The IMF is a financial cooperative, in some ways like a credit union. On joining, each member country pays in a subscription, called its “quota.” A country’s quota is broadly determined by its economic position relative to other members and takes into account members’ GDP, current account transactions, and official reserves. Quotas (see box, below) define members’ financial and organizational relations in the IMF.
What are quotas?
A member’s quota defines the basis of its relationship with the IMF.
Subscription: A member’s IMF quota is equivalent to its subscription in the organization. A member must pay its subscription in full: up to 25 percent in the form of international reserve assets specified by the IMF (SDRs or widely accepted foreign currencies, such as U.S. dollars, euros, Japanese yen, or pounds sterling) and the rest in its own currency.
Voting power: Each IMF member has 250 basic votes plus 1 additional vote for each SDR 100,000 of quota. Thus, the quota defines a member’s voting power in the IMF.
Access to financing: The amount of financing a member can obtain from the IMF (access limits) is generally based on its quota.
Allocation of SDRs: Members’ shares in SDR allocations are set in proportion to their quotas.
The combined capital subscriptions of the IMF’s members form a pool of resources, which the IMF uses to help countries experiencing temporary financial difficulties. An adequate level of resources allows the IMF to provide balance of payments financing to support members implementing economic and financial reform programs.
At regular intervals of not more than five years, the IMF’s Executive Board reviews members’ quotas and decides—in light of developments in the global economy and changes in members’ economic positions relative to other members—whether to propose an adjustment of their quotas to the Board of Governors. A member may also request an adjustment of its own quota at any time. Recently, China requested an adjustment, resulting in an increase of its quota from SDR 4,687.2 million to SDR 6,369.2 million.
In 1998, the IMF’s Board of Governors, at the completion of the Eleventh General Review of Quotas, proposed increasing total quotas by 45 percent, from SDR 146 billion (about $200 billion at the time) to SDR 212 billion (about $290 billion at the time). Its decision was based on the expansion of the world economy since quotas were last increased in 1990; the scale of potential payments imbalances; the rapid globalization and liberalization of trade and payments, including the capital account; and the IMF’s current and prospective liquidity needs and the adequacy of its financing arrangements.
The distribution of the overall quota increase was largely equiproportional—that is, 75 percent of the increase was distributed to all members in proportion to existing quotas. Another 15 percent was distributed in proportion to members’ shares derived from formulas that measure a country’s relative position in the world economy on the basis of GDP, current account transactions, and official reserves (called “calculated quotas”).
The remaining 10 percent was distributed to address the most important anomalies in the quota distribution—that is, to members whose shares in calculated quotas most exceeded their shares in actual quotas.
IMF quotas (million SDRs)
|Member||Aug. 15,2000||Aug. 20, 2001|
|Afghanistan, Islamic State of||120.4||120.4|
|Antigua and Barbuda||13.5||13.5|
|Bosnia and Herzegovina||169.1||169.1|
|Central African Rep.||55.7||55.7|
|Congo, Dem. Rep. of the||291.0||291.0|
|Congo, Republic of||84.6||84.6|
|Iran, Islamic Rep. of||1,497.2||1,497.2|
|Lao People’s Dem. Rep.||39.1||52.9|
|Micronesia, Fed. States of||5.1||5.1|
|Palau, Rep. of||3.1||3.1|
|Papua New Guinea||131.6||131.6|
|St. Kitts and Nevis||8.9||8.9|
|St. Vincent and the Grenadines||8.3||8.3|
|Sao Tome and Principe||7.4||7.4|
|Syrian Arab Rep.||293.6||293.6|
|Trinidad and Tobago||335.6||335.6|
|United Arab Emirates||611.7||611.7|
|Yemen, Rep. of||243.5||243.5|
|Yugoslavia, Fed. Rep. of||–||467.7|
As of April 30, 2001, 174 member countries (accounting for more than 99 percent of total quotas proposed in 1998 under the Eleventh General Review of Quotas) had consented to and paid for their quota increases, substantially increasing the resources the IMF has at its disposal. In July 2001, the Executive Board approved an extension that gave members until January 31, 2002, to consent to and pay for their quota increases under the Eleventh Review.
In December 2000, the Federal Republic of Yugoslavia (Serbia/Montenegro) met the requirements to succeed to the membership of the former Socialist Federal Republic of Yugoslavia, with a quota of SDR 467.7 million.
During the financial year, the Executive Board reviewed the formulas used to calculate member quotas, with a view to simplifying them and updating them to reflect developments in the world economy, including the growing role of financial markets. After considering the recommendation of a panel of independent experts from outside the IMF, the Board concluded that the recommended formula would concentrate quotas in the largest IMF members even more and agreed to await the outcome of additional analysis by the IMF staff. A first discussion of the staff’s report is planned for September 2001.