Press Release: IMF Board of Governors Adopts Quota and Voice Reforms by Large Margin
IMF News, April 29, 2008
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- Published: April 29, 2008
Vote outcome and political significance
- On April 28, the Board of Governors of the International Monetary Fund (IMF) adopted by a large margin far-reaching reforms of the institution's governance.
- Governors from 180 of the 185 member countries cast their votes.
- 175 countries representing 92.93 percent of the total voting power in the Fund voted in favor of changes to the quota and voting share structure.
- Approval of the Resolution required 85 percent of the total voting power.
- Voting turnout and approval metrics cited by IMF leadership:
- "With a voting turnout of 97.8 percent of member countries, and with 94.6 percent of the members approving these reforms, I see this result as the beginning of the new legitimacy of the Fund." — Dominique Strauss-Kahn.
- The Managing Director’s assessment:
- "This vote shows the overwhelming level of support across the Fund's membership for these reforms, and I thank the members for this resounding endorsement."
- "This makes the Fund the first international financial institution to implement such deep governance reforms."
Main reform elements and expected effects
- Reforms aim to enhance the participation and voice of emerging market and developing countries, and to realign members' shares with their relative weight and role in the global economy.
- Reallocation and voice changes:
- The new quota and voting structure is described as "more dynamic and forward-looking."
- The package "represents an important step toward a redistribution of voting shares toward dynamic emerging market and developing countries" with an expected continued shift over the next decade.
- Specific measures included in the reform package:
- Increase in the voting shares of more than two-thirds of the 185 member countries.
- Tripling of basic votes — "the first such increase since the Fund's creation in 1944" — aimed at enhancing the voice and participation of low-income countries.
- A mechanism included in the package "that will keep constant the ratio of basic votes to total voting power in the IMF" to preserve the tripling element.
- Enabling each of the two Executive Directors representing African constituencies to appoint an additional Alternate Director.
- The Executive Board recommended the reform package on March 28 (see Press Release No. 08/64).
Implementation steps and legal requirements
- The Resolution proposes an amendment of the Fund's Articles of Agreement.
- Effectiveness conditions:
- The amendment will need to be accepted by at least three-fifths of IMF members representing 85 percent of the total voting power to become effective.
- Domestic approvals:
- Most member countries will need the approval of domestic legislatures to accept the proposed amendment.
- Quota increases:
- The proposed increase in quotas will require further action by those member countries eligible to receive an increase in their quotas.
Institutional context and governance mechanics
- Board of Governors:
- The Board of Governors is the highest decision-making body of the IMF and consists of one governor and one alternate governor appointed by each member country.
- The governor is usually the minister of finance or the governor of the central bank.
- Most powers of the IMF are vested in the Board of Governors; the Board may delegate to the Executive Board all except certain reserved powers.
- The Board of Governors normally meets once a year.
- Executive Board:
- The Executive Board functions in continuous session and is responsible for conducting the business of the IMF.
- It is composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman.
- The Board usually meets several times each week and carries out its work largely on the basis of papers prepared by IMF management and staff.
- Quotas and financial resources:
- Each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy.
- Quota subscriptions generate most of the IMF's financial resources.
- A member's quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to IMF financing.
- Total quotas at end-March 2008 were SDR 217.4 billion (about US$354.3 billion).
Press Release: IMF Board of Governors Adopts Quota and Voice Reforms by Large Margin (April 29, 2008).