The International Monetary Fund (IMF) has taken a significant step in safeguarding global financial stability by approving a 50% increase in quotas for its members. This decision, made by the IMF’s Executive Board, is aimed at enhancing the institution’s permanent resources and reducing its reliance on borrowed funds.
In a statement issued in Washington D.C., the IMF explained that this increase in quotas is a crucial move to ensure the organization’s financial stability and its ability to respond to the potential needs of its member countries in a world marked by uncertainties and economic shocks.
The Executive Board’s proposal will now be presented to the Board of Governors for final approval. This proposal also includes a call for further work to develop possible approaches for quota realignment by June 2025, which is seen as a guide for future adjustments.
The decision to increase quotas comes following the guidance from the International Monetary and Financial Committee (IMFC) at the 2023 Annual Meetings held in Marrakech, Morocco. This decision aims to maintain a strong, quota-based, and well-resourced IMF as a key player in the Global Financial Safety Net.
IMF Managing Director Kristalina Georgieva commented on the Executive Board’s decision, emphasizing the importance of having a well-resourced IMF to ensure global financial stability. She highlighted that the proposal includes a 50% increase in quotas allocated to members based on their current quotas. This increase will enhance the IMF’s permanent resources and reduce its reliance on borrowing, reinforcing the quota-based nature of the Fund’s resources.
Moreover, the proposal envisions that borrowed resources, such as the Bilateral Borrowing Agreements and New Arrangements to Borrow (NAB), would be reduced to maintain the Fund’s current lending capacity once the quota increases are in effect.
The proposal also recognizes the need for quota share realignment to better reflect members’ relative positions in the global economy while protecting the quota shares of the poorest members. The Executive Board is called upon to work on developing approaches for this realignment by June 2025, as part of the 17th General Review of Quotas.
IMF Managing Director Kristalina Georgieva expressed hope that this proposal will receive broad support from the membership and lead to progress in quota realignment under the 17th Review. She emphasized the importance of international cooperation, particularly in a time when the global economy faces increasing fragmentation.
The Executive Board has requested that the Board of Governors vote on the proposal by December 15, 2023, marking an important milestone in the IMF’s ongoing efforts to maintain global financial stability and support its member countries in a dynamic and challenging economic landscape.