IMF Board Approves Far-Reaching Governance Reforms

Significant shift of voting power to dynamic emerging markets, developing countries

Reforms will lead to all-elected, more representative Executive Board

IMF quotas to double to about $755 billion

“Taken together, it’s a big shift in quotas and accordingly in voting power. It’s a very important increase in the voice and representation of the emerging market and developing countries ... it is a historical reform of the IMF,” Strauss-Kahn told journalists at a press conference immediately following the Board’s decision.

“It means we now have the top 10 shareholders that really represent the top 10 countries in the world, namely the United States, Japan, the four main European countries, and the four BRICs. The ranking of the countries is now really the ranking they have in the global economy,” he said.

More voting power to dynamic emerging markets and developing countries

The core of the reforms will be a doubling of IMF quotas that will produce a shift of 6 percent of quota shares to the dynamic emerging market and developing countries.

“One-half of the shift comes from advanced economies, mostly European advanced economies, but the United States also played a part. One third comes from oil producers, countries like Saudi Arabia for instance. So altogether, 80 percent of the shift comes from advanced countries and oil producers,” Strauss-Kahn said. “Only 20 percent comes from other emerging countries,” he added.

“The bottom line is that 110 countries out of 187 will see their quota share increased or maintained. When you look at who those 110 are, you have 102 which are emerging or developing countries. That gives a clear picture of what has happened,” he said.

The 10 largest members of the Fund will now consist of the United States, Japan, the four largest European economies (France, Germany, Italy, and the United Kingdom) and Brazil, China, India, and the Russian Federation (the BRICs; see box).

• All BRIC countries will be top 10 IMF shareholders

• More than 6 percent shift in quota share to dynamic emerging market and developing countries

• Voice of poorest countries maintained by preserving their voting shares.

So who pays for the shift?

• The bulk of the shift—about 80 per cent—comes from a reduction in the shares of advanced economies and some oil producers

• 110 countries will gain or maintain quota share, of which 102 are emerging market and developing countries.

Once reforms in place, rebalancing to be mirrored in...