2. International Monetary Fund
QUOTA
Quota subscriptions generate most of the IMF's financial
resources.
Each member country of the IMF is assigned a quota, based
broadly on its relative position in the world economy.
A member country's quota determines its
• maximum financial commitment to the IMF,
• its voting power,
• and has a bearing on its access to IMF financing.
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 2
3. On December 15, 2010, the Board of Governors, the Fund’s
highest decision-making body, approved a package of far-
reaching reforms of the Fund’s quotas and governance,
completing the 14th General Review of Quotas.
Once the reform package is approved by member countries and
implemented, it will result in an unprecedented 100 percent
increase in total quotas and a major realignment of quota
shares to better reflect the changing relative weights of the
IMF’s member countries in the global economy.
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 3
4. The 14th General Review of Quotas will:
• Double quotas from approximately SDR 238.4 billion to
approximately SDR 476.8 billion.
• Shift more than 6 percent of quota shares from over-represented to
under-represented member countries.
• Shift more than 6 percent of quota shares to dynamic emerging
market and developing countries. (EMDCs )
• China will become the 3rd largest member country in the IMF, and
there will be four EMDCs (Brazil, China, India, Russia) among the
10 largest shareholders in the fund
• Preserve the quota and voting share of the poorest member
countries. those eligible for the low-income poverty reduction and
growth trust (PRGT) and whose per capita income fell below
US$1,135 in 2008 (the threshold set by the IDA)
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 4
5. • The IMFC noted
that quota reform is
crucial for
increasing the
legitimacy and
effectiveness of the
Fund, and stressed
that the IMF is and
should remain a
quota-based
institution.
• A comprehensive
review of the current
quota formula will be
completed by January
2013.
• Completion of the
15th General Review of
Quotas will be brought
forward by about two
years to January 2014.
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 5
6. Quotas play several key roles in the IMF
International Monetary Fund
QUOTA
Subscriptions (quota share). A member's quota subscription
determines the maximum amount of financial resources the
member is obliged to provide to the IMF.
A member must pay its subscription in full upon joining the Fund:
up to 25 percent must be paid in SDRs or widely accepted
currencies
(such as the U.S. dollar, the euro, the yen, or the pound sterling),
while the rest is paid in the member's own currency.
1
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 6
7. International Monetary Fund
QUOTA
Voting power (voting share). The quota largely determines a member's
voting power in IMF decisions. Each IMF member’s votes are comprised
of basic votes plus one additional vote for each SDR 100,000 of quota.
The 2008 reform fixed the number of basic votes at 5.502 percent of
total votes, which initially increased the number of basic votes from
250 to 677 votes per member. The number of basic votes will keep
increasing as members that are eligible for ad hoc quota increases
under the 2008 reform pay for their quota increases and will have
almost tripled once all the quota increases under the 2008 reform
become effective.
2
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 7
8. International Monetary Fund
QUOTA
Access to financing. The amount of financing a member can obtain
from the IMF (its access limit) is based on its quota. For example,
under Stand-By and Extended Arrangements, a member can borrow
up to 200 percent of its quota annually and 600 percent cumulatively.
However, access may be higher in exceptional circumstances.
3
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 8
9. How quota reviews work
•The IMF's Board of Governors
conducts general quota reviews at
regular intervals (usually every
five years).
•Any changes in quotas must be
approved by an 85 percent
majority of the total voting
power, and a member’s quota
cannot be changed without its
consent.
•There are two main issues
addressed in a general quota
review: the size of an overall
increase and the distribution of
the increase among the members.
•First, a general quota review
allows the IMF to assess the
adequacy of quotas both in terms
of members’ balance of payments
financing needs and in terms of
its own ability to help meet those
needs.
•Second, a general review allows
for increases in members’ quotas
to reflect changes in their
relative positions in the world
economy.
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 9
10. General Quota Reviews
Quota Review
Date Resolution Adopted
Overall Quota Increase
(percent)
First Quinquennial No increase proposed ---
Second Quinquennial No increase proposed ---
1958/59 1
February and April 1959 60.7
Third Quinquennial No increase proposed ---
Fourth Quinquennial March 1965 30.7
Fifth General February 1970 35.4
Sixth General March 1976 33.6
Seventh General December 1978 50.9
Eighth General March 1983 47.5
Ninth General June 1990 50.0
Tenth General No increase proposed ---
Eleventh General January 1998 45.0
Twelfth General No increase proposed ---
Thirteenth General No increase proposed ---
Fourteenth General __ 100.0
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 10
11. • When a country joins the IMF, it is assigned an
initial quota in the same range as the quotas of
existing members that are broadly comparable in
economic size and characteristics.
• The IMF uses a quota formula to guide the
assessment of a member’s relative position.
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 11
12. • The current quota formula is a weighted average of
GDP (weight 50 percent)
Openness (weight 30 percent)
Economic variability (weight 15 percent)
International reserves (weight 05 percent)
For this purpose, GDP is measured as a blend of
GDP based on market exchange rates (weight of 60 percent) +
PPP exchange rates (40 percent).
