IMF stalemate on quotas highlights increased impact of geopolitics in international institutions

From: Chatham House
Published: Wed Oct 18 2023


Failure to reach an agreement will damage the IMF and the rules-based international economic cooperation it embodies.

Attention around the IMF and World Bank annual meetings in Marrakesh has focused on the failure of their members to agree on language condemning Russia's invasion of Ukraine and Hamas's attacks on Israel. But their inability to agree an increase in IMF quotas is one of the most important - if less publicized - issues for the future of the global economic framework.

To finance its lending to countries in distress, the IMF relies on contributions known as quotas from all its member countries - a share of funds paid in to be re-lent - as well as bilateral borrowing arrangements with individual members. As some of these bilateral arrangements are expiring, the US had proposed an increase in quotas in line with countries' current shareholdings.

Although this proposal was broadly supported by other G7 countries, and some emerging markets (including India), opposition led by China saw this proposal shelved - at least for now.

The problem is that quotas are politically contentious, because they determine not only how much each IMF member contributes to the fund but also its voting power in the institution.

The decision this week highlighted the impact of geopolitics at play in international institutions, and the implications for the role of the IMF as the premier international lender for cash-strapped countries.

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Company: Chatham House

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