IMF Survey: IMF Board Approves Far-Reaching Governance Reforms

IMF News, November 5, 2010

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Canonical URL: IMF Survey: IMF Board Approves Far-Reaching Governance Reforms

Publication date: November 5, 2010
Context: Approved by the IMF’s Executive Board one week before the G-20 Leaders’ meeting in Seoul, Korea, to discuss strengthening the global recovery.
Stated purpose: Increase the voice and representation of emerging market and developing countries and make the IMF Executive Board "all-elected, more representative."

Doubling of IMF quotas under the 14th General Review of Quotas:
- From SDR 238.4 billion to SDR 476.8 billion (about $755.7 billion at current exchange rates).
Resulting shift in quota shares:
- More than 6 percent shift in quota share to dynamic emerging market and developing countries.
- “One-half of the shift comes from advanced economies, mostly European advanced economies, but the United States also played a part. One third comes from oil producers, countries like Saudi Arabia for instance. So altogether, 80 percent of the shift comes from advanced countries and oil producers.”
- “Only 20 percent comes from other emerging countries.”
Distributional effects:
- 110 countries out of 187 will see their quota share increased or maintained.
- Of those 110, 102 are emerging or developing countries.
Protection for poorest countries:
- The voice of the poorest countries will be maintained by preserving their voting shares.

Composition of top shareholders:
- The 10 largest members of the Fund will consist of the United States, Japan, the four largest European economies (France, Germany, Italy, and the United Kingdom) and Brazil, China, India, and the Russian Federation (the BRICs).
- “All BRIC countries will be top 10 IMF shareholders.”
Executive Board rebalancing:
- Advanced European economies will hold two fewer seats.
- There will be two more emerging countries on the Board reflecting the change in quotas.
- All Executive Directors will be elected.
Quotation on legitimacy:
- Strauss-Kahn: “Taken together, it’s a big shift in quotas and accordingly in voting power. It’s a very important increase in the voice and representation of the emerging market and developing countries ... it is a historical reform of the IMF.”

Effective dates and deadlines:
- Quota increase and realignments to take effect by the IMF-World Bank Annual Meetings in October 2012.
- Executive Board reforms to be implemented no later than the subsequent Board election, scheduled in late 2012.
Review cadence:
- Composition of the Board will be reviewed every eight years, starting when the quota reform takes effect.
- The Board was last changed in 1992, when it was expanded from 20 to 24 members.
Quota formula and review schedule:
- A new formula for calculating quotas should be decided by January 2013.
- The next quota review should be completed by January 2014, two years ahead of schedule.
Ratification requirement:
- The Board of Governors must ratify the new agreement by an 85 percent majority of votes cast before it comes into effect.

New Arrangements to Borrow (NAB):
- As part of the agreement, the NAB, a backstop arrangement between the IMF and a group of IMF members to provide additional lending resources to the Fund, will be rolled back.

SDR 476.8 billion
about $755.7 billion
SDR 238.4 billion
more than 6 percent shift in quota share to dynamic emerging market and developing countries
6 percent (mentioned as the shift of quota shares to dynamic emerging market, developing countries)
80 percent (share of the shift coming from advanced countries and oil producers)
20 percent (share of the shift coming from other emerging countries)
110 countries out of 187 will see their quota share increased or maintained
102 (of the 110) are emerging or developing countries
Top 10 shareholders: United States, Japan, France, Germany, Italy, United Kingdom, Brazil, China, India, Russian Federation
Quota increase and realignments to take effect by the IMF-World Bank Annual Meetings in October 2012
Executive Board reforms to be implemented no later than the subsequent Board election, scheduled in late 2012
Composition of the Board will be reviewed every eight years
Last composition change: 1992 (Board expanded from 20 to 24 members)
New quota formula decided by January 2013
Next quota review completed by January 2014
Ratification by Board of Governors required by an 85 percent majority of votes cast

IMF Survey: IMF Board Approves Far-Reaching Governance Reforms (November 5, 2010).