Strategic Panorama 2009 - 2010 - IEEE

Federico Steinberg Whesler
ges because it was not considered necessary to increase the Fund’s
resources. However, in 2006 an ad hoc reform process was set in
motion, ending in 2008 and marking substantial changes. The process
progressed in two phases. In the first it was agreed to increase
the quotas of China, Korea, Mexico and Turkey as they were the most
under-represented countries (their economy and international status
had grown significantly in recent years, and this had not been reflected
in their quotas). In the second, in April 2008, a much more far reaching
reform was carried out, including a major change in the formula to make
it simpler and more transparent. With the new formula the weight of a
country in world GDP has become the most important variable and is
furthermore weighted, measured as a blend of GDP based on market
exchange rates (weight of 60%) and GDP based on Purchasing Power
Parity exchange rates (40%). The other variables that make up the quota
formula are openness (ratio of imports plus exports to GDP), variability
of current receipts and net capital flows and reserves. The formula also
includes a compression factor to make downward adjustments to the
quota share of the largest countries and upward adjustments to those
of the smaller ones.
It was likewise agreed to triple the basic votes, which accounted for
11% of votes when the IMF was established and only 2% before the
reform. This increase will make it possible to give a bigger say to the poorest
countries, in addition to reversing the trend whereby the increase in
quotas had progressively diluted the weight of the basic votes.
With this reform the quota shares have been modified as shown in
chart 1. With the new formula the quotas of 54 countries (chiefly emerging
economies) have been increased by 4.9 percentage points out of the total.
If to the new formula we add the modifications of the basic votes, China,
Korea, Brazil, Mexico and Spain, Singapore and Turkey show the biggest
vote increases (although below 1%), while the United Kingdom, France,
Saudi Arabia, Canada, Russia, the United States, Belgium, Switzerland
and Australia experienced the largest decreases (although none more than
0.65%).
The reform is undoubtedly moving in the right direction—increasing
the weight of the emerging countries and reducing that of the advanced
countries (particularly those of Europe except Spain and Ireland)—in order
to reflect more closely the new structure of the world economy.
— 57 —