© Reuters. Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, speaks on the second day of the annual meeting of the IMF and the World Bank, following last month’s deadly earthquake, in Marrakech, Morocco, October 10, 2023. REUTERS/Susa
By David Lawder
MARRAKECH, Morocco (Reuters) -The International Monetary Fund said on Tuesday that it is seeing “significant support” for a U.S.-backed increase in quota lending resources without changes to its shareholding structure at IMF and World Bank meetings in Morocco.
But IMF Managing Director Kristalina Georgieva told civil society groups that she wants to set a deadline for a “necessary realignment” of the crisis lender’s shareholding structure that would reflect the growth of larger emerging market economies such as China.
Georgieva said during the private event, attended by Reuters, that she was prioritizing an increase in quota resources at the Marrakech meeting to ensure that the IMF has enough lending resources to deal with another potential large-scale global economic crisis
“If we don’t get the quota increase, our relative capacity to stand toe-in-front of future shocks diminishes,” Georgieva said. “I think it would be a good thing to have a deadline on the formula, because without changing the formula, we are stuck.”
An IMF spokesperson confirmed that she was referring to a deadline for adjusting the shareholding structure.
“A decision on realignment of quota shares is one for the membership, and the membership is discussing the need for a new quota formula,” the spokesperson said in an emailed statement. “While discussions are underway, we are seeing significant support emerging for an equi-proportional increase.”
The United States is arguing in favor of such an increase, which would see member countries contribute more funds in the same proportion to their current shareholdings.
Quota contributions, which are based on voting power, now account for more than 40% of the Fund’s $1 trillion in lending firepower, which has been taxed by years of COVID-19, inflation, climate shocks and spillovers from Russia’s war in Ukraine.
China, India, Brazil and other big emerging markets have long sought more voting power at the IMF to coincide with their growing influence in the global economy. The last adjustment was made in 2010.
Georgieva’s call for setting a deadline appears to be a signal that the U.S. plan has a strong chance of succeeding. A decision is expected on Saturday, when the IMF’s steering committee meets.
Some emerging market officials, including Brazil, have argued that the Fund could be weakened politically without more representation of fast-growing economies.
Georgieva said the decision on a realignment deadline was up to members. The IMF is scheduled to complete a long-delayed review of quota resources by Dec. 15.
“But I am hoping to see that kind of commitment to the formula that could then unleash some necessary realignment,” she said.
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