The Executive Board of the International Monetary Fund (IMF) has put forward a proposition for a 50% quota increase for member countries, including Ghana, based on their existing quotas. This proposal is subject to approval by the Board of Governors.
The recommendation follows guidance provided by the International Monetary and Financial Committee (IMFC) during the 2023 Annual Meetings.
The IMF states that this quota increase is intended to bolster global financial stability by strengthening the IMF’s permanent resources and decreasing reliance on borrowed resources.
The proposal anticipates that, once the quota increases take effect, borrowed resources such as Bilateral Borrowing Agreements and New Arrangements to Borrow (NAB) would be scaled down to maintain the IMF’s current lending capacity.
“Concluding the 16th Review with a quota increase will help preserve a strong, quota-based, and adequately resourced IMF at the center of the Global Financial Safety Net. An adequately resourced IMF is essential to safeguard global financial stability and respond to members’ potential needs in an uncertain and shock-prone world,” IMF Managing Director Kristalina Georgieva said after the Executive Board’s decision.
The membership has recognized the pressing need and significance of realigning quota shares to more accurately represent the relative positions of members in the global economy. This should be done while safeguarding the quota shares of the least affluent members. Many members would have favored both a quota realignment and the suggested quota increase.
Therefore, an additional crucial aspect of the current proposal is a request for the Executive Board to collaborate on devising potential approaches, by June 2025, as a reference for further quota realignment. This includes considering a new quota formula as part of the 17th General Review of Quotas.
“The proposed quota increase comes at a complex time for the global economy and the IMF’s membership. In the spirit of international cooperation, I am hopeful this proposal will garner the broadest possible support from the membership, and that we will then make progress on a quota realignment under the 17th Review,” said IMF Managing Director Kristalina Georgieva.
The proposal also entails a request to engage in the development of potential approaches by June 2025, serving as a framework for subsequent quota realignment efforts.
“As the world grapples with rising fragmentation, today’s decision is a strong signal that the membership can still come together in support of cooperative solutions that instill confidence in the IMF’s ability to effectively support its membership in navigating a challenging global landscape,” she said.
The Executive Board has requested that the Board of Governors vote on this proposal by December 15, 2023.
Approval by the Board of Governors requires an 85% majority of the total voting power.