IMF quotas and proposed increases
Quotas paid by member states are the main financial resource of the IMF. This note explains how they work with particular reference to the UK, and describes the proposed changes that will see quotas double.
IMF quotas are financial contributions provided by each of its 187 member states to support the organisation’s lending activity. They largely determine member states’ voting power and the amount they can borrow. Following a review, IMF quotas are set to double, to around $767bn in total. This is the first increase since 1998 and the largest in the organisation’s history. The UK’s quota will increase by less than this amount (88%) because of reforms which transfer a degree of power to emerging and low-income economies; these countries will see their quotas more than double.
Quotas are best understood as loans to the IMF: countries can draw down their quotas at short notice if required. In the UK, the portion of the quota that the IMF has drawn down counts as an asset of the National Loans Fund, and does not affect public borrowing or debt.
In the UK, approval of a statutory instrument by the House of Commons is required to for the IMF quota to be increased. The most recent increase is covered by the International Monetary Fund (Increase in Subscription) Order 2011, which was made on 18 July 2011, having been debated in the Delegated Legislation Committee on 5 July 2011, and approved by the House on division (274 votes to 246) on 11 July 2011.
The changes to the quota will only come into effect once consent has been received from members representing at least 70% of the IMF’s voting share. The IMF’s objective is to complete this approval process by its 2012 Annual Meetings, which are likely to take place in October that year.