Press Release: IMF Board of Governors Approves Major Quota and Governance Reforms

IMF News, December 16, 2010

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Canonical URL: Press Release: IMF Board of Governors Approves Major Quota and Governance Reforms

The Board of Governors approved a package of reforms of the Fund’s quotas and governance.
When voting ended on December 15, 2010, Governors representing 95.32 percent of the total voting power had cast votes in favor of a Resolution on Quota and Reform of the Executive Board, exceeding the 85 percent required.
The Resolution had been recommended by the IMF's Executive Board to the IMF Board of Governors on November 5 (see Press Release No. 10/418).

The package is a set of reforms on quotas and governance in the IMF designed to lead to a major overhaul of the Fund’s voice and governance, strengthening the Fund’s legitimacy and effectiveness.
The Board of Governors also supported an amendment to the Articles of Agreement that would facilitate a move to a more representative, all-elected Executive Board.
The reforms build on those initiated in 2008 (see Press Release No.08/93).

Completion of the 14th General Review of Quotas with an unprecedented doubling of quotas to approximately SDR 476.8 billion (about US$733.9 billion).
Once in effect, the reforms will:
- result in a shift of more than 6 percent of quota shares to dynamic emerging market and developing countries;
- result in more than 6 percent shift from over-represented to under-represented countries;
- protect the quota shares and voting power of the poorest members.
Combined with earlier steps, the voting shares of emerging market and developing countries as a group will rise by over 5 percentage points.
Exchange-rate basis: Based on the current market exchange rate, which was 0.649724 SDRs to the U.S. dollar on December 15, 2010.

The Board of Governors is the highest decision-making body of the IMF and consists of one governor appointed by each member country.
- The governor is usually the minister of finance or the governor of the central bank.
- The Board of Governors normally meets once a year.
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 (5) or elected by member countries or by groups of countries (19), 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.
Each member country is assigned a quota that:
- is based broadly on its relative position in the world economy;
- is the primary source of the IMF's financial resources;
- determines its maximum financial commitment to the IMF and its voting power;
- bears on its access to IMF financing.

The 10 Fund members with the largest voting share will consist of:
- the United States, Japan, plus the so-called “BRICs” (Brazil, China, India, the Russian Federation), and the four largest European countries (France, Germany, Italy, the United Kingdom).
The major realignment in the ranking of quota shares under this reform will result in a Fund that better reflects global realities.

Following the Board of Governors’ approval, the next step is for member countries to accept the proposed quota increases and the amendment to the Articles of Agreement.
Members will make best efforts to complete this by the Annual Meeting of the Board of Governors in October 2012.
In many cases this involves parliamentary approval.
IMF Managing Director Dominique Strauss-Kahn urged all members to proceed rapidly with the steps required to implement this package within the agreed timeframe.

Press Release No. 10/477, December 16, 2010. International Monetary Fund.