Book
Share
IMF History (1972-1978) Volume 3
Chapter

Increases in Quotas of Members—Sixth General Review

Author(s):
International Monetary Fund
Published Date:
February 1996
Share
  • ShareShare
Show Summary Details

Under the Articles of Agreement, the Sixth General Review of Quotas had to be completed by February 9, 1975, the date that was not more than five years after the Fifth General Review. However, a number of problems, including the Fund’s practice under its existing Articles for members to pay in gold part of the subscription due when quotas were increased, had to be resolved before the Sixth General Review could be completed. The resolution of these problems would require amending the Articles. As of January 1975, the Executive Directors were not in a position to make a recommendation on the Sixth General Review of Quotas, and they asked the Board of Governors to adopt a resolution merely noting that the quota review was in progress. On March 4, 1975 the Board of Governors adopted such a resolution.

On February 19, 1976, the Executive Directors sent to the Board of Governors their report on the Sixth General Review of Quotas. The Board of Governors adopted a resolution approving the report on March 22, 1976. The quota increases approved under this resolution could not, however, take effect until the Second Amendment of the Articles went into force on April 1, 1978. On that date, the new quota increases went into effect for all consenting members.

Report of the Executive Directors to the Board of Governors (February 19, 1976)

1. Article III, Section 2 of the present Articles of Agreement provides that “The Fund 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.” This report and the attached Resolution on increases in quotas under the current, i.e., the sixth, general review are submitted to the Board of Governors, the organ competent under the Articles to deal with adjustments of quotas, in accordance with Article III, Section 2.

2. The subject of the adjustment of quotas, including the need for and the size of an increase in the total of quotas, the distribution of the total increase among members, and the mode of payment of the subscriptions on such increases has been under consideration both by the Executive Directors and by the Interim Committee of the Board of Governors on the International Monetary System. The Interim Committee considered the subject at its meeting in January 1975 and reached understandings on a number of the main issues. These understandings, which were set forth in paragraph 5 of the communiqué issued by the Committee at the conclusion of that meeting, were as follows:

The Committee considered questions relating to the sixth general review of the quotas of members, which is now under way, and agreed, subject to satisfactory amendment of the Articles, that the total of present quotas should be increased by 32.5 per cent and rounded up to SDR 39 billion. It was understood that the period for the next general review of quotas would be reduced from five years to three years. The Committee also agreed that the quotas of the major oil exporters should be substantially increased by doubling their share as a group in the enlarged Fund, and that the collective share of all other developing countries should not be allowed to fall below its present level. There was a consensus that because an important purpose of increases in quotas was strengthening the Fund’s liquidity, arrangements should be made under which all the Fund’s holdings of currency would be usable in accordance with its policies. The Committee invited the Executive Directors to examine quotas on the basis of the foregoing understandings, and to make specific recommendations as promptly as possible on increases in the quotas of individual member countries.

3. On the basis of a report of the Executive Directors on the progress made toward implementation of the understandings reached by the Interim Committee at its January 1975 meeting, the Board of Governors adopted in March 1975 the following Resolution [No. 30-1]:

Resolved:

That the Board of Governors, having noted the report of the Executive Directors entitled “Increases in Quotas of Members—Sixth General Review,” continues its review under Article III, Section 2, and requests the Executive Directors to continue as promptly as possible their work on this matter on the basis of the understandings reached by the Interim Committee at its second meeting and to submit to the Board, after consideration by the Interim Committee, proposals on increases in the quotas of members and on the mode of payment of the subscriptions payable in respect of these increases.

4. At its meeting in Paris in June 1975 the Interim Committee considered again the subject of increases in quotas. The understandings reached at that meeting were stated in paragraph 9 of the communiqué issued at the end of the meeting:

The Committee considered the report of the Executive Directors on the progress made toward implementation of the understandings reached in the Committee last January with regard to increases in the quotas of members as a result of the Sixth General Review of Quotas. The Committee noted with satisfaction that progress had been made in reaching agreement on quota increases to be proposed for individual countries. The Committee agreed that for the quota increases proposed as a result of this review, and subject to the amendment of the Articles, members should be given an option to pay 25 per cent of the increase in quota (which in the past members have had to pay in gold) in special drawing rights (SDRs), the currencies of certain other members, subject to their concurrence, or in the paying member’s own currency. The question of payment in gold by agreement with the Fund would be settled as part of the provisions on gold. The balance of the increase in subscription would be paid, as in the past, in the paying member’s own currency. The Committee also recommended that there should be no obligation for a member to repurchase the amount of its own currency paid in excess of 75 per cent of the increase in its quota. The Executive Directors have been asked to prepare and submit as promptly as possible to the Board of Governors, for consideration at is annual meeting in September 1975, a resolution that will include proposed increases in the quotas of individual members and provisions on the payment of corresponding subscriptions on the basis of the understandings reached by the Committee.

