IMF Quota and Governance Reform Once Again

Once again, the United States and other members of the International Monetary Fund (IMF) have been asked to address the adequacy of IMF financial resources and the distribution of voting power in the Fund. Observers are justified in thinking that they just witnessed this drama. IMF members completed an agreement on the size of IMF quota resources and governance—or voting power—reform in November 2010. As part of that agreement on the 14th general review of IMF quotas, members committed to bring forward the completion of the 15th general review of quotas to January 2014. The target was not met because the United States delayed approving the 2010 agreement until December 2015, which was necessary for the implementation of the 14th review. As a result, in December 2016, the governors of the IMF freshly resolved to complete the 15th review by the spring of 2019 or the fall of 2019 at the latest. Consequently, the US administration must develop a position on the 15th general review in the next several months. This Policy Brief argues that the United States should support a significant increase in IMF quotas and further reform of IMF governance through the redistribution of IMF quota shares and, therefore, voting shares. At a minimum, total IMF quotas and the standing New Arrangements to Borrow (NAB) should be increased by enough to replace the roughly $450 billion in ad hoc bilateral borrowing arrangements that expire in 2020. This would leave the Fund’s current lending capacity essentially unchanged for the next decade.