ANNEX II: Main Features of the Ninth General Review of Quotas
- International Monetary Fund
- Published Date:
- November 2005
On June 28, 1990, the IMF’s Board of Governors adopted a resolution calling for a 50 percent increase in IMF quotas, from SDR 90,132.55 million to SDR 135,214.7 million (from about $125 billion to about $185 billion). (Since then, a number of countries have joined the IMF, and quotas of current members as of June 1, 1992 amount to SDR 96,053.05 million. Proposed quotas of current members under the Ninth Review would amount to SDR 143,969.1 million.) The agreed increase in the size of the IMF reflects the Interim Committee’s restatement at its September 1989 meeting of the central role of the IMF in the international monetary system, the need for the IMF to be adequately endowed so as to maintain an effective presence at the center of the system, and to preserve its basic monetary character. The IMF’s Executive Board agreed that this character must be preserved by ensuring that the IMF would continue to provide balance of payments assistance on a temporary basis, that its resources revolve, and that it would continue to hold a level of usable assets sufficient to protect the liquidity and immediate usability of members’ claims, thereby maintaining members’ confidence in and support of the institution. The accompanying table indicates the amounts of Eighth Review quotas and those proposed under the Ninth Review for current members and prospective members with approved membership resolutions as of June 1, 1992.
Distribution of the Quota Increase
The distribution of the overall increase in quotas was guided by the principles agreed by the Interim Committee at its meetings in April and September 1989. At the latter meeting, the Committee reiterated 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 among the IMF’s membership and the IMF’s effectiveness in fulfilling its systemic responsibilities, including its role in the strengthened debt strategy. In order to provide all members with a meaningful increase in quotas and to help maintain a balance between different groups of countries, 60 percent of the overall increase in quotas would be distributed to all members in proportion to their current individual quotas. The remaining 40 percent would be distributed in proportion to members’ shares in the total of the "calculated quotas," in order to bring members’ quotas more in line with their relative economic positions. The calculated quotas serve as broad measures of members’ relative positions in the world economy and were derived from a set of five formulas using economic data relating to members’ gross domestic product, current account transactions, the variability of current receipts, and official reserves.
The quota of Japan, after being increased as described above, would be raised further (to be equal to that of Germany), and the increases in the quotas of the other Group of Seven countries (Canada, France, Germany, Italy, the United Kingdom, and the United States) would be adjusted in a manner that would maintain unchanged the increases in quotas for all other IMF members. France and the United Kingdom agreed to an equal distribution of quotas between themselves under the present quota review, as well as in subsequent reviews.
On the basis of these adjustments, assuming all members consented to the increases in quotas that have been proposed for them, the United States would remain the largest shareholder in the IMF, with 19.62 percent of total quotas. Germany and Japan would be the next largest, each with 6.1 percent, followed by France and the United Kingdom, each with 5.48 percent. At present, the United Kingdom is the second largest shareholder, followed by Germany, France, and Japan. Saudi Arabia would have a quota share of 3.79 percent, Italy a share of 3.4 percent, and Canada a share of 3.2 percent. (All of these shares refer to total quotas of members on May 30, 1990. Since then these shares have changed because new members have joined the IMF.)
The quotas of four countries (Antigua and Barbuda, Bhutan, Maldives, and Seychelles), which at present have very small quotas of less than SDR 10 million, would be raised by additional amounts so that their shares in the total of new quotas are equal to their shares in the total of calculated quotas.
The proposed quotas determined as indicated above were rounded to the next higher multiple of SDR 0.1 million, except that quotas of members with present quotas of SDR 10 million or less were rounded to the next higher multiple of SDR 0.5 million.
Period of Consent
Under the quota resolution, members had until December 31, 1991 to consent to the proposed increases in their quotas. This period, however, was extended by the IMF’s Executive Board by six months to June 30, 1992. Members with overdue obligations to the General Resources Account of the IMF may not consent to the proposed increases until they become current.
Effective Date of the Quota Increase
Under the quota resolution, no increase in quotas could become effective before the date the IMF determined that during the period ended December 30, 1991 members having at least 85 percent of the total of quotas on May 30, 1990 had consented to the increases proposed for them, and thereafter that members having not less than 70 percent of the total of quotas had so consented. As mentioned above, in December 1991 the Executive Board decided to extend by six months to June 30, 1992 the date by which IMF members must consent to the proposed increases in their quotas. As of early February 1992, the 70 percent requirement had been met.
Also, in accordance with the understandings reached by the Interim Committee at its May 1990 meeting, no increase in quota under the Ninth Review will become effective before the effective date of the Third Amendment of the Articles of Agreement. Acceptances from three fifths of the present membership having 85 percent of the total voting power are required for the Third Amendment to become effective. This amendment provides for the suspension of voting and related rights of members that fail to fulfill their obligations under the Articles.
Period of Payment
A member’s quota cannot be increased until payment has been made for the increase. A member must pay the increase in its quota within 30 days after the date on which the member notifies the IMF of its consent or the date of the determination by the IMF that the requirements for the quota increases to become effective, as discussed above, have been met, whichever is later. The IMF’s Executive Board may extend the period of payment. A member may not make such payment unless it is current in its obligations to the General Resources Account of the IMF.
Method of Payment
Members have to pay 25 percent of the increase in quotas in SDRs or in currencies of other members acceptable to the IMF with their concurrence (or in a combination of the two). The remainder is to be paid in the member’s own currency.
If a member does not have sufficient reserves to make its reserve asset payment to the IMF, the IMF will arrange for it to borrow SDRs from other members that are willing to cooperate, provided that the borrower would repay the loans on the same day from the SDR proceeds of the drawing of its reserve tranche position in the IMF that had been established by the payment of SDRs.
Timing of the Next Review
In accordance with the IMF’s Articles, the Board of Governors must conduct the Tenth General Review of Quotas not later than March 31, 1993. On March 31, 1992, a Committee of the Whole of the IMF’s Executive Board was established for the Tenth Review of Quotas.
|Eighth Review||Ninth Review|
|Actual Quota||Voting Power||Agreed Quota||Voting Power|
|Country||(Million SDRs)||(No. of votes)||(Shares in percent)||(Million SDRs)||(No. of votes)||(Shares in percent)|
|Iran, Islamic Rep. of||660.0||6,850||0.673||1,078.5||11,035||0.734|
|United Arab Emirates||202.6||2,276||0.224||392.1||4,171||0.277|
|Trinidad and Tobago||170.1||1,951||0.192||246.8||2,718||0.181|
|Syrian Arab Rep.||139.1||1,641||0.161||209.9||2,349||0.156|
|Yemen, Rep. of||120.5||1,455||0.143||176.5||2,015||0.134|
|Papua New Guinea||65.9||909||0.089||95.3||1,203||0.080|
|Central African Rep.||30.4||554||0.054||41.2||662||0.044|
|Lao People's Dem. Rep.||29.3||543||0.053||39.1||641||0.043|
|Antigua and Barbuda||5.0||300||0.029||8.5||335||0.022|
|Sao Tome and Principe||4.0||290||0.029||5.5||305||0.020|