Skip to main content
SpringerLink
Log in
Book cover

European Yearbook of International Economic Law 2012 pp 635–666Cite as

Recent Reforms of the Finances of the International Monetary Fund: An Overview

  • Chapter
  • First Online:

Part of the book series: European Yearbook of International Economic Law ((EUROYEAR,volume 3))

Abstract

Under its charter, the International Monetary Fund with its near universal membership of 187 countries – is charged with “oversee[ing] the international monetary system.” This chapter discusses the measures taken by the International Monetary Fund to reform its income model and to improve its financing capacity. It also touches on related developments, in particular International Monetary Fund governance reform, which is inextricably linked to the financing reform through the link of quota share and voting power in the International Monetary Fund, and the reform of the International Monetary Fund's financing facilities, i.e., the modalities through which the International Monetary Fund provides financing to its members, which also influence the size of the International Monetary Fund.

The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or IMF management. This chapter reflects the status as of April 2011.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    The IMF’s charter is the IMF’s Articles of Agreement (the “IMF’s Articles”), which were adopted at the United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, 22nd July, 1944 and entered into force on 27th December, 1945. The IMF’s Articles were amended effective 28th July, 1969, by the modifications approved by the Board of Governors in Resolution No. 23–5, adopted 31st May, 1968 (“First Amendment”); amended effective 1st April, 1978, by the modifications approved by the Board of Governors in Resolution No. 31–4, adopted 30th April, 1976 (“Second Amendment”); amended effective 11th November, 1992, by the modifications approved by the Board of Governors in Resolution No. 45–3, adopted 28th June, 1990 (“Third Amendment”); amended effective 10th August, 2009, by the modifications approved by the Board of Governors in Resolution No. 52–4, adopted 23rd September, 1997 (“Fourth Amendment”); amended effective 18th February, 2011 by the modifications approved by the Board of Governors in Resolution No. 63–3, adopted 5th May, 2008 (“Fifth Amendment”); and amended effective 3rd March, 2011 by the modifications approved by the Board of Governors in Resolution No. 63–2, adopted 28th April, 2008 (“Sixth Amendment”). The IMF’s Articles are available at: http://www.imf.org/external/pubs/ft/aa/index.htm.

  2. 2.

    See: Art. IV, Sec. 1 and 3(a) of the IMF’s Articles of Agreement.

  3. 3.

    Art. I(v) of the IMF’s Articles.

  4. 4.

    It may be helpful to briefly describe the IMF’s organs to better understand the IMF’s decision making process: The highest decision-making body of the IMF is the Board of Governors, consisting of one Governor per member (i.e. currently 187 Governors). Responsible for conducting the business of the IMF is the Executive Board, consisting of 24 Executive Directors, which also exercises all the powers delegated to it by the Board of Governors. The Managing Director conducts, under the direction of the Executive Board, the ordinary business of the IMF. See, Art. XII of the IMF’s Articles. The International Monetary and Financial Committee (IMFC) is an advisory committee of the Board of Governors at ministerial level that reflects in its composition the Executive Board. See for more background: Gianviti, Decision Making in the International Monetary Fund, in: Current Developments in Monetary and Financial Law, Volume 1, 1999, pp. 31–67.

  5. 5.

    Outstanding IMF credit decreased from its historical peak in September 2003 at SDR 70 billion to just about SDR 5.8 billion in March 2008. As of end February 2011, IMF outstanding credit again amounted to about SDR 61.4 billion. Information on total IMF Credit Outstanding for all IMF members from 1984–2011 is available at: http://www.imf.org/external/np/fin/tad/extcred1.aspx; see also a historical overview of IMF credit outstanding since 1947 at: http://www.imf.org/external/about/lending.htm.

  6. 6.

    Press Release No. 07/82, IMF Executive Board Reviews Fund's Income Position and Leaves Rate of Charge Unchanged for FY 2008, available at: http://www.imf.org/external/np/sec/pr/2007/pr0782.htm. IMF, Review of the Fund’s Income Position for FY 2008 and FY 2009, 2008, available at: www.imf.org/external/np/pp/eng/2008/041408.pdf.

  7. 7.

    The rate of remuneration the IMF pays to members whose quota subscription payments it uses for its financing operations shall be not more than, nor less than four-fifths of, the SDR interest rate; see Art. V, Sec. 9(b) IMF’s Articles.

  8. 8.

    See: Art. XII, Sec. 6(f) of the IMF’s Articles.

  9. 9.

    IMF, Establishment of the Investment Account, 2006, available at: www.imf.org/external/np/pp/eng/2006/041406i.pdf; Press Release No. 06/90, IMF Executive Board Reviews Fund's Income Position, Sets Rate of Charge for FY 2007 and Approves Establishment of an Investment Account, available at: http://www.imf.org/external/np/sec/pr/2006/pr0690.htm. The IMF had the authority to establish the IA since the entry into force of the Second Amendment but only exercised it in 2006.

  10. 10.

    Former Art. XII, Sec. 6(f)(iii) of the IMF’s Articles prior to the Fifth Amendment in the context of the new income model.

  11. 11.

    The Committee was chaired by Andrew Crockett, and included Mohamed A. El-Erian, Alan Greenspan, Tito Mboweni, Guillermo Ortiz, Hamad Al-Sayari, Jean-Claude Trichet, and Zhou Xiaochuan.

  12. 12.

    See: Report of the Managing Director to the International Monetary and Financial Committee on a New Income and Expenditure Framework for the International Monetary Fund, 2008, available at: www.imf.org/external/np/pp/eng/2008/040908b.pdf. Press Release No. 08/74, IMF Managing Director Strauss-Kahn Applauds Executive Board's Landmark Agreement on Fund's New Income and Expenditure Framework, available at: http://www.imf.org/external/np/sec/pr/2008/pr0874.htm; Press Release No. 08/101, IMF Board of Governors Approves Key Element of IMF's New Income Model, available at: http://www.imf.org/external/np/sec/pr/2008/pr08101.htm.

  13. 13.

    The Committee made two additional proposals: (i) it proposed an amendment to the country contribution policy for the IMF’s capacity building activities (i.e., technical assistance and training). While the IMF developed and implemented this amendment to the country contribution policy for technical assistance and training, its application for IMF technical assistance has been delayed and for IMF training has been suspended since January 2010; see: IMF Country Contribution Policy for Capacity Building, available at: http://www.imf.org/external/np/ta/2008/capacity.htm. (ii) the Committee also proposed the investment of quota resources; this proposal did not receive the necessary support by the membership to make it a viable component of the new income model.

