Selected Decisions and Selected Documents of the International Monetary Fund
Chapter

D. Increase in Quotas of Fund Members—Eleventh General Review

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International Monetary Fund
Published Date:
April 2004
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Report of the Executive Board to the Board of Governors

1. Article III, Section 2(a) of the Articles of Agreement provides that “The Board of Governors shall, at intervals of not more than five years, conduct a general review, and if it deems it appropriate, propose an adjustment of the quotas of the members. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member concerned.” This report and the attached Resolution on increases in quotas under the current, i.e., Eleventh General Review are submitted to the Board of Governors in accordance with Article III, Section 2.

2. The five-year period prescribed by Article III, Section 2(a) for the Eleventh General Review of Quotas ends on March 31, 1998, five years from the date on which the Tenth General Review of Quotas should have been concluded. The Tenth General Review of Quotas was completed in early 1995 without recommending an increase in quotas to the Board of Governors. At that time, the Executive Board reported to the Board of Governors that:

…the Fund is at present relatively well-positioned to meet a prospective substantial demand for its resources over the next three years. Nevertheless, the Fund’s liquidity position is expected to decline over the next few years from its currently strong position. Furthermore, considerable uncertainties can be expected as regards the supply of usable resources, which depends on the continued relative strength in the balance of payments and reserve positions of mainly the industrial countries in the Fund. The continued adequacy of member’s quotas, including the Fund’s liquidity position, will be closely monitored by the Executive Board in the period ahead.

3. The conduct of the Eleventh General Review of Quotas has been guided by the views expressed by the Interim Committee since the Spring of 1995. At its meeting in April of that year, the Interim Committee requested the Executive Board “to continue to review the adequacy of the Fund’s resources, and, in connection with its review of the role of the Fund, to carry forward its work on the Eleventh General Review of Quotas.” At its meeting in October 1995, the Committee “welcomed the progress already made by the Executive Board on Fund quotas, and requested the Board to move forward with the Eleventh Quinquennial Review....” The Committee’s April 1996 Communique stated, with respect to the Fund’s financial resources and assistance to members, that the Committee “notes the progress made by the Executive Board in preparatory work for the Eleventh General Review of Quotas and stresses the need to ensure the adequacy of the quotas for the Fund to continue to carry out its mandate, taking into account changes in the world economy since the last increase in quotas was agreed in 1990.” In September 1996, the Committee reiterated its request to the Executive Board “to continue its work on the Review and to do its utmost to reach a conclusion as soon as possible.” In April 1997, the Committee requested the Executive Board to complete its work on quotas as soon as possible and to report to it in time for the Hong Kong meeting of the Committee. The Committee also stated that “the proposed distribution should be predominantly equiproportional while contributing to a correction of the most important anomalies in the present quota distribution. The Executive Board should also review the quota formulae promptly after the completion of the Eleventh Review of Quotas.” The Executive Board reached agreement on the size and distribution of the increase in quotas, which was endorsed by the Interim Committee at its meeting on September 21, 1997, in Hong Kong, China.

4. The Interim Committee agreed that:

  • — the present total of Fund quotas would be increased by 45 percent;

  • — 75 percent of the overall increase would be distributed in proportion to present quotas;

  • — 15 percent of the overall increase would be distributed in proportion to members’ shares in calculated quotas (based on 1994 data), so as to better reflect the relative economic positions of members; and

  • — the remaining 10 percent of the overall increase would be distributed among those members whose present quotas are out of line with their positions in the world economy (as measured by the excess of their share in calculated quotas over their share in actual quotas), of which 1 percent of the overall increase would be distributed among five members whose current quotas are far out of line with their relative economic positions, and which are in a position to contribute to the Fund’s liquidity over the medium term.

The Committee requested the Executive Board to submit before the end of this year a proposed resolution for the approval of the Board of Governors to effect the agreed increases in quotas. The Committee reiterated its view that the formulas used to calculate quotas should be reviewed by the Board promptly after the completion of the Eleventh General Review.

