Japan may slip from IMF's No. 2 shareholder status, China's ratio will jump to 14.4 percent, US will slide to 14.8 percent under new formula

[beijingwalker]

Japan may slip from IMF's No. 2 shareholder status, China's ratio will jump to 14.4 percent, US will slide to 14.8 percent under new formula​

September 26, 2023 (Mainichi Japan)

WASHINGTON (Kyodo) -- Japan may no longer be the International Monetary Fund's second-largest shareholder after maintaining the position for about three decades when the multilateral lender completes its quota reform by the end of this year, officials and documents suggested recently.


Using the current formula, based on economic power, Japan will most likely be overtaken by China and Germany. On the back of Japan's tepid economic growth and the yen's depreciation against the U.S. dollar and other major currencies, the officials said that the country is set to be ranked fourth.

The Japanese government has backed the idea of increasing the IMF's capital resources in closed-door negotiations, but insists on keeping the fund's current quota ratio, according to the officials, who spoke on condition of anonymity.

The IMF generally reviews its quotas at least every five years. The plan to increase the Washington-headquartered institution's funding is aimed at helping emerging and developing countries that are suffering from a shortage of money in the wake of the coronavirus pandemic and other issues.

In addition to deciding how much a given member needs to contribute, a quota largely determines its voting power in IMF matters. The IMF's previous capital increase was decided in 2010.

The institution, governed by 190 countries, is trying to finalize reform plans in December after a broad agreement coming next month when it and the World Bank hold their annual meetings in Marrakech, Morocco.

Currently, the IMF's largest shareholder is the United States, with 17.4 percent of all quota shares, followed by Japan with 6.5 percent and China with 6.4 percent.

According to the documents obtained by Kyodo News, if the current formula is used, China's ratio will jump to 14.4 percent, while that of the United States will slide to 14.8 percent.

Under a different calculation method based on each country's trade activity, the ranking order would be the United States, China, Germany, the United Kingdom and Japan.

With nominal gross domestic product as the criterion, Japan would secure the third spot behind the United States and China.

Japan has asked each member to increase its capital in a way that would not affect the current rankings, the officials said, adding that the United States, which wants to prevent China from having greater influence in the IMF, also urges capital increases without altering the present shareholding ratio.

China and other fast-growing countries, meanwhile, have demanded that the ratio reflect the sizes of their economies, and the negotiations have not yet settled down, according to the officials.

Until now, the ratio has been determined mainly in accordance with the size of the economy, largely using GDP figures. The IMF's previous capital increase took many years to be approved by the U.S. Congress and was finally implemented in 2016.

Japan may slip from IMF's No. 2 shareholder status - The Mainichi

WASHINGTON (Kyodo) -- Japan may no longer be the International Monetary Fund's second-largest shareholder after maintaining the position for about thr

mainichi.jp

 

[beijingwalker]

China should aim to take over IMF in the next 10 years.

 

[etylo]

Will US still retain its veto in IMF ? Or is it only in World Bank ? These institutions are designed to serve US interests.

 

[Kuru]

Will US still retain its veto in IMF ? Or is it only in World Bank ? These institutions are designed to serve US interests.

Just like China provides interest free loans to Pakistan(!) with no strings attached, will the IMF also do the same once China becomes majority shareholder?

It will be great if IMF under China does that, you know. Then Pakistanis will not have to pay so much for electricity which is one of the major produce under CCPec.

 

[beijingwalker]

China's increased lending: How the World Bank wants to stay relevant | DW News​

 

[beijingwalker]

IMF head backs reforms that could give China more voting power​

Colby Smith in Washington

18 HOURS AGO

The head of the IMF has backed reforms that could eventually give Beijing more voting power within the fund, warning of “devastation” if the institution remains without adequate financial resources to aid struggling countries.

In an interview with the Financial Times, Kristalina Georgieva called for the IMF to better represent changes in the global economy over the past decade, which include the rise of China.

“There is a need to constantly change to reflect how the world economy is changing,” she said, in an implicit reference to the disparity between China’s 6 per cent share of voting power in the IMF and its heft in the world economy, which is roughly three times as much.

