Quotas define members' voting rights and access to IMF financing

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The IMF is a financial cooperative, in some ways like a credit union. On joining, each member country pays in a subscription, called its "quota."A country's quota is broadly determined by its economic position relative to other members and takes into account members' GDP, current account transactions, and official reserves. Quotas (see box, below) define members' financial and organizational relations in the IMF.

The combined capital subscriptions of the IMF's members form a pool of resources, which the IMF uses to help countries experiencing temporary financial difficulties. An adequate level of resources allows the IMF to provide balance of payments financing to support members implementing economic and financial reform programs.

At regular intervals of not more than five years, the IMF's Executive Board reviews members' quotas and decides-in light of developments in the global economy and changes in members' economic positions relative to other members-whether to propose an adjustment of their quotas to the Board of Governors. A member may also request an adjustment of its own quota at any time. Recently, China requested an adjustment, resulting in an increase of its quota from SDR 4,687.2 million to SDR 6,369.2 million.

In 1998, the IMF's Board of Governors, at the completion of the Eleventh General Review of Quotas, proposed increasing total quotas by 45 percent, from SDR 146 billion (about $200 billion at the time) to SDR 212 billion (about $290 billion at the time). Its decision was based on the expansion of the world economy since quotas were last increased in 1990; the scale of potential payments imbalances; the rapid globalization and liberalization of trade and payments, including the capital account; and the IMF's current and prospective liquidity needs and the adequacy of its financing arrangements.

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The distribution of the overall quota increase was largely equiproportional-that is, 75 percent of the increase was distributed to all members in proportion to existing quotas.Another 15 percent was distributed in proportion to members' shares derived from formulas that measure a country's relative position in the world economy on the basis of GDP, current account transactions, and official reserves (called "calculated quotas").

The remaining 10 percent was distributed to address the most important anomalies in the...