  14. 14.

    Under the PRGT framework, in principle, the GRA is reimbursed from the PRGT’s Reserve Account for the expenses incurred by the IMF in the administration of the PRGT. Reimbursement has been often suspended leading to a negative impact on GRA income. See Decision No. 8760-(87/176), 18th December, 1987, as amended at IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 462, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=8760-(87/176).

  15. 15.

    The IMF’s Articles normally limit the amount of currencies that can be transferred from the GRA to the IA to the total amount of its general and special reserve at the time of the transfer; see: Art. XII, Sec. 5(f)(ii) of the IMF’s Articles. To ensure that all gold profits can be transferred to the IA to fund the endowment, irrespective of the level of the IMF’s reserves, an amendment to Art. XII, Sec. 5(f)(ii) of the IMF’s Articles was required.

  16. 16.

    Board of Governors Resolution No. 63–3 effective 5th May, 2008, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=63-3; IMF, Report of the Managing Director to the International Monetary and Financial Committee on a New Income and Expenditure Framework for the International Monetary Fund, 2008, available at: www.imf.org/external/np/pp/eng/2008/040908b.pdf. Press Release No. 08/101, IMF Board of Governors Approves Key Element of IMF's New Income Model, available at: http://www.imf.org/external/np/sec/pr/2008/pr08101.htm.

  17. 17.

    In accordance with Art. XXVIII(a) of the IMF’s Articles, once the IMF certifies by formal communication that 3/5 of IMF members having 85% of the total voting power have accepted a proposed amendment, an amendment enters into force for all IMF members. See for further detail: Acceptances of the Proposed Amendments of the Articles of Agreement, available at: http://www.imf.org/external/np/sec/misc/consents.htm#a2.

  18. 18.

    Press Release No. 11/52, IMF’s Broader Investment Mandate Takes Effect, available at: http://www.imf.org/external/np/sec/pr/2011/pr1152.htm.

  19. 19.

    Press Release No. 09/310, IMF Executive Board Approves Limited Sales of Gold to Finance the Fund’s New Income Model and to Boost Concessional Lending Capacity, available at: http://www.imf.org/external/np/sec/pr/2009/pr09310.htm.

  20. 20.

    IMF, U.S. Congress Vote Marks Big Step For IMF Reform, Funding, 2009, available at: http://www.imf.org/external/pubs/ft/survey/so/2009/new061809a.htm.

  21. 21.

    Press Release No. 10/44, IMF to Begin On-Market Sales of Gold, available at: http://www.imf.org/external/np/sec/pr/2010/pr1044.htm; Press Release No. 09/381, IMF Announces Sale of 200 metric tons of Gold to the Reserve Bank of India, available at: http://www.imf.org/external/np/sec/pr/2009/pr09381.htm; Press Release No. 09/413, IMF Announces Sale of 2 Metric Tons of Gold to the Bank of Mauritius, available at http://www.imf.org/external/np/sec/pr/2009/pr09413.htm; Press Release No. 09/431, IMF Announces Sale of 10 Metric Tons of Gold to the Central Bank of Sri Lanka, available at: http://www.imf.org/external/np/sec/pr/2009/pr09431.htm.

  22. 22.

    Press Release No. 10/509, IMF Concludes Gold Sales, available at: http://www.imf.org/external/np/sec/pr/2010/pr10509.htm.

  23. 23.

    PIN No. 09/94, IMF Reforms Financial Facilities for Low-Income Countries, available at: http://www.imf.org/external/np/sec/pn/2009/pn0994.htm. Press Release No. 09/268, IMF Announces Unprecedented Increase in Financial Support to Low-Income Countries, available at: http://www.imf.org/external/np/sec/pr/2009/pr09268.htm. See also section on Increasing the IMF Financing Capacity For Its Low-Income Members below.

  24. 24.

    IMF, Use of Gold Sale Profits – Initial Considerations and Options, 2011, available at: http://www.imf.org/external/np/pp/eng/2011/031611.pdf; PIN No. 11/48, IMF Executive Board Considers Use of Gold Sale Profits, available at: http://www.imf.org/external/np/sec/pn/2011/pn1148.htm.

  25. 25.

    Specifically, see Rule I-6(4) of the IMF’s Rules and Regulations. IMF, Review of the Fund’s Income Position for FY2006 and FY2007, 2006, available at: www.imf.org/external/np/pp/eng/2006/041206.pdf; Press Release No. 06/90, IMF Executive Board Reviews Fund's Income Position, Sets Rate of Charge for FY 2007 and Approves Establishment of an Investment Account, available at: http://www.imf.org/external/np/sec/pr/2006/pr0690.htm.

  26. 26.

    See Rule I-6(4) of the IMF’s Rules and Regulations.

  27. 27.

    IMF, The Fund’s Income Position for FY 2010 – Midyear Review, 2009, available at: www.imf.org/external/np/pp/eng/2009/120709.pdf .

  28. 28.

    See PIN No. 09/94, IMF Reforms Financial Facilities for Low-Income Countries, available at: http://www.imf.org/external/np/sec/pn/2009/pn0994.htm.

  29. 29.

    At end-September 2008, prior to any crises related GRA lending, lendable IMF resources stood at about US$255 billion (see below).

  30. 30.

    See Board of Governors Resolution No. 63–1 effective 28th January, 2010 in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 17, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=63-1.

  31. 31.

    See IMF Lending arrangements for IMF members as of March 31, 2011 at: http://www.imf.org/external/np/fin/tad/extarr11.aspx?memberKey1=ZZZZ&date1key=2020-02-28. See the world map of IMF lending at http://www.imf.org/external/np/exr/map/lending/index.htm.

  32. 32.

    Communiqué of the Heads of State and Government of the Group of Twenty Industrialized and Emerging Market Economies, The Global Plan for Recovery and Reform, 2nd April, 2009, available at: http://www.g20.org/Documents/final-communique.pdf.

  33. 33.

    Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 25th April, 2009, see: http://www.imf.org/external/np/sec/pr/2009/pr09139.htm.

  34. 34.

    See more below under the General and Special SDR Allocations.

  35. 35.

