On April 28, the Board of Governors of the International Monetary Fund (IMF) adopted by a large margin far-reaching reforms of the institution's governance. Governors from 180 of the 185 member countries cast their votes. Of these, 175 countries representing 92.93 percent of the total voting power in the Fund voted in favor of changes to the quota and voting share structure that 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 percent 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. "With a voting turnout of 97.8 percent of member countries, and with 94.6 percent of the members approving these reforms, 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," Mr. Strauss-Kahn added.
"As a result of these changes, the Fund's quota and voting structure will be more dynamic and forward-looking," Mr. 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 (see Press Release No. 08/64), 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 votes—the first such increase since the Fund's creation in 1944—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. 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 percent 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 Board of Governors is the highest decision-making body of the IMF and consists of one governor and one alternate governor appointed by each member country. The governor is usually the minister of finance or the governor of the central bank. Most powers of the IMF are vested in the Board of Governors. The Board of Governors may delegate to the Executive Board all except certain reserved powers. The Board of Governors normally meets once a year
The Executive Board functions in continuous session and is responsible for conducting the business of the IMF. It is composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman. The Board usually meets several times each week. It carries out its work largely on the basis of papers prepared by IMF management and staff.
Each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy. Quota subscriptions generate most of the IMF's financial resources. A member's quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to IMF financing. Total quotas at end-March 2008 were SDR 217.4 billion (about US$354.3 billion).