The formula also includes a “compression factor” that
reduces the dispersion in calculated quota shares across
members.
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 12
13. Where CQS = calculated quota share
= (0.5*Y + 0.3*O + 0.15*V + 0.05*R ) k
International Monetary Fund
QUOTA
Y = a blend of GDP converted at market rates and PPP exchange
rates averaged over a three year period. The weights of market-based
and PPP GDP are 0.60 and 0.40, respectively;
O = the annual average of the sum of current payments and current
receipts
(goods, services, income, and transfers) for a five year period;
V = variability of current receipts and net capital flows
(measured as a standard deviation from the centered three-year trend
over a thirteen year period);
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 13
14. k = a compression factor of 0.95. The compression factor is applied to the
uncompressed calculated quota shares which are then rescaled to sum to
100
International Monetary Fund
QUOTA
R = twelve month average over a year of official reserves (foreign exchange,
SDR holdings, reserve position in the Fund, and monetary gold);
Where CQS = calculated quota share
= (0.5*Y + 0.3*O + 0.15*V + 0.05*R ) k
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 14
15. • Quotas are denominated in Special Drawing Rights (SDRs), the
IMF’s unit of account.
• The largest member of the IMF is the United States, with a
current quota of SDR 37.1 billion (about $58 billion),
• the smallest member is Tuvalu, with a current quota of
SDR 1.8 million (about $2.7 million).
International Monetary Fund
QUOTA
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 15
17. Asian Countries GDP billion US $ (Current Prices)
GDP US $ (billion) Asian Countries. Shaded cells indicate IMF staff estimates
Country 2008 2009 2010 2011
China 4,519.95 4,984.73 5,745.13 6,422.28
India 1260.619 1,236.94 1,430.02 1,598.39
Indonesia 511.489 539.377 695.059 776.976
Thailand 272.429 263.979 312.605 334.026
Malaysia 222.272 192.955 218.95 236.555
Philippines 167.167 161.196 189.061 212.657
Pakistan 163.892 161.994 174.792 190.204
Bangladesh 84.462 94.602 105.402 115.222
Vietnam 90.274 93.164 101.987 113.627
Sri Lanka 39.597 42.203 48.241 52.552
Relative Economic Strength of Asian Countries
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18. Developed Countries Per Capita GDP (US $ Current
Prices)
Shaded cells indicate IMF staff estimates
Country 2008 2009 2010 2011
United States 47,155.32 45,934.47 47,131.95 48,387.29
Japan 38,271.30 39,740.27 42,325.23 44,682.34
Germany 44,524.95 40,831.66 40,511.83 41,235.74
France 45,991.04 42,412.63 40,591.43 40,965.40
United Kingdom 43,651.55 35,257.45 36,298.39 38,239.51
Relative Economic Strength (per capita) of Developed Countries
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 18
19. Asian Countries Per Capita GDP (US $ Current
Prices)
Shaded cells indicate IMF staff estimates
Country 2008 2009 2010 2011
Malaysia 8,142.62 6,950.47 7,754.99 8,238.51
Thailand 4,107.79 3,940.97 4,620.71 4,888.46
China 3,403.53 3,734.61 4,282.89 4,763.87
Indonesia 2,237.72 2,329.45 2,963.28 3,270.01
Sri Lanka 1,971.49 2,084.87 2,364.62 2,558.45
India 1,066.46 1,031.59 1,176.06 1,296.68
Vietnam 1,047.54 1,068.26 1,155.57 1,272.18
Pakistan 1,018.15 989.13 1,049.31 1,122.94
Bangladesh 527.887 583.164 640.847 690.718
Relative Economic Strength (per capita) of Asian Countries
Tuesday, April 29, 2014 PROF. AJIR KUMAR RAY 19
21. United States 17.670
Japan 6.556
Germany 6.110
France 4.505
United Kingdom 4.505
China 3.996
Italy 3.306
Saudi Arabia 2.930
Canada 2.672
Russia 2.494
India 2.442
Netherlands 2.166
Belgium 1.932
Brazil 1.783
Spain 1.688
Distribution of Quotas by Member (percent)
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22. Mexico 1.521
Switzerland 1.451
Korea 1.412
Australia 1.358
Venezuela 1.115
Sweden 1.005
Argentina 0.888
Austria 0.887
Indonesia 0.872
Denmark 0.793
Norway 0.790
South Africa 0.784
Malaysia 0.744
Nigeria 0.735
Poland 0.708
Distribution of Quotas by Member (percent)
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23. Casting Votes of
Votes by
Country
Total
Votes1
Percent
of Fund
Total2
United States 421,960 421,960 16.88
Japan 157,021 157,021 6.28
Germany 146,391 146,391 5.86
France 108,121 108,121 4.32
United Kingdom 108,121 108,121 4.32
China 95,995 95,995 3.84
India 58,951 70,689 2.83
Russian Fed 60,190 60,190 2.41
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24. How the IMF Makes Decisions
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