5. The discussion of the subject of quotas by the Interim Committee at its meeting in Washington on August 31, 1975 is reflected in the following passage from the Committee’s communiqué of August 31:

The Committee noted the progress made by the Executive Directors on the Sixth General Review of Quotas within the framework of the understandings reached at previous meetings of the Committee. The Committee noted the agreement on increases in the quotas of almost all members. In particular, the increases for the industrial countries and for the major oil exporting members have been agreed. The differences that remain among the other members are few and are expected to be resolved soon. The Committee asked the Executive Directors to prepare and submit to the Board of Governors a resolution on increases in the quotas of individual members. The Committee also asked the Executive Directors to complete their work on the mode of payment of the increases in quotas on the basis of the understandings already reached in the Committee so that appropriate recommendations can be submitted to the Board of Governors at the same time as the resolution on increases in quotas.

6. At the 1975 Annual Meeting of the Board of Governors of the Fund, the Board of Governors adopted the following Resolution [No. 30-3]:

Resolved:

That the Board of Governors, having noted the report of the Executive Directors entitled “Increases in Quotas of Members—Sixth General Review,” dated August 22, 1975, and having endorsed the understandings reached so far by the Interim Committee on this subject, continues its review under Article III, Section 2 and requests the Executive Directors to complete as promptly as possible their work on this matter, on increases in individual quotas, and on the mode of payment of subscriptions in respect of them, and to submit appropriate proposals to the Board of Governors, after consideration of them by the Interim Committee.

7. The Interim Committee’s discussion of the subject of quotas at its meeting in Jamaica in January 1976 is reflected in the following passage from the Committee’s communiqué dated January 8, 1976:

The Committee endorsed the recommendations contained in the report of the Executive Directors on the Sixth General Review of Quotas and the proposed resolution on increases in the quotas of individual members to be submitted to the Board of Governors for its approval. In this connection, the Committee reaffirmed its view that the Fund’s holdings of each currency should be usable in the Fund’s operations and transactions in accordance with its policies. Appropriate provisions for this purpose will be included in the draft amendments of the Fund’s Articles. To give effect to the Committee’s view in the period before the amendments become effective, it was agreed that, within six months after the date of the adoption of this resolution, each member shall make arrangements satisfactory to the Fund for the use of the member’s currency in the operations and transactions of the Fund in accordance with its policies, provided that the Executive Directors may extend the period within which such arrangements shall be made.

8. The proposed increases in quotas cannot take effect until the second amendment of the Articles has become effective. The Executive Directors have agreed that they will propose to the Board of Governors, as part of a comprehensive amendment, provisions under which a member which consents to an increase in its quota would have to pay to the Fund twenty-five per cent of the increase in special drawing rights. The Board of Governors would be able, however, to prescribe that this payment could be made, on the same basis for all members, in whole or in part in the currencies of other members specified, with their concurrence, by the Fund, or in the member’s own currency. A nonparticipant would have to pay in the currencies of other members specified by the Fund, with their concurrence, a proportion of the increase corresponding to the proportion to be paid in special drawing rights by participants. The balance of the increase would be paid by the member in its own currency. An eighty-five per cent majority of the total voting power would be required for any decision relating to the payment of increases in quotas, except for the determination of a period and the specification of currencies to be paid.