    Art. III, Sec. 1 of the IMF’s Articles. Quotas are subject to periodic reviews, at least every five years, but can also be changed on an ad-hoc basis (Art. III, Sec. 2 of the IMF’s Articles). Any change in quotas must be adopted by the Board of Governors with an 85% majority of the total voting power.

  36. 36.

    Following the entry into force of the Sixth Amendment on 3rd March, 2011, ad hoc quota increases for 54 eligible members under the 2008 quota and voice reform will become effective, once those members have consented to, and paid for, their increases. See Reform of IMF Quotas and Voices, available at: http://www.imf.org/external/np/exr/ib/2008/040108.htm.

  37. 37.

    For individual IMF member country quota information, see: http://www.imf.org/external/np/sec/memdir/members.htm.

  38. 38.

    Art. III, Sec. 3(a) of the IMF’s Articles.

  39. 39.

    Art. XIII, Sec. 2(a) of the IMF’s Articles provides: “(a) Each member shall designate its central bank as a depository for all the IMF’s holdings of its currency, or if it has no central bank it shall designate such other institution as may be acceptable to the Fund.” In addition, Art. V, Sec. 1 of the IMF’s Articles stipulates that “Each member shall deal with the IMF only through its Treasury, central bank, stabilization fund, or other similar fiscal agency, and the IMF shall deal only with or through the same agencies.” When a country joins the IMF it designates the fiscal agency for its dealings with the IMF.

  40. 40.

    Art. III, Sec. 4 of the IMF’s Articles and Rule E-1 of the IMF’s Rules and Regulations.

  41. 41.

    Art. XXX(f) of the IMF’s Articles defines the term “freely usable currency” as follows: “A freely usable currency means a member’s currency that the IMF determines (i) is, in fact, widely used to make payments and transfers for international transactions, and (ii) is widely traded in the principal exchange markets. Currently, the euro, Japanese yen, pound sterling and the U.S. dollar are considered freely usable currencies. See Executive Board Decision No. 11857-(98/130), 17th December, 1998, see: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 782.

  42. 42.

    Art. V, Sec. 3(e)(i) and (ii) of the IMF’s Articles.

  43. 43.

    Art. V, Sec. 3(d) of the IMF’s Articles.

  44. 44.

    Currently there are 52 members on the Financial Transactions Plan. The most recent published version of the FTP can be obtained at http://www.imf.org/cgi-shl/create_x.pl?ftp+2010.

  45. 45.

    The amount by which holdings are below quota is called the reserve tranche. It forms part of a members reserve assets as a member has the right to make purchases for the amount of its reserve position upon representation of balance of payments need (see Art. XXX(c) of the IMF’s Articles). The reserve tranche is remunerated, except for a small portion (Art. V, Sec. 9(a) and (b) of the IMF’s Articles).

  46. 46.

    Art. V, Sec. 8(b) of the IMF’s Articles.

  47. 47.

    Art. V, Sec. 11 of the IMF’s Articles.

  48. 48.

    Art. V, Sec. 7(j)(i) of the IMF’s Articles.

  49. 49.

    See more on the Forward Commitment Capacity at http://www.imf.org/cgi-shl/create_x.pl?liq.

  50. 50.

    Usable resources consist of: (i) IMF holdings of the currencies of members considered by the IMF Executive Board to have a sufficiently strong balance of payments and reserve position for them to be included in the FTP for the financing of the IMF’s operations and transactions; (ii) IMF holdings of SDRs; and (iii) unused amounts available under currently active bilateral loan and note purchase agreements, and unused amounts available under the New Arrangements to Borrow or the General Arrangements to Borrow when these have been activated.

  51. 51.

    The prudential balance is calculated as 20 percent of the quotas of members included in the FTP, amounts made available under bilateral loan and note purchase agreements, and any amounts activated under the NAB or the GAB. At end-September 2008, prior to any crises related GRA lending, lendable IMF resources stood at about US$255 billion, of which US$199 billion available to cover potential new lending commitments under the FCC in addition to US$54 billion under the NAB, the IMF’s primary borrowing mechanism. IMF, Review of the Adequacy of and Options for Supplementing Fund, 2009, available at: www.imf.org/external/np/pp/eng/2009/011209.pdf. See more on the IMF's Financial Resources and Liquidity Position at http://www.imf.org/external/np/tre/liquid/2009/0909.htm.

  52. 52.

    See IMF Financial Activities, updated 7th April, 2011, available at: http://www.imf.org/external/np/tre/activity/2011/040711.htm.

  53. 53.

    Art. VII, Sec. 1 of the IMF’s Articles.

  54. 54.

    Examples include the Oil facilities in 1974–75, the Supplementary Financing Facility in 1979–81, and the enlarged access policy of 1981–86; see IMF, Financial Organization and Operations of the IMF, No. 45, (6th ed.) 2001, p. 77.

  55. 55.

    Press Release No. 09/32, IMF Signs US$100 Billion Borrowing Agreement with Japan, available at http://www.imf.org/external/np/sec/pr/2009/pr0932.htm.

  56. 56.

    See links to all borrowing agreements and the related press releases in “Bolstering the IMF's Lending Capacity”, available at: http://www.imf.org/external/np/exr/faq/contribution.htm. To date, counterparties of the IMF’s borrowing agreements include the Government of Japan, Norges Bank, the Government of Canada, the Government of France, the Government of the United Kingdom, Deutsche Bundesbank, Spain, De Nederlandsche Bank NV, Danmarks Nationalbank, Banca d’Italia, Banco de Portugal, Central Bank of Malta, National Bank of Belgium, Slovak Republic, Oesterreichische Nationalbank, Bank of Finland, Sveriges Riksbank, Czech National Bank, and Bank of Slovenia.

  57. 57.

    In this regard, it should be noted that Art. VII, Sec. 1 of the IMF’s Articles requires the member’s consent if the IMF borrows a member’s currency from source other than the member, including its central bank.

  58. 58.

    See Press Release No. 09/248, IMF Approves Framework for Issuing Notes to the Official Sector, available at: http://www.imf.org/external/np/sec/pr/2009/pr09248.htm.

  59. 59.

    IMF, A Framework for the Fund’s Issuance of Notes to the Official Sector, 2009, available at:

    http://www.imf.org/external/np/pp/eng/2009/061709B.pdf.

  60. 60.

    See all press releases and agreements in “Bolstering the IMF's Lending Capacity”, available at: http://www.imf.org/external/np/exr/faq/contribution.htm.

