Reform Of Quota And Voice In The International Monetary Fund Draft Report Of The Executive Board To The Board Of Governors

This report sets out a proposal for a second-round package of reforms consistent with the framework agreed in the Singapore Resolution and, to that end, recommends that the Board of Governors approve the resolution that is appended to this Report (the "Resolution").

The October 2007 Communiqué of the IMFC called on the Executive Board to develop specific proposals on a new income model and a new expenditure framework by the time of the 2008 Spring Meetings. On April 7, 2008, the Executive Board endorsed a new income model for the Fund and considered a new medium-term budgetary envelope for financial years 2009–11, which includes deep spending cuts, and approved administrative, restructuring, and capital budgets for financial year 2009. As a key element of this new income-expenditure framework, the Executive Board ecommended the adoption by the Board of Governors of an amendment of the Articles of Agreement to expand the Fund’s investment authority. The Executive Board’s recommendation was sent to the Board of Governors, with the voting period running through 6:00 p.m., Washington time, May 5, 2008.

In completing the Fourteenth General Review of Quotas (hereafter the “Fourteenth Review”) and approving the proposed Amendment on the Reform of the Executive Board (hereafter the “Board Reform Amendment”), the Board of Governors requested the Executive Board to bring forward the timetable for completion of the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”) to January 2014.

Since the IMFC last met in April, the Executive Board has taken up the full range of quota and other governance reforms. While there has been some movement on the many complex issues, discussions have been inconclusive, and no proposal has been able to command broad support. The concluding remarks that sum up these meetings lay out the various positions taken by members of the Board (attached). The debate is continuing, and we hope to make progress on finding the possible elements of a compromise acceptable to the membership.

In light of continuing delays in the implementation of the 2010 quota and governance reforms (hereafter the “2010 Reforms”), the Board of Governors, in February 2015, adopted Resolution No. 70-1, which (i) expressed its deep regret that the quota increases under the Fourteenth General Review of Quotas (hereafter the “Fourteenth Review”) and the Proposed Amendment on the Reform of the Executive Board (hereafter the “Board Reform Amendment”) have not become effective, and that the Fifteenth General Review of Quotas (hereafter the “Fifteenth Review”) has not been completed; (ii) emphasized the importance and urgency of the 2010 Reforms for the Fund’s credibility, legitimacy, and effectiveness, and reiterated its commitment to their earliest possible implementation; (iii) urged the remaining members who have not yet accepted the Fourteenth Review quota increases and the Board Reform Amendment to do so without further delay; (iv) called for the completion of the Fifteenth Review by December 15, 2015; and (v) called on the Executive Board to work expeditiously and to complete its work as soon as possible on interim steps in the key areas covered by the 2010 Reforms, pending their full implementation, and thus to enable the Board of Governors to reach agreement on steps that represent meaningful progress towards the objectives of the 2010 Reforms by June 30, 2015.

At the Annual Meetings in Singapore, the Board of Governors approved a program of quota and voice reforms (Resolution 61-5) that aims to enhance the effectiveness and credibility of the Fund. This report responds to that request and reflects the extensive discussions by the Executive Board over the past year on the reform agenda agreed in Singapore.

This paper sets out, and seeks to make operational, a core package for the consideration of the Executive Board and, subsequently, the Board of Governors. The reforms would lead to a major overhaul of the Fund’s quotas and governance, strengthening the Fund’s legitimacy and effectiveness. The paper proposes completion of the 14th General Review of Quotas with a doubling of quotas and a major realignment of quota shares among members. It also covers proposals that would lead to a more representative, all-elected Executive Board.

The IMF staff has updated individual member country data for the variables used in the quota formula for the period 1999-2011; the tables also include the comparable value of each variable for the previous quota dataset, which was based on data covering the period 1998-2010. The information is presented in millions of SDRs (Table A1) and in percent of their respective global totals (Tables A2 and A3). A table showing calculated quota shares based on the quota formula is also included (Table A4). The current quota formula includes a GDP variable, which is a blend of GDP at market rates and GDP at purchasing power parity (PPP), openness, variability, and international reserves (see Box 1 in Reform of Quota and Voice in the International Monetary Fund-Draft Report of the Executive Board to the Board of Governors). Data sources and a description of the quota variables are discussed in Quota Formula – Data Update and Further Considerations - Statistical Appendix; IMF Policy Paper; June 2013. Download Quota Data: Updated IMF Quota Formula Variables - July 2013