2023-11-08 04:12:00
The IMF wants to increase the quotas of each State by 50%
The International Monetary Fund (IMF) announced Tuesday, November 7, that its Board of Directors had validated a proposal aimed at increasing by 50% the quotas distributed to States during the next review in this area, which must take place at the end of this cycle, in June 2025.
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IMF Managing Director Kristalina Georgieva. Photo: AFP/VNA/CVN
This is the first step in the process which aims to increase quotas, a desire expressed by the Fund as well as the Member States during the last annual meetings of the IMF and the World Bank (WB).
“A well-financed IMF is essential to protect financial stability and to meet the potential needs of member states in an uncertain and shock-prone world,” said the Fund’s Managing Director, Kristalina Georgieva, quoted in the press release.
The increase in quotas should be accompanied by a reduction in resources from borrowing, in order to “maintain the current borrowing capacities of the IMF”, adds the press release. Concretely, an increase in quotas requires an increase in the capital of the Fund, which involves an increase in the money made available by the States, in proportion to their share in the capital of the institution.
Quotas represent an important element for States in accessing financing from the IMF because the lending capacity of the IMF for each of them is correlated to the share of quota it holds. But quotas also represent the voting rights available to each Member State. They are therefore distributed more widely to advanced economies than to emerging or developing countries.
The difficulty is that from then on, advanced economies are entitled to have more funds from the IMF, even though they most often do not need it. This blocks these funds which cannot be redistributed to countries in need.
NGOs and several emerging and developing countries are campaigning for a redistribution of quotas in their favor, which would increase the financing capacity of the IMF towards them.
But such an idea is currently rejected by the Fund’s main shareholders because it would also call into question the distribution of voting rights on the Board of Directors, to their disadvantage.
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