Rethinking the Governance of the International Monetary Fund

Abstract

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper attempts to set out the principal issues that need to be resolved in formulating a proposal for quotas and voice reform in the IMF that could command broad support. Following John Rawls, we argue that "justice is the first virtue of social institutions," and we use his theory of justice to provide a method for understanding what should be the case, in the context of voice and voting shares, before international institutions, such as the IMF, are to be justifiable to their members. The implementation of this process suggests, among other things, that a major revision of the quota formulas is long overdue, and leaving this unaddressed raises serious questions regarding the IMF's governance which could develop into a core mission risk and jeopardize the relevance of the institution.

Emerging Powers and Global Governance: Whither the IMF?

“…The initial quotas in 1944, when the IMF was set up, were supposed to have been based on the original formula, but it appears that the quotas were actually decided ex-ante and the quota formula was developed ex-post to rationalize and justify the quotas (IMF, 2000;Mikesell, 1994;Mirakhor and Zaidi, 2006;Virmani and Patra, 2011). The US Treasury staff were instructed to prepare a formula that would give the largest quotas to the US and its three then allies (the UK, the USSR, and China) -President Roosevelt's Big Four 5 .…”

How to Modify the Mechanism for Setting Member State Quotas Within the International Monetary Fund

“…Wprowadzono je w życie w 1983 roku. Zgodnie z nimi kwoty krajów członkowskich wyznacza się wykorzystując pięć formuł [Boughton, 2001, s. 860-864], [Mirakhor, Zaidi, 2006]. Przedstawia je tablica 1.…”

“…się dane uwzględniające parytet siły nabywczej, udział ten spada do ok. 50%. Ponadto, ich zdaniem, by dodatkowo zwiększyć kwoty krajów słabszych do nowej formuły należy włączyć zmienne odzwierciedlające populację krajów członkowskich oraz wykorzystanie przez nie środków finansowych Funduszu [Mirakhor, Zaidi, 2006i 2007.…”

Rebalancing IMF Quotas

“…Still, using GDPs at current prices and exchange rates appears in contradiction with the objective of giving more say to emerging and developing countries, whose currencies tend to be undervalued relative to PPP. Consistently, it has been suggested to measure GDPs at PPP exchange rates (see Mirakhor and Zaidi, 2006). Additionally, PPP GDPs better reflect the future ability of member countries to contribute to the Fund (Truman, 2006).…”