“I commend our members for ratifying these truly historic reforms,” IMF Managing Director Christine Lagarde said. She noted that a more representative, modern IMF will ensure that the institution is able to better meet the needs of its members in a rapidly changing global environment.
“Today marks a crucial step forward and it is not the end of change as our efforts to strengthen the IMF’s governance will continue,” Lagarde added.
Significance of quota and governance reforms
This historic change marks an important step forward for the IMF.
First, the reforms significantly increase the IMF’s quota resources and its ability to respond to crises more effectively. The combined quotas (or the capital countries contribute) of the IMF’s 188 members will increase to a combined SDR 477 billion (about US$659 billion) from about SDR 238.5 billion (about US$329 billion).
Second, they also improve the Fund’s governance by better reflecting the increasing role of dynamic emerging and developing countries in the global economy. More than 6 percent of quota shares will shift to dynamic emerging market and developing countries and also from over-represented to under-represented IMF members. As a consequence, four emerging market countries (Brazil, China, India, and Russia) will be among the 10 largest members of the IMF. Other top 10 members include the United States, Japan, and the four largest European countries (France, Germany, Italy, and the United Kingdom).
The 2010 agreement will also enhance the...