IMF Quotas

Why in News?

Recently, International Monetary Fund (IMF) executive board approves a proposal to increase in IMF Quotas.

• The board proposes a 50% quota increase allocated to members in proportion to their current quotas.
• Now, the proposal will be considered and voted on by the Board of Governors, after which it will be made effective.

Significance of the rise in Quota

1. Help safeguard global financial stability by enhancing the IMF's permanent resources.
2. The goal is to decrease the dependence on borrowed resources.

• The Fund currently utilizes bilateral borrowing arrangements and pledges to the New Arrangements to Borrow for nearly 60% of its lending resources.

About IMF Quota

1. Quotas are the building blocks of the IMF's financial and governance structure.
2. Quotas are denominated in Special Drawing Rights (SDRs), the IMF's unit of account.

3. Use of Quotas is to determine:

• Resource contribution of a member
• Voting power in IMF decisions.
• Members get one vote per SDR100,000 of quota plus basic votes, which are the same for all members.
• Amount of loans a member can obtain from the IMF
• General allocation of Special Drawing Rights (SDRs).
• India currently holds a quota of 2.75% and 2.63% in voting rights.

 

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