9. The Executive Directors are agreed, reflecting the understandings reached at the third meeting of the Interim Committee and endorsed by the Board of Governors, that for increases in quotas proposed as a result of the current review, members will have an option to pay the former “gold” portion of the increases in SDRs, the currencies of other members specified by the Fund, subject to their concurrence, or in the members’ own currencies without an obligation to repurchase. If it were considered desirable to permit members to pay part or all of this portion of the increases in gold by agreement with the Fund, it would be necessary for the Fund to decide, under the amended Articles, to accept payments from members in gold in connection with the current general review of quotas. A general decision or individual decisions for each proposed payment in gold could be taken by the Executive Directors. An eighty-five per cent majority of the total voting power would be required. The payments would be at a price agreed for each operation on the basis of prices in the market. (Draft Article V, Section 12(b) and (d)) [Second Amendment]

10. Once the amended Articles have become effective, all members’ currencies will be usable in accordance with the policies of the Fund. (Draft Article V, Section 3(d)) [Second Amendment] To give effect to the agreement reached in the Interim Committee on the desirability of arrangements under which all the Fund’s holdings of currency would be usable in accordance with its policies in the period before amendment, the Resolution provides in paragraph 4 that, within six months after the date of the adoption of the Resolution, members shall make arrangements satisfactory to the Fund for the use of their currencies in the operations and transactions of the Fund in accordance with the Fund’s policies. The Executive Directors would be able to extend the period within which such arrangements shall be made.

11. The draft Resolution does not provide for increases by fixed installments as was possible under Resolutions regarding earlier quinquennial reviews. A member will be able, however, to consent to an increase smaller than the maximum provided for, but the increase consented to should be a whole number in millions of SDRs. Within the period for consent under paragraph 5 of the Resolution, the member will be able to consent to further increases, up to the maximum provided for, at a later date, as was possible under earlier Resolutions. Payments would have to correspond to the increases consented to.

12. The increase in a member’s quota under the Resolution will take effect on the latest of four relevant dates: the member’s consent to the increase in quota, the payment of the increase in its subscription, the date on which the second amendment becomes effective, and the date on which the Fund determines that the participation requirement in paragraph 2 of the Resolution has been satisfied. Under that paragraph, the required degree of participation is reached when the Fund determines that members having not less than three fourths of the total of quotas on February 19, 1976 have consented to increases in their quotas. In determining whether this degree of participation has been reached, the Fund will take into account all consents to increases, whether they be increases to the maximum amount provided for or to a smaller amount. In order to give members time to take any necessary legislative action as well as to make arrangements to pay the increased subscriptions, it is provided that a member may consent to the increase in its quota at any time up to the end of one month following the effective date of the second amendment. If circumstances warrant, the Executive Directors may extend the period for consent.

13. The Executive Directors have determined that a member must pay the increase in its subscription within sixty days after the date on which the member notifies the Fund of its consent, or the effective date of the second amendment, or the date on which the participation requirement is met, whichever is latest. This requirement appears in paragraph 6 of the proposed Resolution.

14. In accordance with the understanding reached by the Interim Committee at its meeting in January 1975, the Resolution provides that the next general review of quotas will be completed by February 9, 1978.

15. The Executive Directors recommend the adoption of the attached Resolution. This Resolution is designed to enable the Board of Governors to vote at one time on all matters connected with the increases in quotas under the Resolution.

Resolution Submitted to the Board of Governors

Whereas the Executive Directors have considered the adjustment of the quotas of members in accordance with the resolution of the Board of Governors of the International Monetary Fund at its 1975 Annual Meeting:

That the Board of Governors, having noted the report of the Executive Directors entitled “Increases in Quotas of Members—Sixth General Review,” dated August 22, 1975, and having endorsed the understandings reached so far by the Interim Committee on this subject, continues its review under Article III, Section 2 and requests the Executive Directors to complete as promptly as possible their work on this matter on increases in individual quotas and on the mode of payment of subscriptions in respect of them and to submit appropriate proposals to the Board of Governors, after consideration of them by the Interim Committee;

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

Whereas the Interim Committee of the Board of Governors on the International Monetary System has endorsed the recommendations contained in the report of the Executive Directors; and

Whereas the Executive Directors have been requested to prepare and submit to the Board of Governors as soon as possible proposals to amend the Articles of Agreement of the Fund, including a proposal for the modification of the provisions relating to the payment of increases in quotas; and

Whereas the Executive Directors have recommended the adoption of the following Resolution of the Board of Governors, which Resolution purposes increases in the quotas of members of the Fund as a result of the sixth 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, provided that any member may consent to an increase in its quota that is smaller than the one shown in the Annex, and may consent thereafter to further increases up to the amount shown against its name in the Annex not later than the date prescribed by or under paragraph 5 below. Each increase shall be a whole number in millions of special drawing rights.