  61. 61.

    See: IMF, Proposed Decision to Modify the New Arrangements to Borrow, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/032510c.pdf.

  62. 62.

    Decision No. 1289-(62/1), 5th January, 1962, as amended; see IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 470, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=1289-(62/1). There is an associated arrangement with Saudi Arabia for an additional SDR 1.5 billion, see: http://www.imf.org/external/np/exr/facts/gabnab.htm.

  63. 63.

    For commitments of the 26 participants under old NAB, see Annex to Decision No. 11428-(97/6), 27th January, 1997 in IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 486, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=11428-(97/6) (“NAB Decision (old)”).

  64. 64.

    See preamble to the NAB Decision (old).

  65. 65.

    See Press Release No. 07/270, IMF Executive Board Approves Renewal of Standing Borrowing Arrangements, available at: http://www.imf.org/external/np/sec/pr/2007/pr07270.htm.

  66. 66.

    Paragraph 21 of NAB Decision (old).

  67. 67.

    See more below under Influence Of The Reform Of The IMF Lending Toolkit.

  68. 68.

    Paragraphs 6 A and B, 7A(a), 7A(b), and 7A(g),(h) and (i) of NAB Decision (old).

  69. 69.

    IMF, Proposed Decision to Modify the New Arrangements to Borrow, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/032510c.pdf. The provisions of the amended and enlarged NAB may be found in the before-mentioned paper and are referred to as “NAB Decision (new)” throughout the chapter.

  70. 70.

    The NAB reform was adopted on 12th April, 2010. Its effectiveness required the consent of participants representing 85 percent of total credit arrangements to the amendments of the NAB to make it more flexible (Paragraph 15(a) of the NAB Decision (new)), and the consent of participants representing 85 percent of total credit arrangements of participants, including the consent of each participant whose credit arrangement is changed (i.e., 22 participants), for the increases in credit arrangements of current participants (Paragraph 5(b) of the NAB Decision (old)). As both the effectiveness of the amendments and the increases in credit arrangements were linked, the effectiveness of the NAB reform effectively required the consent of the 22 participants whose credit arrangements were changed, which represent 96 percent of the total voting power. Moreover, for the NAB to be operational for drawings, the adherence to the modified NAB of new participants representing at least 70 percent of the proposed total credit arrangements of new participants was required (Paragraph 24 of the NAB Decision (new)). For many members, consent to the NAB reform required legislative approval, in particular budgetary authorization. See Consents and Adherences to the Proposed Expansion of the Fund’s New Arrangements to Borrow (NAB), available at: http://www.imf.org/external/np/fin/misc/nab.htm.

  71. 71.

    Press Release No. 11/74, Major Expansion of IMF Borrowing Arrangements Takes Effect, Boosting Resources for Crisis Resolution, available at: http://www.imf.org/external/np/sec/pr/2011/pr1174.htm.

  72. 72.

    Press Release No. 10/145, IMF Executive Board Approves Major Expansion of Fund’s Borrowing Arrangements to Boost Resources for Crisis Resolution, available at: http://www.imf.org/external/np/sec/pr/2010/pr10145.htm.

  73. 73.

    The NAB can be activated “when the Fund’s resources available for the purpose of providing financing to members from the General Resources Account need to be supplemented in order to forestall or cope with an impairment of the international monetary system”; see Paragraph 5(a) NAB Decision (new). Under paragraphs 6A and B of the NAB Decision (old), the standard required for activation differed whether the NAB was activated for NAB participants or non-NAB participants: While for the former the standard was “to forestall or cope with an impairment of the international monetary system”, the latter required “existence of an exceptional situation associate with balance of payments problems of members of a character or aggregate size that could threaten the stability of the international monetary system.”

  74. 74.

    Press Release No. 11/74, Major Expansion of IMF Borrowing Arrangements Takes Effect, Boosting Resources for Crisis Resolution, available at: http://www.imf.org/external/np/sec/pr/2011/pr1174.htm.

  75. 75.

    Press Release No. 11/109, IMF Activates Expanded Borrowing Arrangements, available at: http://www.imf.org/external/np/sec/pr/2011/pr11109.htm. See: IMF Financial Activities, updated 7th April, 2011, available at: http://www.imf.org/external/np/tre/activity/2011/040711.htm.

  76. 76.

    Quota reform has been at the center of the discussions for the last few years: Starting in September 2006, the IMF approved a first set of initial ad hoc increases in quotas for a small group of the most under-represented countries comprising China, Korea, Mexico and Turkey; see Press Release, IMF Executive Board Recommends Quota and Related Governance Reforms, available at: http://www.imf.org/external/np/sec/pr/2006/pr06189.htm. Following up in April 2008, as part of the IMF’s broader quota and voice reform, the IMF Board of Governors approved increases in the quotas of 54 members that were underrepresented under the newly adopted quota formula and requested that the IMF Executive Board recommend further realignments of members’ quota shares in the context of future general quota reviews, beginning with the Fourteenth General Review, to ensure that they continue to reflect members’ relative positions in the world economy; see Board of Governors Resolution No. 63–2, adopted 28th April, 2008; IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 18, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=DN3.

  77. 77.

    As discussed above, quota reviews are required at intervals of five years under the IMF’s Articles.

  78. 78.

    Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 25th April, 2009, available at: http://www.imf.org/external/np/sec/pr/2009/pr09139.htm.

  79. 79.

    Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 4th October, 2009, available at: http://www.imf.org/external/np/sec/pr/2009/pr09347.htm.

  80. 80.

    For a more detailed analysis see IMF, Fourteenth General Review of Quotas-The Size of the Fund – Initial Considerations, 2010, available at: https://www.imf.org/external/np/pp/eng/2010/031210.pdf.

  81. 81.

    Art. V, 3(b)(ii) of the IMF’s Articles. Commonly, financial assistance is provided through an IMF arrangement which is a decision of the IMF that gives an IMF member the assurance that the IMF stands ready to provide SDRs or usable currencies during a specified period and up to a specified amount, in accordance with the agreed terms; see Art. XXX(b) of the IMF’s Articles. The member’s economic program underlying an IMF arrangement is formulated by the country in consultation with the IMF and is presented to the IMF’s Executive Board in a Letter of Intent (“LOI”), typically, together with a Memorandum of Economic and Financial Policies (“MEFP”), and a Technical Memorandum of Understanding (“TMU”). See more on the nature of IMF arrangements: Leckow, The Stand-By Arrangement: Its Legal Nature and Principal Features, in: Current Developments in Monetary and Financial Law, Volume 2, 2003, pp. 33–49.

