IMF Quotas

Why is it in news?
  • India has called for quota reforms so that share of emerging nations increases in line with their growing economic position.
  • Quota shares of Emerging Market & Developing Countries need increase in line with its growing relative economic position in the world.
More about IMF Quotas
  • What are IMF Quotas? - The IMF is a quota-based institution. Quotas are the building blocks of the IMF’s financial and governance structure. An individual member country’s quota broadly reflects its relative position in the world economy. Quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account.
  • Multiple roles of quotas :
  1. Resource Contributions: Quotas determine the maximum amount of financial resources a member is obliged to provide to the IMF.
  2. Voting Power: Quotas are a key determinant of the voting power in IMF decisions. Votes comprise one vote per SDR100,000 of quota plus basic votes (same for all members).
  3. Access to Financing: The maximum amount of financing a member can obtain from the IMF under normal access is based on its quota.
  4. SDR Allocations: Quotas determine a member’s share in a general allocation of SDRs.
  • Quota reviews: The IMF’s Board of Governors conducts general quota reviews at regular intervals (no more than five years). Any changes in quotas must be approved by an 85% majority of the total voting power, and a member’s own quota cannot be changed without its consent.
    Two main issues addressed in a general quota review are the size of an overall quota increase and the distribution of the increase among the members.
  • About IMF:
  1. The IMF, along with the World Bank, was conceived in 1944 at a conference in Bretton Woods, in the US state of New Hampshire.
  2. It aims to preserve economic stability and to tackle – or ideally prevent – financial crises. Over time, its focus has switched to the developing world.
  3. The IMF is funded by a charge – known as a “quota” – paid by member nations – based on a country’s wealth.
  4. The IMF also acts as a lender of last resort, disbursing its foreign exchange reserves for short periods to any member in difficulties.
Source
The Hindu, Wikipedia




Posted by Jawwad Kazi on 17th Oct 2018
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