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Rebalancing IMF Quotas

Authors


  • We are grateful to Yvan Decreux, Christophe Gouel and Sandra Poncet for their contributions in constructing the macroeconomic scenarios underlying the present paper. We also thank an anonymous referee for helpful comments on a previous version of this paper. All remaining errors are our own.

Abstract

In this paper, we address the issue of IMF quota calculation in several directions. We first discuss the relevance of various specifications regarding the choice of variables, the way to measure them and the potential functional forms. Then, relying on long-run projections for GDP, trade and foreign direct investment, we compare the ‘old’ system of formulas to the new one adopted in 2008 at different time horizons until 2030. Two major results emerge from our analysis. First, a single chair for the Eurozone can free 2–3 percentage points of quota shares, but this amount fades over time because intra-Eurozone trade is relatively less dynamic than world trade. Second, introducing population in quota formulas would be the most transparent and efficient way of significantly raising the quota shares for less developed countries.

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