5. In its discussions on the Eleventh General Review, the Executive Board has considered, inter alia (i) the size of the overall increase in quotas; (ii) the distribution of the overall increase; (iii) the procedures for consent and payment for the increase in quotas, including by members with overdue obligations in the General Resources Account; and (iv) the media for payment for the increase in quotas. In its preparatory work on the Review, the Executive Board also considered issues relating to the role of the Fund in providing balance of payments financing, the quota formulas used in making quota calculations, and the declining share in quotas of developing countries in the Fund.

6. In assessing the Fund’s need for resources over the medium term in order to carry out its purposes, the Executive Board stressed that (i) the Fund is the central institution in the international monetary system and it must be adequately endowed with financial resources to enable it to act effectively when dealing with members’ balance of payments difficulties; (ii) the Fund, in fulfilling its function at the center of the system, must ensure that its resources are fully safeguarded, including by the adoption and implementation of appropriate policies by members supported by use of the Fund’s general resources, and that its resources are provided on a temporary basis, thereby ensuring that its resources revolve; and (iii) the Fund must hold a level of usable assets that are sufficient to protect the liquidity and immediate usability of members’ claims on the Fund, so as to maintain members’ confidence in and support of the institution.

7. In its consideration of the size of the increase in quotas, the Executive Board has taken into account a range of factors, including the growth of world trade and payments since 1990; the scale of potential payments imbalances, including imbalances that may stem from sharp changes in capital flows; the prospective demand for Fund resources, including the need for the Fund to support members’ growth-oriented adjustment programs, which, in many cases, may involve far-reaching economic and structural reforms; and the rapid globalization and the associated liberalization of trade and payments, including on capital account, that has characterized the development of the world economy since the last increase in quotas was agreed in 1990. The Executive Board has also considered the Fund’s current and prospective liquidity position, and has also taken into account the adequacy of the Fund’s borrowing arrangements, in particular the General Arrangements to Borrow (GAB) and the prospective coming into effect of the New Arrangements to Borrow (NAB). These borrowing arrangements are an important buttress to the Fund’s liquidity but are not a substitute for larger quotas. The Executive Board reiterated its view that the Fund should continue to rely on its quota resources as its principal form of financing and should resort to borrowing only in exceptional circumstances.

In its consideration of the prospective demand for the Fund’s resources in the context of the globalized economy, the Executive Board stressed that members should approach the Fund at an early stage of their balance of payments difficulties, and take all appropriate steps to maintain the confidence of markets, not only through the pursuit of adequate and transparent policy actions but also through the timely and transparent provision of economic and financial information to the markets.

8. In the light of these considerations, and taking into account the agreement reached by the Executive Board at the Annual Meetings in Hong Kong which was endorsed by the Interim Committee at its meeting on September 21, 1997 in Hong Kong, the Executive Board now proposes to the Board of Governors that the present total of Fund quotas be increased by 45 percent, from approximately SDR 146 billion to approximately SDR 212 billion.

9. As regards the distribution of the overall increase in quotas, the Executive Board has been guided by the views of the Interim Committee as expressed in its Communiqués of April and September 1997, and summarized in paragraph 4 above.

10. In reaching the agreement on the size and distribution of the increase in quotas, Directors confirmed that there was no intention to re-open the issues of the size and composition of the Executive Board, and that the existing representation of developing countries should not be affected.

11. The Executive Board also proposes adjustments in the quotas of France, Germany, Italy, and the United Kingdom in a manner that would maintain unchanged the increases in quotas for all other members as determined under paragraph 4 above. The Executive Board notes that the United Kingdom and France have agreed to maintain the equal distribution of quotas between themselves under the Eleventh General Review as first agreed under the Ninth General Review.

12. The Executive Board proposes that the quotas determined in paragraph 4 above be rounded to the nearest multiple of SDR 0.1 million. The quotas proposed under the Eleventh Review for those members that have not yet consented or paid for their proposed increase in quotas under the Ninth Review (Resolution 45-2 of the Board of Governors) have been calculated on the basis of their proposed Ninth Review quotas.

