2023-12-19 02:10:40
© Reuters. IMF logo at the headquarters of the institution, in Washington 04/09/2018 REUTERS/Yuri Gripas
By Andrea Shalal
WASHINGTON (Reuters) – The governing body of the International Monetary Fund has approved a 50% increase in quota resources, to be borne by member countries in proportion to their current participation in the institution, bringing total quotas to $960 billion, the IMF said. in this Monday.
Managers representing nearly 93% of the fund’s total decision-making power voted in favor of the 50% increase recommended by the IMF’s executive board last month, exceeding the required 85%. The voting period ended on Friday.
The quota increase, after years of extensive discussions, will take effect on November 15, 2024, once member countries agree to their respective quota changes, which requires legislative approval in many cases.
The decision largely follows a U.S.-backed plan to boost the IMF’s lending resources but delay any increases in holdings in the institution from China, India, Brazil and other fast-growing emerging market economies.
But leaders asked the IMF to develop possible approaches for a new quota formula by June 2025, in line with the executive board’s recommendation.
The 50% increase in quota financing — equivalent to about $320 billion at current exchange rates — will not raise the fund’s global firepower to about $1 billion, but it will change the composition to about 70 % of permanent resources, reducing dependence on borrowed capital, the IMF said.
IMF Director General Kristalina Georgieva called the decision “a strong vote of confidence in the Fund’s work.”
“It will reduce the Fund’s dependence on borrowed resources, restore the central role of quotas in our lending capacity, and reinforce the IMF’s role at the center of the Global Financial Safety Net,” she said.
Georgieva further stated that the move would strengthen the IMF’s ability to help “safeguard global financial stability and respond to members’ potential needs in an uncertain and shock-prone world.”
Currently, the IMF relies on bilateral loan agreements and pledges for a crisis loan fund called New Arrangements Lending. The executive board will discuss proposals to reduce the crisis loan fund in early 2024.
Zuzana Murgasova, deputy director of the IMF’s finance department, told Reuters that work on guidance for a new quota realignment would begin soon, but declined to provide further details as the discussions were confidential.
“What is really important is that members have recognized that this is an urgent priority and that work will begin very soon,” he said.
Murgasova said the leaders’ votes were also confidential and declined to say which country or countries did not approve the quota increase.
(Reporting by Andrea Shalal)
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