Spring meeting of IMF and WB
- April 22, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Spring meeting of IMF and WB
Subject: International Relations
Section: IR
Concept:
MF Quota
Each IMF member country is assigned a quota, or contribution, that reflects the country’s relative size in the global economy. Each member’s quota also determines its relative voting power as well as its borrowing capacity. Quotas are denominated in Special Drawing Rights (SDRs),
Purpose:
General Quota Review:
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.It also 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.
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.
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.
Earlier Quota Review
- On February 7, 2020, the Board of Governors (BoG) adopted a Resolution concluding the 15th General Review of Quotas, with no increase in quotas and providing guidance for the 16th Review.Under the Resolution, the 16th Review should be completed no later than December 15, 2023.
- In 2010, the IMF’s Quota and Governance Reforms were drafted; which finally became effective in 2016.
- These reforms shifted more than 6% of the quota shares to emerging and developing countries from the US and European countries.
- Presently, India holds 2.75% of SDR quota, and 2.63% of votes in the IMF.