13. The list of proposed quotas for all members is to be found in the Annex to the draft Resolution proposed for adoption by the Board of Governors.

14. Under the proposed Resolution, a member that does not have overdue obligations with respect to purchases, charges or assessments to the General Resources Account will be able to consent to the amount of quota proposed for it in the Annex to the proposed Resolution. The member will be able to consent to the increase in its quota at any time before 6:00 p.m., Washington time, January 29, 1999. In order to meet this deadline, the member will have to have completed before that date whatever action may be necessary under its laws to enable it to give its consent. The Executive Board is authorized by paragraph 4 of the proposed Resolution to extend the period of consent.

15. A member’s quota cannot be increased until it has consented to the increase and paid the subscription. Under the proposed Resolution, the increase in a member’s quota will take effect only after the Fund has received the member’s consent to the increase in quota and the member has paid the increase in subscription, provided that the quota increase cannot become effective before the date on which the Fund determines that the participation requirement in paragraph 3 of the proposed Resolution has been satisfied. The participation requirement in paragraph 3 of the proposed Resolution will be reached when the Fund determines that members having not less than 85 percent of the total of quotas on December 23, 1997 have consented to the increases in their respective quotas as set out in the Annex.

16. Taking into consideration the situation of members that may still wish to consent to or pay for their quota increases under the Ninth Review, the Executive Board recommends that the periods for consent and payment for quota increases under the Ninth Review be extended until the date when the participation requirement in paragraph 3 of the proposed Resolution on the Eleventh Review has been reached. Such extension of the periods of consent and payment for quota increases under the Ninth Review is provided for in paragraph 7 of the proposed Resolution.

17. The proposed Resolution provides that a member must pay the increase in its subscription within 30 days after (a) the date on which the member notifies the Fund of its consent, or (b) the date on which the participation requirement is met, whichever is the later. A member may not make such a payment unless it is current in its obligations with respect to repurchases, charges and assessments to the General Resources Account. The Executive Board is authorized in paragraph 5 of the proposed Resolution to extend the period for payment.

18. The Executive Board has agreed that, when considering any extension of the period for consent or payment, it shall give particular consideration to the situation of members that may still wish to consent to or pay for the increase in quota, including those members with protracted arrears to the General Resources Account, consisting of overdue repurchases, charges, or assessments to the General Resources Account, that are judged to be cooperating with the Fund toward the settlement of these obligations.

19. Article III, Section 3(a) provides that 25 percent of any increase in quota shall be paid in special drawing rights, but permits the Board of Governors to prescribe, inter alia, that this payment may be made on the same basis for all members, in whole or in part, in the currencies of other members specified by the Fund, subject to their concurrence. Paragraph 8 of the Resolution provides that 25 percent of the increase in quotas proposed as a result of the current review should be paid in SDRs or in currencies of other members selected by the Fund, subject to their concurrence, or in any combination of SDRs and such currencies. The balance of the increase shall be paid in a member’s own currency. A reserve asset payment will help strengthen the liquidity of the Fund and will not impose an undue burden on members because under the existing decisions of the Fund, a reserve asset payment will either enlarge or create a reserve tranche position of an equivalent amount. In addition, the Fund stands ready to assist members that do not hold sufficient reserves to make their reserve asset payments to the Fund to borrow SDRs from other members willing to cooperate; these loans would be made on the condition that such members would repay on the same day the loans from the SDR proceeds of drawings of reserve tranche positions which had been established by the payment of SDRs.

20. The Executive Board recommends that the Board of Governors adopt the attached Resolution that covers all the matters on which the Governors are requested to act. The adoption of the Resolution requires positive responses from Governors having an 85 percent majority of the total voting power.

