IMF Approves Voting Reforms

by Ulrika Lomas, for LawAndTax-News.com, Brussels

20 September 2006

The Board of Governors of the International Monetary Fund (IMF) on Monday adopted a Resolution on Quota and Voice Reform in the IMF.

Members representing 90.6% of the total voting power cast votes in favor of the Resolution. Votes of Governors exercising 85% of the total voting power were required for adoption of the Resolution.

The Resolution, which had been recommended by the IMF's Executive Board to the IMF Board of Governors, is a package of reforms on quotas and voice in the IMF.

These reforms aim to better align the IMF's quota shares with members' relative positions in the world economy and to make it more responsive to changes to the global economy while, and equally important, enhancing the participation and voice of low-income countries in the IMF.

The two-year reform program includes as a first step ad hoc quota increases for a group of the most clearly under-represented countries, China, Korea, Mexico and Turkey.

The Resolution further requests that by the Annual Meetings in 2007, the IMF Executive Board reach agreement on a new quota formula to guide the assessment of the adequacy of members' quotas in the IMF. Such a formula should provide a simpler and more transparent means of capturing members' relative positions in the world economy.

The new quota formula will provide the basis for a further rebalancing of quotas to be recommended to the Board of Governors by the Annual Meetings in 2007 and no later than by the Annual Meetings in 2008.

The Executive Board is also requested to propose an amendment of the IMF's Articles of Agreement to provide for at least a doubling of the basic votes that each member possesses, so as to protect the voting power of low-income countries as a group; and it is envisaged that the amendment should also safeguard the proportion of basic votes in total voting power.

The Resolution additionally calls on the Executive Board to act expeditiously to increase the staffing resources available to those Executive Directors elected by a large number of members whose workload is particularly heavy.

Further, the Executive Board will give consideration to the merits of an amendment of the Articles that would enable each Executive Director elected by a large number of members to appoint more than one Alternate Executive Director.

It is also envisaged that the Board of Governors will consider distributing any increase in quotas with a view to achieving better alignment of members' quota share with their relative positions in the world economy, while ensuring that the IMF has adequate liquidity to achieve its purposes.

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