Fourteenth General Review of Quotas—Realigning Quota Shares: Initial Considerations Supplement
Author: International Monetary Fund
Publication Date:
24 Mar 2010
eISBN:
9781498337762
ISBN:
9781498337762
Language:
English
Keywords:
PP; quota share; director; share; PPP-GDP share; note purchase agreements; fund member; debt relief; loan commitment; Purchasing power parity; Africa; Global
Download PDF (855.7 KB)

This note provides operational guidance and background information on the use of Fund resources for budgetary financing.

Abstract

This note provides operational guidance and background information on the use of Fund resources for budgetary financing.

I. Members’ Financial Contributions to the Fund

At the September meeting on quota calculations, a number of Executive Directors requested information on members’ financial contributions to the Fund. This chapter seeks to respond to that request. It first briefly discusses the various channels through which members contribute financially to the Fund and how these contributions have been taken into account in quota adjustments. It then reports a range of available data on members’ actual contributions. The data highlight that while all members contribute in some way to the Fund’s financing, there have been important differences in the scale and form of those contributions across the membership.

A. Members’ Financial Contributions and Quotas

1. Members’ financial contributions to the Fund come in a wide variety of forms, reflecting the cooperative nature of Fund membership. These include, among others, commitments to support the Fund’s liquidity through bilateral loan/note purchase agreements and the NAB/GAB, resources provided in the context of specific facilities (e.g., the oil facility), loan and subsidy resources provided to the PRGT and its predecessors, member contributions to debt relief operations in the context of HIPC, MDRI and the recent operation for Liberia, voluntary SDR trading arrangements, and financial support provided for other Fund activities, such as technical assistance and training. Members also make contributions that are mandated by Fund policies, such as quota subscriptions, participation in the FTP, charges and fees associated with borrowing from the Fund, and burden shared contributions. In this sense, most of the membership contributes in one way or another to the financing of the Fund, but there have been important differences in the scale and form of these contributions between countries and over time.

2. Past and expected future financial contributions to the Fund have played a role in determining individual members’ quotas. Members’ capacity and willingness to contribute financially to the Fund have long been recognized as relevant when determining quota increases. Notable examples include the ad hoc quota increase for Saudi Arabia in 1981, which took place outside of a general quota review, the ad hoc increase for Japan in the 9th Review, and ad hoc increases agreed in the context of general reviews for other countries that had or were expected to contribute to the Fund’s liquidity.1

3. These adjustments have been made outside of the quota formula. Elements of the formula can be viewed as capturing members’ potential to contribute financially to the Fund. In particular, GDP (measured at market exchange rates) and the reserve variable capture important aspects of members’ capacity to contribute. 2 However, actual financial contributions have been taken into account outside of the formula, and mainly in recognition of cases of particularly generous contributions.

4. This practice may partly reflect the difficult measurement and aggregation issues that would need to be addressed to capture members’ actual financial contributions on a more systematic basis.3 These include determining which types of contributions should be taken into account (e.g., whether to include only voluntary contributions, and which kinds of contributions), how different types should be aggregated (e.g., how to combine loan versus subsidy resources, loan commitments to the GRA versus the PRGT, and how to adjust for other forms of contributions, such as voluntary SDR trading arrangements or financing for technical assistance and training). A further question would be what time period(s) should be considered and how to aggregate contributions over time. It would also be important to avoid signaling that some forms of financing are more highly valued than others, which could discourage members from contributing in those areas in future.

5. Notwithstanding these difficulties, it should be recognized that the Fund’s financial structure relies on the ability and willingness of members with relatively larger quotas in the Fund to make larger financial contributions. As is evident from the data presented in this chapter, advanced countries, which have the majority of Fund quotas, and at times major oil-exporting countries have tended to provide the bulk of voluntary contributions in the past. Thus, as the quota share of EMDCs increases in line with their rising weight in the global economy, it can be expected that they will also play a more important role in contributing to the financing of the Fund. In this regard, the recent note purchase agreements committed by several EMDCs to support the Fund’s liquidity, on-going efforts to broaden the voluntary SDR trading arrangements, and the envisaged increase in EMDC participation in the reformed and expanded NAB represent notable developments in this direction.

B. Indicators of Members’ Financial Contributions to the Fund

6. The attached tables report details on a broad range of financial contributions that members provide to the Fund or in the context of Fund-related activities. For presentational purposes, these contributions are grouped into three main categories:

  1. resources provided by a member on a voluntary basis in support of the Fund’s general resources and the SDR department (Table I-1a; and Tables I-2–I-7);

  2. other voluntary resources provided by a member (Table I-1b; and Tables I-8–I-10); and

  3. contributions that are mandated by Fund policies (Table I-1c).

Table I-1a.

Summary of Voluntary Resources Provided through the GRA and SDR Department—by Member

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Republic of Yemen’s contributions include former contributions of Yemen Arab Republic and the People’s Democratic Republic of Yemen before their union in 1990.

Table I-1b.

Summary of Other Voluntary Resources—by Member

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As of January 7, 2010, the PRGF-ESF Trust was renamed PRGT. The PRGF-ESF Trust was previously known as ESAF (1987-1999), as PRGF (1999-2005), and as PRGF-ESF Trust (2006-2010) after the establishment of the ESF. All bilateral contributions to the original Trust in effect have remained there, with the exception of SDR 1.12 billion, which in 2006, at a request of bilateral contributors, was transferred to the MDRI-II Trust in support of the MDRI.

When the SCA-2 Administered Account was terminated in 1999, most of the refunds made to the membership were donated back as bilateral contributions to the IMF to help fund the Enhanced HIPC Initiative.

3/ Includes both GRA and Subsidy resources

Republic of Yemen's contributions include former contributions of Yemen Arab Republic and the People's Democratic Republic of Yemen before their union in 1990.