Proposed Resolution of the Board of Governors1

Whereas the Executive Board has submitted to the Board of Governors a report entitled “Increases in Quotas of Fund Members—Eleventh General Review” containing recommendations on increases in the quotas of individual members of the Fund; and

Whereas the Executive Board has recommended the adoption of the following Resolution of the Board of Governors, which Resolution proposes increases in the quotas of members of the Fund as a result of the Eleventh General Review of Quotas and deals with certain related matters, by vote without meeting pursuant to Section 13 of the By-Laws of the Fund;

Now, therefore, the Board of Governors hereby resolves that:

1. The International Monetary Fund proposes that, subject to the provisions of this Resolution, the quotas of members of the Fund shall be increased to the amounts shown against their names in the Annex to this Resolution.

2. A member’s increase in quota as proposed by this Resolution shall not become effective unless the member has notified the Fund of its consent to the increase not later than the date prescribed by or under paragraph 4 below and has paid the increase in quota in full within the period prescribed by or under paragraph 5 below, provided that no member with overdue repurchases, charges or assessments to the General Resources Account may consent to or pay for the increase in its quota until it becomes current in respect of these obligations.

3. No increase in quotas shall become effective before the date of the Fund’s determination that members having not less than 85 percent of the total of quotas on December 23, 1997 have consented to the increases in their quotas.

4. Notices in accordance with paragraph 2 above shall be executed by a duly authorized official of the member and must be received in the Fund before 6:00 p.m., Washington time, January 31, 2000, provided that the Executive Board may extend this period as it may determine.1

5. Each member shall pay to the Fund the increase in its quota within 30 days after the later of (a) the date on which it notifies the Fund of its consent, or (b) the date of the Fund’s determination under paragraph 3 above, provided that the Executive Board may extend the payment period as it may determine.

6. When deciding on an extension of the period for consent to or payment for the increase in quotas, the Executive Board shall give particular consideration to the situation of members that may still wish to consent to or pay for the increase in quota, including members with protracted arrears to the General Resources Account, consisting of overdue repurchases, charges or assessments to the General Resources Account, that, in its judgment, are cooperating with the Fund toward the settlement of these obligations.

7. For members that have not yet consented to their increases in quotas under the Ninth Review, the period for consent to such quota increases shall extend to the date determined under paragraph 3 above. For members that have not yet paid for their quota increases under the Ninth Review, the period for payment for such quota increases shall extend to 30 days after the date determined under paragraph 3 above.

8. Each member shall pay 25 percent of its increase either in special drawing rights or in the currencies of other members specified, with their concurrence, by the Fund, or in any combination of special drawing rights and such currencies. The balance of the increase shall be paid by the member in its own currency.

ANNEX

Members and Proposed Quotas(In millions of SDRs)
1. Afghanistan, Islamic

State of
161.92. Albania48.7
3. Algeria1,254.74. Angola286.3
5. Antigua and Barbuda13.56. Argentina2,117.1
7. Armenia92.08. Australia3,236.4
9. Austria1,872.310. Azerbaijan160.9
11. Bahamas, The130.312. Bahrain135.0
13. Bangladesh533.314. Barbados67.5
15. Belarus386.416. Belgium4,605.2
17. Belize18.818. Benin61.9
19. Bhutan6.320. Bolivia171.5
21. Bosnia and

Herzegovina
169.122. Botswana63.0
23. Brazil3,036.124. Brunei Darussalam215.2
25. Bulgaria640.226. Burkina Faso60.2
27. Burundi77.028. Cambodia87.5
29. Cameroon185.730. Canada6,369.2
31. Cape Verde9.632. Central African

Republic
55.7
33. Chad56.034. Chile856.1
35. China4,687.236. Colombia774.0
37. Comoros8.938. Congo, Democratic

Republic of the
533.0
39. Congo, Republic of84.640. Costa Rica164.1
41. Côte d’Ivoire325.242. Croatia365.1
43. Cyprus139.644. Czech Republic3
45. Denmark1,642.846. Djibouti15.9
47. Dominica8.248. Dominican Republic218.9
49. Ecuador302.350. Egypt943.7
51. El Salvador171.352. Equatorial Guinea32.6
53. Eritrea15.954. Estonia65.2
55. Ethiopia133.756. Fiji70.3
57. Finland1,263.858. France10,738.5
59. Federal Republic of