  82. 82.

    More on IMF conditionality see: Leckow, Conditionality in the International Monetary Fund, in: Current Developments in Monetary and Financial Law, Volume 3, 2005, pp. 53–64.

  83. 83.

    Access limits are intended to balance the need to provide members with confidence regarding the scale of possible IMF financing with the need to preserve IMF liquidity and the revolving character of IMF resources. The amount of financing a member can obtain from the IMF (its access limit) is a multiple of the member’s quota. See: IMF, Review of Limits on Access to Financing in the Credit Tranches and Under the Extended Fund Facility, and Overall Access Limits Under the General Resources Account, 2008, available at: www.imf.org/external/np/pp/eng/2008/090208E.pdf .

  84. 84.

    See: Relationship between Performance criteria and phasing purchases under Fund arrangements – o perational guidelines, see: Decision No. 7925-(85/38), 8th March, 1995, as amended in IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 334, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=EBM/09/29.

  85. 85.

    See: Repurchase, Decision No. 5703-(78/39), 22nd March, 1978, as amended in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 424, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=EBM/09/29.

  86. 86.

    All GRA arrangements are subject to the IMF’s market-related interest rate, known as the “rate of charge” and large loans (above certain limits) carry a surcharge; see I-Rules of the IMF’s Rules and Regulations at http://www.imf.org/external/pubs/ft/bl/blcon.htm. See also: SDR Interest Rate, Rate of Remuneration, Rate of Charge and Burden Sharing Adjustments 2010, available at: http://www.imf.org/cgi-shl/create_x.pl?bur: and Decision No. 12346-(00/117), 28th November, 2000, as amended in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 428, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=12346-(00/117). Further, a commitment fee is charged on IMF arrangements which are precautionary (i.e., under which the member has not yet drawn) which are refundable in case the member draws. See: Rule I-8 of the IMF’s Rules and Regulations. A new system of surcharges and commitment fees is in place since 2009. See: IMF, GRA Lending Toolkit and Conditionality: Reform Proposals, 2009, available at: www.imf.org/external/np/pp/eng/2009/031309a.pdf; IMF, The Acting Chair’s Summing Up – GRA Lending Toolkit and Conditionality – Reform Proposals March 24, 2009 in IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 292, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=EBM/09/29.

  87. 87.

    Art. V, Sec. 3(a) of the IMF’s Articles.

  88. 88.

    See for further background: IMF, Review of Fund Facilities – Analytical Basis for Fund Lending and Reform Options, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/020609a.pdf; IMF, Review of the Fund’s Financing Role in Member Countries, 2008, available at: http://www.imf.org/external/np/pp/eng/2008/082808.pdf.

  89. 89.

    Also, the IMF eliminated certain recently infrequently used facilities, which were repealed by Decision No. 14282-(09/29), adopted 24th March, 2009. These are the Short-Term Liquidity Facility, Decision No. 14184-(08/93), adopted 29th October, 2008, Supplemental Reserve Facility, Decision No. 11627-(97/123), adopted 17th December, 1997, as amended, and Compensatory Financing Facility, Decision No. 8955-(88/126), adopted 23rd August, 1988, as amended in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 296, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=EBM/09/29. See, IMF, GRA Lending Toolkit and Conditionality: Reform Proposals, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/031309A.pdf.

  90. 90.

    See, IMF, GRA Lending Toolkit and Conditionality: Reform Proposals, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/031309A.pdf; see PIN No. 09/40, IMF Overhauls Nonconcessional Lending Facilities and Conditionality, 2009, available at: http://www.imf.org/external/np/sec/pn/2009/pn0940.htm.

  91. 91.

    Subject to four criteria, the IMF is prepared to make resources available to members in excess of normal access limits. See: Access Policy, Summing-up 02/94, 6th September, 2002, as amended in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 392, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=EBM/02/94.

  92. 92.

    Normal access limits in the GRA were doubled to 200% of quota annually and 600% of quota cumulatively; see IMF, GRA Lending Toolkit and Conditionality: Reform Proposals, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/031309A.pdf and PIN No. 09/40, IMF Overhauls Nonconcessional Lending Facilities and Conditionality, available at: http://www.imf.org/external/np/sec/pn/2009/pn0940.htm.

  93. 93.

    IMF, The Fund’s Mandate – The Future Financing Role: Revised Reform Proposals, 2010, available at: www.imf.org/external/np/pp/eng/2010/082510.pdf.

  94. 94.

    IMF, The Fund’s Mandate – The Future Financing Role: Revised Reform Proposal, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/082510.pdf.

  95. 95.

    Currently, Mexico (SDR 47 billion), Colombia (SDR 2.3 billion), and Poland (SDR 19 billion) have a FCL arrangement. See: IMF, Colombia: Staff Report Arrangement Under the Flexible Credit Line, 2011, available at: http://www.imf.org/external/pubs/ft/scr/2010/cr10156.pdf; IMF, Staff Report Mexico: Arrangement Under the Flexible Credit Line, 2011, available at: http://www.imf.org/external/pubs/ft/scr/2011/cr1111.pdf; IMF, Staff Report Republic of Poland: Arrangement Under the Flexible Credit Line, 2011, available at: http://www.imf.org/external/pubs/ft/scr/2011/cr1124.pdf. Macedonia (total of SDR 412 million over two years) has a PCL arrangement. See: IMF, Staff Report for the 2010 Article IV and Arrangement under the Precautionary Credit Line, 2011, available at: http://www.imf.org/external/pubs/ft/scr/2011/cr1142.pdf.

  96. 96.

