IMF executive board approves plan for 50% increase in quota funding
The proposal will be presented to the board of governors for final approval in December
07 November 2023 - 23:42
by David Lawder
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Washington — The IMF said on Tuesday its executive board approved a proposal for a 50% increase in quota resources to be contributed by member countries in proportion to their current shareholdings.
The proposal would largely follow a US-backed plan that would enhance IMF lending resources, but delay any IMF shareholding increases for China, India, Brazil and other fast-growing emerging market economies. But the IMF said the board requested an accelerated timetable for developing options to guide realignment of the IMF’s quota formula by June 2025.
The IMF said the 50% increase in quota funding — equivalent to about $314bn at current exchange rates — would not increase its overall lending firepower of about $1-trillion, but would shift the composition to more permanent resources.
Currently, the IMF relies on bilateral borrowing arrangements and pledges to a crisis lending fund called the New Arrangements to Borrow for nearly 60% of its lending resources. It said these would be reduced to maintain the IMF’s current overall lending capacity.
The quota increase “will help preserve a strong, quota-based and adequately resourced IMF at the centre of the Global Financial Safety Net”, IMF MD Kristalina Georgieva said in a statement.
“An adequately resourced IMF is essential to safeguard global financial stability and respond to members’ potential needs in an uncertain and shock-prone world,” she added.
The plan still needs approval by the IMF board of governors, which includes representatives from all 190 member states, with a vote requested by December 15.
The proposal, which saw broad support during the IMF-World Bank annual meetings last month in Morocco, needs an 85% majority of the IMF’s voting power to be implemented.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
IMF executive board approves plan for 50% increase in quota funding
The proposal will be presented to the board of governors for final approval in December
Washington — The IMF said on Tuesday its executive board approved a proposal for a 50% increase in quota resources to be contributed by member countries in proportion to their current shareholdings.
The proposal would largely follow a US-backed plan that would enhance IMF lending resources, but delay any IMF shareholding increases for China, India, Brazil and other fast-growing emerging market economies. But the IMF said the board requested an accelerated timetable for developing options to guide realignment of the IMF’s quota formula by June 2025.
The IMF said the 50% increase in quota funding — equivalent to about $314bn at current exchange rates — would not increase its overall lending firepower of about $1-trillion, but would shift the composition to more permanent resources.
Currently, the IMF relies on bilateral borrowing arrangements and pledges to a crisis lending fund called the New Arrangements to Borrow for nearly 60% of its lending resources. It said these would be reduced to maintain the IMF’s current overall lending capacity.
The quota increase “will help preserve a strong, quota-based and adequately resourced IMF at the centre of the Global Financial Safety Net”, IMF MD Kristalina Georgieva said in a statement.
“An adequately resourced IMF is essential to safeguard global financial stability and respond to members’ potential needs in an uncertain and shock-prone world,” she added.
The plan still needs approval by the IMF board of governors, which includes representatives from all 190 member states, with a vote requested by December 15.
The proposal, which saw broad support during the IMF-World Bank annual meetings last month in Morocco, needs an 85% majority of the IMF’s voting power to be implemented.
Reuters
IMF upgrades China’s GDP growth outlook
EDITORIAL: Africa has a place at the table and must use it well
IMF says quota lending reforms will strengthen global economy
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Clouds are gathering, says IMF chief Kristalina Georgieva
Israel-Hamas war sidelines IMF and World Bank as reforms inch forward
IMF chief says soft landing is possible, but risks abound
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.