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 5 below and has paid the increase in quota in full, provided that no increase in quota shall become effective before (i) the effective date of the second amendment of the Articles or (ii) the date of the Fund’s determination that members having not less than three fourths of the total of quotas on February 19, 1976 have consented to increases in their quotas, whichever is the later of these dates.

3. A member shall pay twenty-five per cent of the increase in special drawing rights, the currencies of other members specified, with their concurrence, by the Fund, or in the member’s own currency, and shall pay the balance of the increase in its own currency.

4. A member shall, within six months after the date of the adoption of this Resolution, make arrangements satisfactory to the Fund for the use of the member’s currency in the operations and transactions of the Fund in accordance with its policies, provided that the Executive Directors may extend the period within which such arrangements shall be made.

5. 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 not later than one month after the effective date of the second amendment of the Articles, provided that the Executive Directors may extend this period as they may determine.

6. Each member shall pay to the Fund the increase in its quota within sixty days after (a) the date on which it notifies the Fund of its consent or (b) the effective date of the second amendment of the Articles or (c) the date of the Fund’s determination under paragraph 2 (ii) above, whichever is latest.

7. The seventh general review of quotas shall be completed by February 9, 1978.

ANNEX TO RESOLUTION
Proposed

Maximum Quota

(In millions of SDRs)
1. Afghanistan45
2. Algeria285
3. Argentina535
4. Australia790
5. Austria330
6. Bahamas33
7. Bahrain20
8. Bangladesh152
9. Barbados17
10. Belguim890
11. Benin16
12. Bolivia45
13. Botswana9
14. Brazil665
15. Burma73
16. Burundi23
17. Cambodia31
18. Cameroon45
19. Canada1,357
20. Central African Republic16
21. Chad16
22. Chile217
23. China550
24. Colombia193
25. Congo, People’s Republic of the17
26. Costa Rica41
27. Cyprus34
28. Denmark310
29. Dominican Republic55
30. Ecuador70
31. Eqypt228
32. El Salvador43
33. Equatorial Guinea10
34. Ethiopia36
35. Fiji18
36. Finland262
37. France1,919
38. Gabon30
39. Gambia, The9
40. Germany, Federal Republic of2,156
41. Ghana106
42. Greece185
43. Grenada3
44. Guatemala51
45. Guinea30
46. Guyana25
47. Haiti23
48. Honduras34
49. Iceland29
50. India1,145
51. Indonesia480
52. Iran660
53. Iraq141
54. Ireland155
55. Israel205
56. Italy1,240
57. Ivory Coast76
58. Jamaica74
59. Japan1,659
60. Jordan30
61. Kenya69
62. Korea160
63. Kuwait235
64. Laos16
65. Lebanon12
66. Lesotho7
67. Liberia37
68. Libyan Arab Republic185
69. Luxembourg31
70. Malagasy Republic34
71. Malawi19
72. Malaysia253
73. Mali27
74. Malta20
75. Mauritania17
76. Mauritius27
77. Mexico535
78. Morocco150
79. Nepal19
80. Netherlands948
81. New Zealand232
82. Nicaragua34
83. Niger16
84. Nigeria360
85. Norway295
86. Oman20
87. Pakistan285
88. Panama45
89. Papua New Guinea30
90. Paraguay23
91. Peru164
92. Philippines210
93. Portugal172
94. Qatar40
95. Romania245
96. Rwanda23
97. Saudi Arabia600
98. Senegal42
99. Sierra Leone31
100. Singapore110
101. Somalia23
102. South Africa424
103. South Viet-Nam90
104. Spain557
105. Sri Lanka119
106. Sudan88
107. Swaziland12
108. Sweden450
109. Syrian Arab Republic63
110. Tanzania55
111. Thailand181
112. Togo19
113. Trinidad and Tobago82
114. Tunisia63
115. Turkey200
116. Uganda50
117. United Arab Emirates120
118. United Kingdom2,925
119. United States8,405
120. Upper Volta16
121. Uruguay84
122. Venezuela660
123. Western Samoa3
124. Yemen Arab Republic13
125. Yemen, People’s Democratic Republic of41
126. Yugoslavia277
127. Zaire152
128. Zambia141

Resolution No. 31-2, adopted by the Board of Governors effective March 22, 1976.

    Other Resources Citing This Publication