    Quota is the main component that determines voting power in the IMF (i.e., one vote per SDR 100,000 in quota). A minimum of votes is distributed to all members in the form of basic votes pursuant to Art. XII, Sec. 5(a) of the IMF’s Articles. The Sixth Amendment to the IMF’s Articles (Voice and Participation Amendment), which entered into force on 3rd March, 2011 essentially tripled basic votes to approximately 742 votes (from a fixed number of 250 basic votes under the former Art. XII, Sec. 5(a) of the IMF’s Articles), once all eligible members have paid their ad hoc quota increases under the 2008 reform. In addition, this amendment also ensures that basic votes can no longer be eroded by quota increases, by allocating a fix percentage of total votes (i.e., 5.502%) that will be divided among the IMF membership equally as basic votes – assuming there are no fractional votes. The Sixth Amendment was adopted by the Board of Governors Resolution No. 63–2 effective 28th April, 2008 and entered into force on 3rd March, 2011. Acceptance of the Proposed Amendments of the Articles of Agreement at http://www.imf.org/external/np/sec/misc/consents.htm#a2. See: IMF, Reform of Quota and Voice in the International Monetary Fund – Report of the Executive Board to the Board of Governors, 2008, available at: www.imf.org/external/np/pp/eng/2008/032108.pdf. For background see: IMF, Proposed Amendment of the Articles of Agreement Regarding Basic Votes – Preliminary Considerations, 2006, available at: www.imf.org/external/np/pp/eng/2006/122206a.pdf.

  97. 97.

    The discussion on IMF governance reform started with an assessment report by the IMF’s Independent Evaluations Office. See: IEO, Governance of the IMF An Evaluation, 2008, available at: http://www.ieo-imf.org/eval/complete/pdf/05212008/CG_main.pdf. In response to this report, the Managing Director requested an eminent committee to review IMF governance. A report authored by the eminent committee headed by Mr. Trevor Manuel followed in 2009. Press Release No. 09/88, IMF Managing Director Dominique Strauss-Kahn Welcomes Experts’ Report on Fund Decision Making, available at: http://www.imf.org/external/np/sec/pr/2009/pr0988.htm. Its report was published in 2009: Committee on IMF Governance Reform, 2009, available at: http://www.imf.org/external/np/omd/2009/govref/032409.pdf. See also: IMF, IMF Governance – Summary of Issues and Reform Options, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/070109.pdf; IMF, IMF Governance Reform, 2010, available at: www.imf.org/external/np/pp/eng/2010/070710.pdf; PIN No. 10/108, IMF Executive Board Discusses IMF Governance Reform, available at: http://www.imf.org/external/pp/longres.aspx?id=4464.

  98. 98.

    Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 24th April, 2010, available at: http://www.imf.org/external/np/sec/pr/2010/pr10166.htm.

  99. 99.

    Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund, 9th October, 2010, available at: http://www.imf.org/external/np/sec/pr/2010/pr10379.htm.

  100. 100.

    Other issues include the strengthening of ministerial involvement in the IMF’s decision making, double majorities, or the delineation of responsibilities among IMF organs.

  101. 101.

    For further background, see, Hagan, Reforming the Fund in International Monetary and Financial Law. The Global Crisis, 2011, pp. 40–68.

  102. 102.

    IMF, Executive Board Progress Report to the IMFC: The Reform of Fund Governance, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/042110a.pdf; IMF, IMF Governance Reform, 2010, available at: www.imf.org/external/np/pp/eng/2010/070710.pdf; PIN No. 10/108, IMF Executive Board Discusses IMF Governance Reform, available at: http://www.imf.org/external/np/sec/pn/2010/pn10108.htm.

  103. 103.

    Art. III, Sec. 2(c) of the IMF’s Articles.

  104. 104.

    The current quota formula was agreed upon in April 2008. IMF, Reform of Quota and Voice in the International Monetary Fund – Report of the Executive Board to the Board of Governors, 2008, see http://www.imf.org/external/pp/longres.aspx?id=4235. The current quota formula is a weighted average of GDP (weight of 50 percent), openness (30 percent), economic variability (15 percent), and international reserves (5 percent). For this purpose, GDP is measured as a blend of GDP based on market exchange rates (weight of 60 percent) and on PPP exchange rates (40 percent). The formula also includes a “compression factor” that reduces the dispersion in calculated quota shares across members

  105. 105.

    See Tables in IMF, Fourteenth General Review of Quotas – Realigning Quota Shares: Initial Considerations, 2010, available at: https://www.imf.org/external/np/pp/eng/2010/030410a.pdf.

  106. 106.

    See: Board of Governors Resolution No. 66–2 effective 15th December, 2010, in IMF, IMF Quota and Governance Reform Elements of an Agreement, 2010, available at: www.imf.org/external/np/pp/eng/2010/103110.pdf.

  107. 107.

    The Sixth Amendment together with Board of Governors Resolution No. 66–2 effective 15th December, 2010, in IMF, IMF Quota and Governance Reform Elements of an Agreement, 2010, available at: www.imf.org/external/np/pp/eng/2010/103110.pdf, introduced the option for the appointment of a Second Alternate Executive Director for constituencies of seven or more starting with the 2012 regular election of Executive Directors.

  108. 108.

    IMF, IMF Quota and Governance Reform Elements of an Agreement, 2010, available at: www.imf.org/external/np/pp/eng/2010/103110.pdf. Press Release No. 10/418, IMF Executive Board Approves Major Overhaul of Quotas and Governance, available at: http://www.imf.org/external/np/sec/pr/2010/pr10418.htm; Press Release No. 10/477, IMF Board of Governors Approves Major Quota and Governance Reforms, available at: http://www.imf.org/external/np/sec/pr/2010/pr10477.htm.

  109. 109.

    Under the current Art. XII, Sec. 3(b)(i) of the IMF’s Articles, the five members with the largest quotas each have the right and obligation to appoint their own Executive Director at the IMF Executive Board. The remaining 19 Executive Directors are elected at an interval of two years. The Proposed Amendment on the Reform of the Executive Board was adopted by the Board of Governors Resolution No. 66–2 effective 15th December, 2010. See: IMF, IMF Quota and Governance Reform Elements of an Agreement, 2010, available at: www.imf.org/external/np/pp/eng/2010/103110.pdf. Pursuant to Art. XXVII(a) of the IMF’s Articles, it will enter into force for all members, once the IMF certifies that 3/5 of members representing 85% of the total voting power have accepted the amendment.

  110. 110.

    See Art. XXVIII of the IMF’s Articles.

  111. 111.

    The Sixth Amendment, which was another condition precedent for the entry into effect of the quota increases under the 14th General Review of Quotas, entered into force on 3rd March, 2011.

  112. 112.

    G-20 Communiqué of 2nd April, 2009, see: http://www.g20.org/Documents/final-communique.pdf.

  113. 113.

