H. Increases in Quotas of Members-Ninth General Review
- International Monetary Fund
- Published Date:
- June 1991
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 deemed it appropriate propose an adjustment, of the quotas of the members.” The five-year period since the completion of the previous review of quotas ended on March 31, 1988. The Board of Governors decided in April 1988 to continue its review and requested the Executive Board to report on this matter and submit appropriate proposals to the Board of Governors not later than April 30, 1989. The Executive Board believes that further consideration is needed of the substantive issues relating to the Ninth Review before it will be in a position to make appropriate recommendations to the Board of Governors. The Executive Board is submitting this report, and the attached draft resolution, to the Board of Governors, the organ competent under the Articles to deal with an adjustment of quotas, in accordance with Article III, Section 2 and Resolution No. 43-1, adopted April 22, 1988.
2. In the course of the past year, the Executive Board has considered all the main elements relating to the Ninth Review. The main issues that have been discussed by Executive Directors are (i) the role of the Fund in the early 1990s; (ii) the size of the overall increase in quotas; (iii) the issues bearing on the distribution of the overall increase, including an examination of the position of the developing countries in the Fund and, in particular, those members with very small quotas; (iv) the question of ad hoc quota increases in the context of the quota review; (v) the mode of payment for the increase in quotas; and (vi) technical issues relating to the economic data and the formulas used to make quota calculations. The Directors have concluded certain technical aspects of their work but they have not concluded their discussions on most of the substantive issues, including the size of the overall increase in quotas, its distribution, and the media of payment for the increased subscriptions. Directors will also continue their discussion of the role of the Fund in the early 1990s. Consequently, the Executive Board is not in a position to make recommendations in time for the Board of Governors to adopt a resolution completing the Ninth General Review by April 30, 1989.
3. The Interim Committee considered the subject of the Ninth General Review during the thirty-first and thirty-second meetings of the Committee in Berlin (West) on September 25-26, 1988, and in Washington on April 3, 1989, respectively. In connection with its latest meeting, the Executive Board submitted a report on the Ninth General Review which outlined the progress made in its work relating to the Ninth General Review and requested guidance from the Committee on the main issues discussed in the report. Paragraph 5 of the communique issued at the conclusion of the meeting reads as follows:
The Committee agreed that the size and distribution of any quota increase should take into account changes in the world economy since the last review of quotas as well as members’ relative positions in the world economy and the need to maintain a balance between different groups of countries, the Fund’s effectiveness in fulfilling its systemic responsibilities, including its role in the strengthened debt strategy, and reduce the Fund’s reliance on borrowing. The Committee urged the Executive Board to complete its work on the Ninth Review with a view to a decision on this matter by the Board of Governors before the end of this year.
A further report on the Ninth General Review will be made to the Interim Committee at its next meeting on September 24, 1989.
4. In the light of the above, and taking into account the conclusion of the Interim Committee as expressed in it latest communique, the Executive Board proposes that the Board of Governors continue its review and that the Executive Board submit a report to the Board of Governors, together with appropriate recommendations regarding the size of the overall increase in quotas, increases in the quotas of individual members, and on the mode of payment of increases in subscriptions, with a view to enable the Board of Governors to complete the Ninth Review by December 31, 1989.
5. In view of the foregoing considerations, it is recommended that the Board of Governors adopt the resolution set forth below:
April 24, 1989
Proposed Resolution of the Board of Governors*
That the Board of Governors having noted the report of the Executive Board entitled Increases in Quotas of Members—Ninth General Review, hereby resolves to continue its review of quotas under Article III, Section 2(a), and requests the Executive Board to complete its work on the Ninth General Review of Quotas with a view to a decision by the Board of Governors on the completion of the Ninth Review before the end of this year.
Adopted by the Board of Governors, effective May 30, 1989, and designated No. 44-1.