MercoPress. South Atlantic News Agency

IMF approves by wide margin vote and quota reforms

The IMF Board of Governors adopted by wide margin far-reaching reforms to increase the voting shares of a majority of the 185 member countries particularly the large emerging economies.

Governors from 180 of the 185 member countries had by April 28 cast their votes on the proposed reform package. Of these, 175 countries representing 93% of the total voting power in the IMF voted in favor of changes to the quota and voting share structure. Three voted against, two abstained, and five did not vote. The changes will enhance the participation and voice of emerging market and developing countries, and realign members' shares with their relative weight and role in the global economy. Approval of the Resolution required 85% of the total voting power. "This vote shows the overwhelming level of support across the Fund's membership for these reforms, and I thank the members for this resounding endorsement," said IMF Managing Director Dominique Strauss-Kahn. "I see this result as the beginning of the new legitimacy of the Fund." "This makes the Fund the first international financial institution to implement such deep governance reforms," Strauss-Kahn added. He said that 95% of the institution's members had supported the reform. "As a result of these changes, the Fund's quota and voting structure will be more dynamic and forward-looking," Strauss-Kahn said. "The new structure represents an important step toward a redistribution of voting shares toward dynamic emerging market and developing countries and we expect to see a continued shift over the next decade." In addition to changes in the quota structure, the reform package, recommended by the IMF Executive Board on March 28, will increase the voting shares of more than two-thirds of the 185 member countries. It will also enhance the voice and participation of low-income countries through a tripling of basic votesâ€"the first such increase since the Fund's creation in 1944â€"and will enable each of the two Executive Directors representing African constituencies to appoint an additional Alternate Director. "In particular, the tripling of basic votes reflects an innovative part of this reform effort, aimed at enhancing engagement and voice of our low-income members," Mr. Strauss-Kahn added. "To preserve this element of the reforms, the package includes a mechanism that will keep constant the ratio of basic votes to total voting power in the IMF." The Governors' vote marks an important step in putting into effect the package of reforms in the IMF. The Resolution proposes an amendment of the Fund's Articles of Agreement, which will need to be accepted by at least three-fifths of IMF members representing 85% of the total voting power in order to become effective. Most member countries will need the approval of domestic legislatures to accept the proposed amendment. The proposed increase in quotas will also require further action on the part of those member countries eligible to receive an increase in their quotas. The reform of country representation is part of a two-year program approved at the 2006 Annual Meetings in Singapore, when initial ad hoc increases in quotas were agreed for China, Korea, Mexico, and Turkey. A country's quota at the IMF largely determines its voting power in the 185-member institution. Reforms at the IMF had received strong backing in early April from the IMF policy-guidance committee, the IMFC, which welcomed the recent agreement by the Executive Board on quota and voice reforms "as an important contribution to enhance the Fund's credibility and legitimacy." The IMFC also endorsed the recent agreement by the Executive Board on a new income model and a new medium-term budgetary envelope, "which will contribute to placing the Fund on a sustainable financial footing".