    IMFC Communiqué of 25th April, 2009, see: http://www.imf.org/external/np/sec/pr/2009/pr09139.htm.

  114. 114.

    The “Triffin dilemma” is sometimes invoked to suggest that accommodating demand for reserves would lead to dollar debt creation that could reach magnitudes that challenge sustainability. However, Triffin was principally concerned with the dollar’s convertibility into gold, supplies of which were growing only slowly. With the dollar no longer tied to gold, demand for reserve assets can in principle be met entirely through the capital account (simultaneous creation of claims and obligations with non-residents), with a balanced current account. That does not mean an unsustainable current account, or debt burden, could not arise. See: IMF, Reserve Accumulation and International Monetary Stability, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/041310.pdf.

  115. 115.

    Art. XVI, Sec. 1 and 2 of the IMF’s Articles.

  116. 116.

    See allocations per IMF members at http://www.imf.org/external/np/tre/sdr/proposal/2009/0709.htm.

  117. 117.

    Under Art. XVII, Sec. 3(i) of the IMF’s Articles, the IMF may prescribe as holders non-members, members that are non-participants (in the SDR Department), institutions that perform functions of a central bank for more than one member, and other officials entities as “prescribed holders.”

  118. 118.

    Art. XV, Sec. 2 of the IMF’s Articles.

  119. 119.

    Under the current valuation rules, the SDR basket comprises the four currencies that are issued by IMF members (or by monetary unions that include IMF members), whose exports of goods and services during the five-year period ending 12 months before the effective date of the revision had the largest value, and that have been determined by the IMF to be freely usable currencies in accordance with Art. XXX (f). Decision No. 12281-(00/98), adopted 11th October, 2000 in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 709, available at: http://www.imf.org/external/pubs/ft/sd/index.asp?decision=8160-(85/186). IMF, Review of the Method of Valuation of the SDR, 2010, available at: www.imf.org/external/np/pp/eng/2010/102610.pdf; Press Release No. 10/434, IMF Determines New Currency Weights for SDR Valuation Basket, available at: http://www.imf.org/external/np/sec/pr/2010/pr10434.htm.

  120. 120.

    Rule T-1(c) of the IMF’s Rules and Regulations.

  121. 121.

    IMF, Review of the Method of Valuation of the SDR, 2010, available at: www.imf.org/external/np/pp/eng/2010/102610.pdf; Press Release No. 10/434, IMF Determines New Currency Weights for SDR Valuation Basket, available at: http://www.imf.org/external/np/sec/pr/2010/pr10434.htm.

  122. 122.

    Rule T-1 of the IMF’s Rules and Regulations.

  123. 123.

    Rule O-10 of the IMF’s Rules and Regulations.

  124. 124.

    Art. XIX, Sec. 2(c) and 6 of the IMF’s Articles.

  125. 125.

    See Decision No. 6832-(81/65), 22nd April, 1981, in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 749, available at: www.imf.org/…/Selected_decisions_and_selected_documents_of_the_International_Monetary_Fund_Thirty-fourth.pdf. See more on the reconstitution requirement in IMF, Proposal for a General Allocation of SDRs, 2009, available at http://www.imf.org/external/np/sec/pr/2009/pr09264.htm or Annex II of IMF, Guidance Note for Fund Staff on the Treatment and Use of SDR Allocations, 2009, available at: www.imf.org/external/np/pp/eng/2009/082809.pdf.

  126. 126.

    Art. XIX, Sec. 3(a) of the IMF’s Articles.

  127. 127.

    Art. XIX, Sec. 4 of the IMF’s Articles.

  128. 128.

    See for instance: Payment of reserve asset portion of a quota increase (Art. III, Section 3(a) of the IMF’s Articles); the payment of charges (Art. V, Sec. 8 of the IMF’s Articles); purchases (Art. V, Sec. 3(f) of the IMF’s Articles) and repurchase (Art. V, Sec. 7(i) of the IMF’s Articles) transactions under IMF arrangements. The IMF may prescribe other operations with a 70% majority of the total voting power for the use of SDRs under Art. XIX, Sec. 2(c) of the IMF’s Articles and in practice has done this for additional use (Decision No. 6000-(79/1), adopted 28th December, 1978, as amended), loans (Decision No. 6001-(97/1), adopted 28th December, 1978), pledges (Decision No. 6053-(79/34), adopted 26th February, 1979), transfers as security for the performance of financial obligations (Decision No. 6054-(79/34), adopted 26th February, 1979), swap operations (Decision No. 6336-(79/178), adopted 28th November, 1979, forward operations (Decision No. 6337-(79/178), adopted 28th November, 1979), donations (Decision No. 6437-(80/37), adopted 5th March, 1980) in: IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, pp. 733, 734, 736, 738, 740, 741, and 742 at www.imf.org/…/Selected_decisions_and_selected_documents_of_the_International_Monetary_Fund_Thirty-fourth.pdf.

  129. 129.

    Art. XVIII, Sec. 2 of the IMF’s Articles.

  130. 130.

    Art. XVIII, Sec. 1(a) of the IMF’s Articles.

  131. 131.

    The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970–72 during the first basic period in yearly installments. The second allocation, for SDR 12.1 billion, was distributed in 1979–81 during the third basic period in yearly installments.

  132. 132.

    The general allocation was endorsed by the Executive Board and approved by the Board of Governors. IMF, Allocation of Special Drawing Rights for the Ninth Basic Period: Draft Executive Board Decision and Managing Director Report to the Board of Governors, 2009, available at: http://www.imf.org/external/np/pp/eng/2009/071609.pdf. See, in this regard: Press Releases No. 09/264, IMF Executive Board Backs US$250 Billion SDR Allocation to Boost Global Liquidity, available at: http://www.imf.org/external/np/sec/pr/2009/pr09264.htm and No. 09/283, IMF Governors Formally Approve US$250 Billion General SDR Allocation, available at: http://www.imf.org/external/np/sec/pr/2009/pr09283.htm.

  133. 133.

    Press Release No. 09/264, IMF Executive Board Backs US$250 Billion SDR Allocation to Boost Global Liquidity, available at: http://www.imf.org/external/np/sec/pr/2009/pr09264.htm.

  134. 134.

