Developing countries will benefit from quota reforms
Managing Director of the International Monetary Fund (IMF), Christine Lagarde, has welcomed the adoption of legislation by the United States Congress to authorise the 2010 quota and governance reforms.
"The United States Congress approval of these reforms is a welcome and crucial step forward that will strengthen the IMF in its role of supporting global financial stability," she said.
"The reforms significantly increase the IMF's core resources, enabling us to respond to crises more effectively, and also improve the IMF's governance by better reflecting the increasing role of dynamic emerging and developing countries in the global economy," she added.
Lagarde said "a more representative, modern IMF will be even better equipped to meet the needs of all its 188 member countries in the 21st century".
The 2010 quota and governance reforms were approved by the IMF's board of governors in December 2010 and build on an earlier set of reforms that was approved in April 2008.
These include quota increases for all member countries under the 14th general review of quotas and an amendment to the articles of agreement on the reform of the executive board, enabling an all-elected executive board for the first time.
The reforms require the acceptance by the membership - with an 85 per cent majority of the total voting power, which, in many cases, involved parliamentary approval.
Among the main outcomes of the 2010 quota reforms is that all 188 members' quotas will increase as a result of the agreed bolstering of the fund's quota resources to about SDR 477 billion (about US$659.67 billion) from about SDR 238.5 billion (about US$329.83 billion)
More than six per cent of quota shares will shift to dynamic emerging markets and developing countries and also from over-represented to under-represented members.
Four emerging market countries (Brazil, China, India, and Russia) will be among the 10 largest members of the IMF. Other top-10 members include the United States, Japan, and the four largest European countries - France, Germany, Italy and the United Kingdom.
The quota shares and voting power of the IMF's poorest member countries will be protected.
For the first time, the IMF's board will consist entirely of elected executive directors, ending the category of appointed executive directors (currently the members with the five largest quotas appoint an executive director).
There will be further scope for appointing a second alternate executive director in multi-country constituencies with seven or more members to enhance the constituency's representation in the executive board.
Advanced European countries have committed to reduce their combined board representation by two chairs.
The doubling of quotas, together with the shift in quota shares and the move to an all-elected board, mark a significant step forward in the process of IMF quota and governance reforms.