Title Page
Copyright
IMF POLICY PAPER
Quotas—Data Update And Simulations
September 2016
IMF staff regularly produces papers proposing new IMF policies, exploring options for reform, or reviewing existing IMF policies and operations. The following documents have been separately released:
The Staff Report Quotas—Data Update and Simulations, prepared by IMF staff and completed on August 9, 2016.
Staff Supplement on Quotas—Data Update and Simulations—Statistical Appendix, completed on August 10, 2016.
These documents were prepared by IMF staff and were presented to the Executive Board in an informal session on September 9, 2016. Such informal sessions are used to brief Executive Directors on policy issues, and to receive feedback from them. No decisions are taken at these informal sessions. The views expressed in this paper are those of the IMF staff and do not necessarily present the views of the IMF's Executive Board.
The IMF's transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities' policy intentions in published staff reports and other documents.
Electronic copies of IMF Policy Papers are available to the public from http://www.imf.org/external/pp/ppindex.aspx
International Monetary Fund Washington, D.C.
August 9, 2016
Quotas—Data Update And Simulations
Executive Summary
The quota database has been updated by one year through 2014. Overall, the results of the update continue the broad trends observed in previous updates, but the shifts between the main country groups are generally smaller. Using the current quota formula, the calculated quota share of Emerging Market and Developing Countries (EMDCs) as a group increases by 0.6 percentage points relative to the 2015 update to 49.3 percent, which is about half the increase in the last update.
The paper takes stock of recent discussions on the quota formula, including the outcome of the Quota Formula Review in 2013 and subsequent discussions in the context of the annual quota data updates. It also updates the illustrative simulations of possible reforms of the quota formula presented previously, using the latest data. These simulations have sought to capture possible reforms that would be broadly in line with the conclusions of the Quota Formula Review and Directors' guidance is sought on the relative merits of these reforms and the most productive areas for future work.
Initial simulations are also presented to show how possible changes in the quota formula might feed through into shifts in actual quota shares in the context of the 15th Review. Given the very early stage of discussions, these simulations are purely illustrative and no proposals are made. Rather the goal is to help inform the discussions and seek feedback from Directors on the direction of future work.
The paper also proposes to update the current country groupings used in quota work, and seeks guidance on how to define the poorest members for the purpose of providing protection under the 15th Review.
Approved By Andrew Tweedie
August 9, 2016
Prepared by the Finance Department
Andrew Tweedie (In collaboration with the Statistics Department)
The FIN team comprised H. Hatanpaa (lead), M. Albino-War,
R. Bhattacharya, E. Ozturk, R. Zhang, D. Mikhail, and S. Rodriguez-Apolinar.
T. Krueger (FIN) provided guidance.
Contents
INTRODUCTION
UPDATED QUOTA DATABASE
A.Developments in Calculated Quota Shares
B.Developments in Out-Of-Lineness
QUOTA FORMULA VARIABLES: TAKING STOCK
ILLUSTRATIVE CALCULATIONS FOR ALTERNATIVE QUOTA FORMULAS
REALIGNING QUOTA SHARES
UPDATING COUNTRY GROUPINGS
CONCLUDING REMARKS
BOXES
1.Data Sources and Methodology
2. The Quota Formula
FIGURES
1. Evolution of CQS 2005-2014
2. Selected Macroeconomic Developments
3. Contributions of Quota Variables to CQS
4. Out-of-Lineness (OOL)
TABLES
1a. Distribution of Quotas and Calculated Quotas
1b. Changes in Distribution of Calculated Quotas
2a. Distribution of Quotas and Updated Quota Variables
2b. Updated GDP Blend Variable
3. Top 10 Positive and Negative Changes in Calculated Quota Shares
4. Under- and Overrepresented Countries by Major Country Groups
5. Illustrative Calculations: Summary
6. Illustrative Calculations—Current GDP and Openness Measures, and Dropping Variability 2
7. Illustrative Calculations—Current Openness Measure, Dropping Variability, Weight Split Evenly Between GDP and Openness, and Different Combinations of GDP Blend
8. Illustrative Calculations—Current Openness Measure, Dropping Variability, Weight Split Between GDP (2/3) and Openness (1/3), and Different Combinations of GDP Blend
9. Illustrative Calculations—Current Openness Measure, Dropping Variability, All Weight to GDP, and Different Combinations of GDP Blend
10. Illustrative Calculations—Current Openness Measure, Dropping Variability, Weight of Openness Reduced to 0.25, and Different Combinations of GDP Blend
11. Illustrative Calculations—Current GDP Blend, Dropping Variability, Weight Split Evenly Between GDP and Openness, and Different Openness Measures
12. Illustrative Calculations—Current GDP Blend, Dropping Variability, Weight Split Between GDP (2/3) and Openness (1/3), and Different Openness Measures
13. Illustrative Calculations—Current GDP Blend, Dropping Variability, All Weight to GDP, and Different Openness Measures
14. Illustrative Calculations—Current GDP and Openness Measures, Dropping Variability, and Higher Compression (0.925)
15. Illustrative Calculations—Current GDP and Openness Measures, Dropping Variability and Lower Compression (0.975)
16. Adjustment Coefficients and Convergence Indices
17. Weights of Variables for the Formulas Used for Illustrative Quota Allocations
18. Illustration of Allocation Mechanisms: Summary
19. Illustration of Allocation Mechanisms: Current Formula
20. Illustration of Allocation Mechanisms: Formula 1.2
21. Illustration of Allocation Mechanisms: Formula 1.3
22. Illustration of Allocation Mechanisms: Formula 3.2.c
23. Illustration of Allocation Mechanisms: Formula 3.3.c
24. Illustration of Allocation Mechanisms: Formula 1.3, Includes 5 percent Ad Hoc Distribution based on Voluntary Financial Contributions
25. Changes in CQS resulting from WEO Classification
ANNEXES
I. Quota Formula Variables
II. Country Groups
III. Defining the Poorest Members
IV. Voluntary Financial Contributions