Jakob Vestergaard and Robert H. Wade, Guest Bloggers
Part 2 of a two-part series.
The IMF’s existing quota formula allocates shares to member countries on the basis of four variables (with their weights in the formula given in parentheses):
- Size of a member’s economy, as measured by GDP (50%);
- Member’s integration into the world economy, or “openness” (30 %);
- Member’s potential need for Fund resources, measured in terms of “variability” of current receipts and net capital flows (15%); and
- Member’s financial strength and ability to contribute to the Fund’s finances, as measured by its foreign exchange reserves (5%).
Instead of announcing a new formula in January 2013, as planned, the Executive Board of Directors (EBD) reported to the Board of Governors on the outcome of the Quota Formula Review (IMF 2013). The main conclusions were:
(a) “it was agreed that GDP should remain the most important variable, with the largest weight in the formula and scope to further increase its weight”; and
(b) there was “considerable support for dropping variability from the formula” (IMF 2013: 2-3).
Beyond these, the Executive Directors could agree on little. Read the rest of this entry »