    The Fourth Amendment became effective 10th August, 2009, by the modifications approved by the Board of Governors in Resolution No. 52–4, adopted 23rd September, 1997. See: IMF Summary Proceedings 1997 – Part 4 of 4, available at: www.imf.org/external/pubs/ft/summary/52/pdf/part4.pdf; see Press Release 97/45, IMF Board of Governors Approves SDR Amendment, available at: http://www.imf.org/external/np/sec/pr/1997/pr9745.htm.

  135. 135.

    See Press Release No. 09/283, IMF Governors Formally Approve US$250 Billion General SDR Allocation, available at: http://www.imf.org/external/np/sec/pr/2009/pr09283.htm. The Fourth Amendment amended Art. XV of the IMF’s Articles, and introduced Schedule M into the IMF’s Articles.

  136. 136.

    See allocations per IMF members at http://www.imf.org/external/np/tre/sdr/proposal/2009/0709.htm.

  137. 137.

    IMF, Reserve Accumulation and International Monetary Stability, 2010, available at: http://www.imf.org/external/np/pp/eng/2010/041310.pdf. IMF, Enhancing International Monetary Stability – A Role for the SDR?, 2011, available at: http://www.imf.org/external/np/pp/eng/2011/010711.pdf. See: Towards a more stable international monetary system, IMF conference in March 2011; see the Managing Director’s remarks at: www.imf.org/external/np/seminars/eng/2011/ims/pdf/invitation.pdf.

  138. 138.

    In 2010, the IMF Executive Board modified the eligibility criteria for the PRGT, see IMF Reviews Eligibility for Using Concessional Financing Resources, available at: http://www.imf.org/external/np/sec/pn/2010/pn1016.htm.

  139. 139.

    See: The Impact of the Financial Crisis on Low-Income Countries, available at: http://www.imf.org/external/np/speeches/2009/030309.htm.

  140. 140.

    Under Art. V, Sec. 2(b) of the IMF’s Articles, the IMF has the authority to perform financial and technical services, including the administration of resources contributed by members that are consistent with the purposes of the IMF.

  141. 141.

    The PRGT was established in 1987; see Decision No. 8759-(87/176), 18th December, 1987 at IMF, Selected Decisions and Selected Documents of the International Monetary Fund, 34th issue, 2010, p. 163. Other initiatives for the benefit of low income countries include HIPC or MDRI: The Highly Indebted Poor Countries (HIPC) Initiative was launched in 1996 by the IMF and World Bank, with the aim of providing debt relief to eligible low-income members that face an unsustainable debt burden. See: IMF/World Bank, The HIPC Initiative: Delivering Debt Relief to Poor Countries, 1999, available at: http://www.imf.org/external/np/hipc/art0299.pdf. The Multilateral Debt Relief Initiative (MDRI) followed an initiative by the G-8 to provide 100 percent cancellation of debt owed by HIPCs to the Fund. See: IMF, The Multilateral Debt Relief Initiative (G-8 Proposal) and Its Implications for the Fund – Further Considerations: Supplemental Information, 2005, available at: http://www.imf.org/external/np/pp/eng/2005/110105.pdf; IMF, The Multilateral Debt Relief Initiative (G-8 Proposal) and Its Implications for the Fund – Further Considerations – Supplement on Financing Arrangements, 2005, available at: http://www.imf.org/external/np/pp/eng/2005/110105s.htm.

  142. 142.

    G-20 Communiqué of 2nd April, 2009, see: http://www.g20.org/Documents/final-communique.pdf.

  143. 143.

    See Press Release No. 09/286, IMF Announces Unprecedented Increase in Financial Support to Low-Income Countries, available at: http://www.imf.org/external/np/sec/pr/2009/pr09268.htm.

  144. 144.

    The strategy for subsidy financing would involve the use of windfall profits arising from gold sales at an average price in excess of U.S. dollar 850 per ounce in the first instance. To the extent that the realized windfall profits fall short of the required contribution, the difference will be generated through investment income from the gold endowment. This strategy would provide some flexibility on how the resources would be generated, and allow the IMF to preserve the corpus of the gold sales proceeds and thus the Fund’s ability to implement the new income model. See: PIN No. 09/94, IMF Reforms Financial Facilities for Low-Income Countries, available at: http://www.imf.org/external/np/sec/pn/2009/pn0994.htm. See also: IMF, Use of Gold Sale Profits – Initial Considerations and Options, 2011, available at: http://www.imf.org/external/np/pp/eng/2011/031611.pdf; PIN No. 11/48, IMF Executive Board Considers Use of Gold Sale Profits, available at: http://www.imf.org/external/np/sec/pn/2011/pn1148.htm.

  145. 145.

    IMF, A New Architecture of Facilities for Low-Income Countries, 2009, available at: www.imf.org/external/np/pp/eng/2009/062609.pdf.

  146. 146.

    The revised instruments are: The Extended Credit Facility (“ECF”), the successor to the Poverty Reduction and Growth Facility (“PRGF”), allows the IMF to provide sustained program engagement and financing for countries facing protracted balance of payments difficulties. The Standby Credit Facility (“SCF”) – similar to the Stand-By Arrangement – provides financial assistance and policy support to LICs with shorter-term or episodic financing needs emanating from a range of sources. It also allows for precautionary use, in cases where there is a potential rather than an actual financing need. The Rapid Credit Facility (“RCF”) provides a limited amount of financing in response to urgent needs, with reduced conditionality particularly appropriate to the transitory nature of the financing need or instances in which policy implementation capacity is constrained. The Exogenous Shocks Facility (“ESF”) has been eliminated.

Author information

Authors and Affiliations

  1. Legal Department, International Monetary Fund, 700 19th Street NW, Washington, DC, 20431, USA

    Bernhard Steinki & Wolfgang Bergthaler

Authors
  1. Bernhard Steinki
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Wolfgang Bergthaler
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Bernhard Steinki .

Editor information

Editors and Affiliations

  1. European Law, European and, University of Passau Chair for Constitutional and Administrat, Passau, Germany

    Christoph Herrmann

  2. Department of European Law, University of Hamburg, Hamburg, Germany

    Jörg Philipp Terhechte

Rights and permissions

Reprints and permissions

Copyright information

© 2012 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Steinki, B., Bergthaler, W. (2012). Recent Reforms of the Finances of the International Monetary Fund: An Overview. In: Herrmann, C., Terhechte, J. (eds) European Yearbook of International Economic Law 2012. European Yearbook of International Economic Law, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-23309-8_20

Download citation

Publish with us

Policies and ethics

Search

Navigation