The use of the IMF’s 15th Review of Quotas to redistribute voting rights has been unilaterally thwarted by the US, despite being supported by the majority of IMF member states. Confronted with US opposition, shareholders agreed instead with the US proposal to extend New Borrowing Arrangements (NAB) – designed as a “backstop to the Fund’s quota-based financing mechanism” – as a way to ensure, at least in the short-term, that the Fund maintains its lending capacity (see Inside the Institutions, IMF resources: quota, NAB and GAB; Observer Summer 2019).
The 15th review was scheduled for completion no later than the 2019 World Bank and IMF Annual Meetings – after the US Congress failed to authorise the 14th quota review, conducted in 2010, until 2016. The International Monetary and Finance Committee’s October 2019 communiqué called “on the executive board to complete its work on the 15th Review and on a package of IMF resources and governance reforms” (see Dispatch Annuals 2019; Observer Winter 2018, Winter 2016).
In response to an April 2019 statement by US Treasury Secretary Steven Mnuchin, that “…we do not see a need for a quota increase at this time,” Mark Sobel of UK-based think-tank OMFIF, speculated that Washington was blocking the reform because it did not want to increase China’s voting power at the IMF. The US move not only leaves the voting shares unchanged but also potentially undermines the notion of the IMF being a quota-based institution (see Observer Summer 2019). Following the decision to uphold the ‘gentleman’s agreement’ with the appointment of European-backed candidate Kristalina Georgieva as IMF managing director, the blocking of the quota review raises broader questions around the IMF’s undemocratic governance structures.
