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The search for Columbus’ egg - finding a new formula to determine quotas at the IMF

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  • Martin Skala
  • Christian Thimann
  • Regine Wölfinger

Abstract

The International Monetary Fund (IMF) is undergoing profound changes, not only in its policies, but also in its internal governance. These changes reflect the structural developments in the global economy, and in particular the growing role of emerging economies that demand a greater say at the Fund. In addition, the Fund has recognised that it needs to strengthen the voice of developing economies in order to increase ownership of IMF programmes and policy recommendations from this very large country group. At the heart of IMF governance lies the distribution of its quota: quotas are the percent share at the IMF that are attributed to the various members. Quotas play a central role in the Fund, because they determine not only member countries’ financial contributions, but also their rights to draw on IMF financial support and their voting rights within the institution. Therefore, quotas are essentially a matter of representation, visibility, and influence of countries at the IMF. Quotas are being calculated as a function of various economic variables and also include a certain degree of judgement. This paper provides a systematic analysis of the way IMF quota have been calculated in the past and of the current challenges of reform. It shows the importance for individual variables for specific country groups and the sensitivity of changes in the formula of overall distribution. The paper provides an extensive and comprehensive overview of various technical issues involved in choosing an appropriate quota formula. It analyses the current quota system and its functioning, and shows which countries and groups are most under and over-represented. It also puts forward an analysis of the various avenues of quota-reform that are currently under discussion.

Suggested Citation

  • Martin Skala & Christian Thimann & Regine Wölfinger, 2007. "The search for Columbus’ egg - finding a new formula to determine quotas at the IMF," Occasional Paper Series 70, European Central Bank.
    • Handle: RePEc:ecb:ecbops:20070070
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    11. Blattner, Tobias Sebastian & Catenaro, Marco & Ehrmann, Michael & Strauch, Rolf & Turunen, Jarkko, 2008. "The predictability of monetary policy," Occasional Paper Series 83, European Central Bank.
    12. Moutot, Philippe & Jung, Alexander & Mongelli, Francesco Paolo, 2008. "The working of the eurosystem: monetary policy preparations and decision-making - selected issues," Occasional Paper Series 79, European Central Bank.
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    14. Filippo Di Mauro & Katrin Forster, "undated". "Globalisation and the competitiveness of the Euro area," Working Papers 5, Department of the Treasury, Ministry of the Economy and of Finance.
    15. Andrea Colabella & Enrica Di Stefano & Claudia Maurini, 2009. "The reform of IMF quotas: the way towards the 2008 resolution," Questioni di Economia e Finanza (Occasional Papers) 54, Bank of Italy, Economic Research and International Relations Area.
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    19. Ben Hassine, Hela, 2015. "Financial Crises Management By The IMF : Was External And Public Debt Sustainable ?," MPRA Paper 75466, University Library of Munich, Germany.
    20. Fidora, Michael & Beck, Roland, 2008. "The impact of sovereign wealth funds on global financial markets," Occasional Paper Series 91, European Central Bank.
    21. De Santis, Roberto A. & Cappiello, Lorenzo & Baltzer, Markus & Manganelli, Simone, 2008. "Measuring financial integration in new EU Member States," Occasional Paper Series 81, European Central Bank.
    22. Morgese Borys, Magdalena & Polgár, Éva Katalin & Zlate, Andrei, 2008. "Real convergence and the determinants of growth in EU candidate and potential candidate countries: a panel data approach," Occasional Paper Series 86, European Central Bank.
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