IMF Quota

Subject – Economy

Context – Experts call for review of IMF role, data integrity, completing quota reforms

Concept –

The IMF is a quota-based institution. Quotas are the building blocks of the IMF’s financial and governance structure.
An individual member country’s quota broadly reflects its relative position in the world economy.
Quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account.

Multiple roles of quotas

General Quota Reviews

The IMF’s Board of Governors conducts general reviews of quotas at regular intervals (no more than five years apart).
Any changes in quotas must be approved by an 85 percent majority of the total voting power, and a member’s own quota cannot be changed without its consent.
The two main issues addressed in a general review of quotas are
- (i) the size of an overall quota increase and
- (ii) the distribution of the increase among the members.
Size of overall quota increase – A general review allows the IMF to assess the adequacy of quotas in relation to both the members’ balance of payments financing needs and the Fund’s ability to help meet those needs.

Distribution of the quota increase among members

A general review allows for realignments in members’ quota shares to reflect changes in their relative positions in the world economy.
In addition, a member may request an ad hoc quota adjustment at any time outside of a general review.

Quota formula

A quota formula is used to help assess members’ relative position in the world economy and it can play a role in guiding the distribution of quota increases.
The current formula was agreed in 2008.