The Board of Governors of the International Monetary Fund approved a A 50% increase in the size of the quotas allocated to each member state. The proposal must still be validated by each member state – in some cases, such as the United States and Argentina, requiring legislative approval – before November 15, 2024. The organization stresses that it will “reduce dependence on natural resources.” “Obtained on loan.” Argentina should move from the initial amount of SDR 3,187.3 million to SDR 4,780.5 million. At the current value of the Special Drawing Rights, it should contribute $2,133 million. To fully understand the impact on Argentina, we will see the agency’s decision to raise the minimum from which interest on excess fees is paid.
As is the case every five-year period, the IMF has revised its quota policy. It was No. 16 since the organization’s inception. Fate is pure and exclusive Change your resource asset mix. The organization concluded that “the proposed increase in quotas would enhance the contingent nature of the Fund by reducing its dependence on borrowing, thus ensuring the essential role of quotas in the Fund’s resources.” Despite China’s persistent request, the structure and voting power of member states will not change – for now – and the United States will retain the greatest power.
Receivables are the basic components of an organization’s financial and administrative structure. Its importance lies in that it determines the maximum financial resources that the state must provide to the Fund. The power of votes in IMF decisions; The maximum amount of loans that a member country can obtain from the IMF under normal access conditions; And the participation of each country in the comprehensive allocation of Special Drawing Rights.
Ceteris paribus
usually Two main issues were addressed in the overview Quotas are the size of the total increase and the distribution of the increase among member countries. “The general review of quotas allows the IMF to assess the adequacy of quotas on the basis of the financing needs for the balance of payments of member countries and the IMF’s own ability to help meet those needs,” the organization explains on its official website and continues: “The general review allows Member States may increase their shares on the basis of changes in their relative position in the global economy.
In this particular case, “the IMF’s lending capacity does not increase, but rather changes the source mix of its resources,” he stressed in an interview with PageI12 Former representative to the International Monetary Fund Hector Torres. The fact is that since shareholder contributions have been nominally frozen for a long time (the last decision to update them was in 2010 and took five years to implement), the largest financing today is fed by lines of credit, which do not have the rigidity of quotas.
The IMF itself states that the structure will be reviewed “before June 2025.” This data is not simple, given that China is calling for a review of the structure (and thus voting power on the board), taking into account the growth of its GDP In the last years. For its part, the United States today has 16.05% of the vote and corresponding veto power, a battle it is not willing to give up easily.
Each member country’s share is intended to reflect its relative economic position in the global economy. It is denominated in Special Drawing Rights (SDR), which is the IMF’s unit of account. The current formula was approved in 2008, and gives special importance to each economy’s GDP. According to the current structure, the United States is the country that contributes the most and therefore has the greatest voting power (16.05%) in the decision-making process within the IMF. Followed by Japan (6.14 percent), China (6.08 percent), Germany (5.31 percent), Great Britain (4.03 percent), and France (4 percent). Argentina has 0.66% of the voting power.
This task will be left until 2025. The IMF has recognized “the urgent need and importance of readjusting quotas so that they better reflect members’ relative positions in the global economy, while protecting the quotas of poorer member countries.” They therefore called on the Executive Council to work, by June 2025, to develop “possible methods to guide further adjustment of quotas, including through a new quota formula.”
Influence in Argentina
The governors are the highest authority in each country at the IMF. In the case of Argentina, the governor is the Minister of Economy. Implementing the increase may take several years, taking into account that any quota adjustment must be approved by 85% of the total votes, and no member state’s quota can be modified without its approval.
In the case of the United States and Argentina, this approval must pass through Congress and then the budget must allocate the funds. The point here is that once the Council approves, each country must pay the difference in the share. If the ratio was 50 per cent, Argentina would have to go from SDR 3,187.3 to SDR 4,780.5. At the current value of the Special Drawing Rights, it should contribute $2,133 million. For reference, the 2010 approval took more than five years to be approved because the US Congress refused to approve it.
In the case of Argentina, the amendment could have an effect by reducing the amount of additional interest charges paid for existing credit, because increasing the charges would reduce the delinquent share. “An additional fee of 200 basis points is paid when there is exceptional access. Anything above 200 percent of the quota is considered exceptional. In contrast, 100 basis points are added when liabilities with the IMF remain above 200 percent of the premium for more From ‘3 years (the surcharge on this portion is an additional 100 basis points, for a total of 300 basis points). If premiums are increased by 50 percent, the surcharge will be applied to amounts owed below the current amounts,” says Torres.
History, so far, is inconsistent: In the past, the minimum from which you pay interest on excess fees was not adjusted for the increase in premiums. He stressed that although it has not yet been implemented, “it is not excluded that once the increase in quotas is approved, an adjustment to this minimum will not be applied. Therefore the impact could be zero for Argentina.” PageI12 Alejandro Werner, Director of the Fund’s Western Hemisphere Department.