Yugoslavia

(Serbia/Montenegro) 1/
467.760. Gabon154.3
61. Gambia, the31.162. Georgia150.3
63. Germany13,008.264. Ghana369.0
65. Greece823.066. Grenada11.7
67. Guatemala210.268. Guinea107.1
69. Guinea-Bissau14.270. Guyana90.9
71. Haiti81.972. Honduras129.5
73. Hungary1,038.474. Iceland117.6
75. India4,158.276. Indonesia2,079.3
77. Iran, Islamic

Republic of
1,497.278. Iraq1,188.4
79.1reland838.480. Israel928.2
81. Italy7,055.582. Jamaica273.5
83. Japan13,312.884. Jordan170.5
85. Kazakhstan365.786. Kenya271.4
87. Kiribati5.688. Korea1,633.6
89. Kuwait1,381.190. Kyrgyz Republic88.8
91. Lao People’s

Democratic Republic
52.992. Latvia126.8
93. Lebanon203.094. Lesotho34.9
95. Liberia129.296. Libya1,123.7
97. Lithuania144.298. Luxembourg279.1
99. Macedonia, former

Yugoslav Republic of
68.9100. Madagascar122.2
101. Malawi69.4102. Malaysia1,486.6
103. Maldives8.2104. Mali93.3
105. Malta102.0106. Marshall Islands3.5
107. Mauritania64.4108. Mauritius101.6
109. Mexico2,585.8110. Micronesia, Federal States of5.1
111. Moldova123.2112. Mongolia51.1
113. Morocco588.2114. Mozambique113.6
115. Myanmar258.4116. Namibia136.5
117. Nepal71.3118. Netherlands5,162.4
119. New Zealand894.6120. Nicaragua130.0
121. Niger65.8122. Nigeria1,753.2
123. Norway1,671.7124. Oman194.0
125. Pakistan1,033.7126. Palau, Republic of3.1
127. Panama206.6128. Papua New Guinea131.6
129. Paraguay99.9130. Peru638.4
131. Philippines879.9132. Poland1,369.0
133. Portugal867.4134. Qatar263.8
135. Romania1,030.2136. Russia5,945.4
137. Rwanda80.1138. Samoa11.6
139. San Marino17.0140. Sao Tomé and

Principe
7.4
141. Saudi Arabia6,985.5142. Senegal161.8
143. Seychelles8.8144. Sierra Leone103.7
145. Singapore862.5146. Slovak Republic357.5
147, Slovenia231.7148. Solomon Islands10.4
149. Somalia81.7150. South Africa1,868.5
151. Spain3,048.9152. Sri Lanka413.4
153. St. Kitts and Nevis8.9154. St. Lucia15.3
155. St. Vincent and the

Grenadines
8.3156. Sudan315.1
157. Suriname92.1158. Swaziland50.7
159. Sweden2,395.5160. Switzerland3,458.5
161. Syrian Arab

Republic
293.6162. Tajikistan87.0
163. Tanzania198.9164. Thailand1,081.9
165. Togo73.4166. Tonga6.9
167. Trinidad and

Tobago
335.6168. Tunisia286.5
169. Turkey964.0170. Turkmenistan75.2
171. Uganda180.5172. Ukraine1,372.0
173. United Arab

Emirates
611.7174. United Kingdom10,738.5
175. United States37,149.3176. Uruguay306.5
177. Uzbekistan275.6178. Vanuatu17.0
179. Venezuela2,659.1180. Vietnam329.1
181. Yemen, Republic

of
243.5182. Zambia489.1
183. Zimbabwe353.4184.

Adopted by the Board of Governors, effective January 30, 1998, and designated Resolution No. 53–2.

The Executive Board extended this period until 6:00 p.m., Washington time, on January 31, 2002 (Decision No. 12533-(00/76), July 18, 2001). The period was further extended to July 31, 2002 (Decision No. 12672-(02/11), January 31, 2002).

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