of quotas in the fund’s resources,” the global lender said in a statement declaration.
Currently, India has a quota of SDR 13,114.4 million, representing a share of 2.75 percent, making it the eighth largest quota country within the IMF. Based on the quota, India has 1,32,063 votes, which means a share of 2.63 percent.
Kristalina Georgieva, Managing Director of the IMF, says this increase will help maintain a strong, quota-based and adequately funded IMF at the center of the global financial safety net, as an adequately funded IMF is essential to ensure global financial stability and respond to members’ potential needs in an uncertain and shock-prone world.
“The proposed quota increase comes at a complex time for the global economy and the members of the IMF. In the spirit of international cooperation, I am hopeful that this proposal will receive the broadest possible support from Members, and that we will subsequently move forward with a quota realignment under the 17th Review,” she added.
The proposal also envisages that once the quota increases come into effect, the borrowed funds, comprising the Bilateral Loan Agreements and the New Arrangements to Borrow (NAB), would be reduced to maintain the Fund’s current borrowing capacity.
“Members have also recognized the urgency and importance of reallocating quota shares to better reflect Members’ relative positions in the global economy while protecting the quota shares of the poorest Members, and many Members would now have supported a reallocation of quotas together with the proposed quota increase. Therefore, another crucial element of today’s proposal is a call for the Governing Council to develop by June 2025 possible approaches to guide further quota reallocation, including through a new quota formula, in the context of the 17th General Quota Revision.” said the IMF statement.
Quotas are the building blocks of the IMF’s financial and governance structure. An individual Member State’s quotas broadly reflect its relative position in the global economy. Quotas are expressed in special drawing rights (SDRs), the IMF’s unit of account. These determine the maximum amount of financial resources that a member is obliged to provide to the IMF. They are also important determinants of voting rights, in addition to the maximum loan amount a member can obtain.
The IMF Board of Governors conducts general quota reviews at least every five years. Any change in quota requires the approval of 85 percent of the total voting power, and a member’s own quota cannot be changed without its consent.
The 16th review is currently underway and is expected to be completed by mid-December this year.