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A Factsheet - February 2009

IMF Quotas

Quota and Voice Reform

On April 28, 2008, a large-scale quota and voice reform in the making for nearly two years was adopted by a large margin by the Board of Governors of the IMF. It aims to make quotas more responsive to economic realities while enhancing the participation and voice of low-income countries in the IMF's decision making. The IMF's membership had agreed to initial ad hoc quota increases for four countries—China, Korea, Mexico, and Turkey—in September 2006. In April 2008, the Board of Governors approved a package with more far-reaching reforms, including agreement on a new quota formula; a second round of ad hoc quota increases based on the new formula that will give ad hoc quota increases to 54 countries; a tripling of basic votes to increase the voice of low-income countries; and an additional Alternate Executive Director for the two African chairs at the Board. Moreover, the reform envisages realignments of quota and voting shares every five years.

How does the IMF determine a member country's quota?

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.

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 quota of SDR 37.1 billion (about $58.2 billion), and the smallest member is Palau, with a quota of SDR 3.1 million (about $4.9 million).

What are the functions of quotas?

A member's quota delineates basic aspects of its financial and organizational relationship with the IMF, including:

Subscriptions. 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.

Voting power. The quota largely determines a member's voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota. Accordingly, the United States has 371,743 votes (16.77 percent of the total), and Palau has 281 votes (0.01 percent).

Access to financing. The amount of financing a member can obtain from the IMF (its access limit) is based on its quota. Currently, under Stand-By and Extended Arrangements, a member can borrow up to 100 percent of its quota annually and 300 percent cumulatively. However, access may be higher in exceptional circumstances.

Quota reviews

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. 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. The Thirteenth General Review was concluded on January 28, 2008 with no proposal by the Board of Governors to increase quotas.

Ad hoc quota increases outside general reviews do not occur often, although the increase in quotas approved on April 28, 2008 does qualify as ad-hoc because it was agreed outside the realm of the general quota reviews. In future, it has been agreed that this type of ad-hoc increases will be considered at the time of the general quota reviews irrespective of the liquidity needs of the institution. The goal is to have a dynamic mechanism to adjust quota shares every five years to reflect members' evolving weight in the world economy and to increase the shares of underrepresented countries.