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Questions and Answers

G20 Agreement on Quotas and Governance

Last Updated: August 05, 2013


Agreement was reached among the G20 Finance Ministers and Governors in Gyeongju, Korea on October 23rd, 2010 on a proposal to reform the IMF quotas and governance. The proposed reforms would result in a doubling of IMF members’ quotas—financial stakes that determine voting power in the institution—that will shift voting shares toward dynamic emerging market and developing countries.. The ministers also agreed on a reshuffle of the IMF’s 24-member Executive Board that will raise the representation of dynamic emerging market and developing countries on the institution’s day-to-day decision-making body.






Q. 1- Agreement was reached among the G20 Finance Ministers and Governors in Korea on a proposal to reform the IMF quotas and governance. What are the next steps?

• The IMF’s Executive Board will need to meet and discuss the proposed changes agreed by G20 Finance Ministers and Governors. A staff paper laying out the elements of a final proposal will be sent to the Executive Board shortly.

• There are a number of elements involved to take forward the proposed reform.

• On quotas, the Executive Board, based on its discussions and agreements, would prepare a report to the IMF’s Board of Governors for the completion of the 14th General Review of Quotas. Quota increases would be approved by the Board of Governors with an 85 percent majority of total voting power.

• To move to an all-elected Board will require an amendment of the Fund’s Articles of Agreement. An Amendment would need to be approved by the Board of Governors and to become effective requires acceptance by three-fifths of members, representing 85 percent of total voting power.


Q. 2- What will it take to expand the IMF's lending resources by $250 billion?

• In its communiqué, the G20 committed to work to complete implementation of the quota reform by the IMF’s Annual Meetings in 2012.


Q. 3- Which members would be among the 10 largest shareholders under this agreement? Who would no longer be in the top ten?

• As a result of the proposed reforms agreed in Korea on quota rebalancing, the ten largest shareholders in the IMF would be the United States, Japan, the BRICs (Brazil, China, India and Russia), and the four largest European countries (France, Germany, Italy, and United Kingdom).

• The countries that would no longer be in the top ten are Canada and Saudi Arabia.


Q. 4- What does the doubling in quotas mean?

• The permanent resources available to the Fund to lend to its members would double. At present, these quota resources amount to SDR 217.4 billion (approximately $341 billion). After the 2008 quota reform is completed, these resources would amount to SDR 238.4 billion (approximately $374 billion). The doubling of quotas would bring these resources to SDR 476.8 billion (about $748 billion).


Q. 5- It was agreed that the quota formula will be reviewed by 2013: why again?

• The IMF uses a quota formula to guide the assessment of a member's relative position in the global economy. There are many measures on which that can be assessed and no one formula is perfect.

• The current quota formula was agreed in 2008 and represents a substantial improvement over the previous five-formula system, although many members had and continued to have reservations about various aspects of the current formula. Against this background, the G20 proposed to review the quota formula by January 2013.

• It was proposed by the G20 that the next general review of quotas (the 15th General Review) be completed by January 2014, two years earlier than the normal deadline of five-yearly general quota review.


Q. 6- What will happen to [country name’s] quota under the proposed reform?

• The Executive Board will meet to discuss the set of proposals agreed by the G20 Finance Ministers and Governors. It is premature to discuss individual country quotas.


Q. 7- What would the Board look like with this reform. Would there be different/new constituencies? What European chairs would be affected and when will advanced Europeans give up their chairs?

• With the proposed changes agreed in Korea, there will be two fewer advanced European chairs.

• Aside from France, Germany, Italy and the United Kingdom, there are currently constituencies led by Belgium, Netherlands, Denmark, Spain, and Switzerland in the Executive Board.

• European nations would be able to take advantage of the implementation period (the G20 committed to work to complete implementation of the quota reform by the Annual Meetings 2012) to work out exactly how the shift in Board seats will take place.


Q. 8- Will the reform have any discernible impact on countries in Africa? Will there be a 25th chair in the Executive Board?

• The Executive Board will meet to discuss the set of proposals agreed by the G20 Finance Ministers and Governors. It is premature to discuss individual country quotas.

• A key objective of the reform is the shift from advanced countries to dynamic EMDCs. A number of countries in Africa will benefit from the proposed shift to 6 percent to dynamic EMDCs. Importantly protection for the poorest will ensure that the quota shares of many African countries are protected.

• The G20 proposed moving “to an all-elected Board, along with a commitment by the Fund's membership to maintain the Board size at 24 chairs, and following the completion of the 14th General Review, a review of the Board's composition every 8 years.” It also proposed a review of the quota formula by January 2013.


Q. 9- Is an amendment to the Fund’s Articles required to change to a fully elected Board? With a fully elected Board, can a chair be rejected?

• The Fund’s Articles stipulate that there will be appointed Executive Directors to the 5 largest shareholders. An amendment to the Articles would be needed to change to a fully elected Board. The rules around those elections will need to be determined.


Q. 10- It was indicated that the Board composition will be reviewed every 8 years (following completion of the 14th review i.e., this review), by what measure?

• This has not been specified.