At its first meeting in Africa since 1973, the International Monetary Fund (IMF) announced on Saturday, October 14, that member nations had decided to increase their payments to the global lender and grant sub-Saharan Africa a third seat on its executive board.
This week, the IMF and World Bank held talks in Marrakech, Morocco, where both lenders stated that increasing the IMF’s quota resources and providing Africa a stronger voice within the organisation were among their top goals.
At a news conference on Saturday, Spanish Economy Minister Nadia Calvino, who served as chair of the IMF Financial Committee, stated that there was “agreement on a meaningful increase of quotas by the end of the year.”
As countries agree to raise contributions, the IMF agrees to allocate an additional executive voting seat to Africa.
The quotas, which are based on economic size, define how much money a country should contribute to the IMF, its voting power, and the maximum amount of loans it is eligible to receive.
During this week’s sessions, IMF Director Kristalina Georgieva and World Bank President Ajay Banga urged participants to increase funding so that their organisations could better assist countries affected by poverty and climate change.
Georgieva said the agreement on quotas was “very heartwarming.”
The objective, according to her, was “to make the fund strong financially in terms of our ability to step up should we be hit by yet another shock.”
When asked when the IMF would modify its voting shares, Georgieva responded that the “membership has agreed that this is going to be the next step and that there will be a clear pathway and plan to go there.”
Giving nations with economies like China, which is currently the second largest in the world, a higher vote share has generated debate.
Japan, the third largest economy in the world, with 6.14 percent of the vote versus China’s 6.08 percent.
“At some point, a revision of the IMF’s quota distribution will be inevitable,” French central bank governor Francois Villeroy de Galhau said in Marrakesh on Wednesday.
“But the emerging countries that will benefit from this — including China — will have to accept common rules of the game,” he said.
While voting shares were not changed, the IMF agreed to expand its executive board from 24 to 25 members to give Africa another seat.
Sub-Saharan Africa will now have three executive board members instead of two.
“I will finish with what warmed my heart the most: uniform support for a third African chair on our executive board,” Georgieva said.
“That is so important for meetings that take place on African soil,” she said
“Despite all the difficulties I can only praise our members for finding this pathway to solidarity on which hundreds of millions of people depend.”
