What Is the Issue? The International Monetary Fund (IMF, the Fund) is a multilateral organization focused on the international monetary system. In December 2010, the United States and the other IMF member countries agreed to a reform package. It addresses two major concerns about the institution: (1) the representation of emerging and developing economies at the IMF does not reflect their contribution to the global economy; and (2) the size of the IMF’s financial resources has not kept pace with increased economic activity in the global economy. If enacted, the reform package would double the IMF’s capital base and update the governance structure. Specifically, it would increase the IMF member contributions (known as quota) and voting power of developing and emerging market economies, and reduce the total voting power of European countries and reduce Europe’s representation on the IMF’s Executive Board, its main governing body. What is the Reform Package? As currently structured, the two components of the 2010 reform package—the quota and governance reforms—are interlinked, and cannot be implemented separately. A double majority of the IMF membership (measured by voting power and number of total members) is required to adopt the reforms. For the quota increase, IMF members representing at least 70% of IMF contributions must consent to the increase and the governance reforms must be approved. The governance reforms must be agreed by three-fifths of the IMF’s 188 members (113 members) having 85% of the IMF’s total voting power. In many cases (including the United States) this involves parliamentary approval or authorization. Since the United States has voting power of 16.75%, the reforms cannot take effect without ratification by the United States. Depending on the budgetary treatment of any new authorized U.S. contributions to the IMF, appropriations may also be required.
Date of Report: February 19, 2015
Order Number: IF10134
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