Noting that she was encouraged by “how the fund has been able to mobilise and overcome differences in views so many times since [Covid-19] hit,” Georgieva said of the changes in voting power: “I am optimistic that we will go there.”

Traditionally each IMF member country has a so-called quota, based on its position in the world economy, which determines its contributions to the fund as well as its voting weight within the institution and access to emergency financing.

At present, China’s quota is less than Japan’s, despite its larger share of global gross domestic product. As the IMF’s largest shareholder, the US holds roughly 17 per cent, giving it veto power over quota decisions, which require 85 per cent support.

The IMF’s board of governors conducts quota reviews at least every five years. The last time it agreed changes was in 2010. Since then, China’s economy has grown considerably. The changes took effect in 2016.

Speaking ahead of IMF and World Bank meetings in Marrakech this month, Georgieva acknowledged changes to voting weights were not on the agenda for a current quota review, due to wind up in December.

Georgieva’s call for a longer-term rethink of IMF representation comes amid a US effort to shore up Washington-based multilateral institutions to increase western influence with emerging and developing countries.

It also comes as she seeks to step up her institution’s resources to deal with economic problems across the globe.

“We are at the centre of the global financial safety net,” she said. “If the fund is unable to step forward and bring confidence for others, the devastation can be profound economically, socially, but also from a security standpoint.”

As part of the current push for more resources, the US wants to increase member countries’ quotas without an immediate reallocation of voting powers — along with governance changes to give greater prominence to developing countries.


Georgieva said such changes had the support of a “very healthy majority” of the fund’s membership and would allow it to be “strong for the future”.

But she noted the issue of adjusting representation over time had come up in discussions among member countries.

US officials have left the door open to supporting a reallocation of shares at a later stage, but have signalled they would veto any expansion of Beijing’s voting rights at the present time.

Jay Shambaugh, Treasury under-secretary for international affairs, said such a move would require “all countries — especially those that would see an increase in share” to respect “the roles and norms of the IMF”.

China, now the world’s biggest bilateral lender, has been criticised by western creditors for hampering debt relief deals for troubled countries.

Georgieva said it had “not been at all easy” to work with Beijing on such issues. But she added China had “steadily engaged” with the IMF on restructurings and was generally “quite constructive”.

She underlined the fund’s call for more resources from its shareholders at a time when the global economy was likely to be hamstrung by lacklustre growth.

“Given how much needs to be done, we simply don’t have the growth we need,” she said. “Fiscal space has been eroded, debt levels have gone up everywhere, debt service costs have gone up as well, and yet demands on the public purse are high.”

Georgieva defended the institution’s foray into climate-related issues, food security and health.

“The role of the fund inevitably has to change because the world around us is changing,” she said. After Covid hit, “getting health policy in good shape to operate efficiently and effectively at that time was the most important economic policy”. She also argued climate shocks had economic and financial stability consequences.

Georgieva pushed back on criticism of her institutions’s oversight of countries such as Argentina and Pakistan, which repeatedly have turned to it for support, sometimes just to service IMF loans.
Last month Shambaugh said loan programmes that were repeatedly extended without meaningful reforms “harm the credibility of the IMF”.

Georgieva said it was important that the fund offer assistance “in an empathetic manner” while agreeing that the lender could not help countries that were “unwilling or unable to take the necessary steps”.

She added: “In a world of more tensions, more social pressures, more rejections of the notion of detached elites, we have to aim to understand the priorities of people.”

IMF head backs reforms that could give China more voting power | Financial Times

Kristalina Georgieva steps up push for more resources to deal with economic problems across the globe

www.ft.com

 

[beijingwalker]

IMF chief supports giving China greater voting rights​

Backed by Kristalina Georgieva​

Laura Miller
03 October 2023• 1 min read

​

Image:
Currently China’s quota is less than Japan’s, despite its larger share of global gross domestic product.

International Monetary Fund managing director Kristalina Georgieva has backed reforms to give China more voting power in decisions made by the institution.​

In an interview with the FT, Georgieva said the IMF must adapt "to reflect how the world economy is changing", in a veiled reference to China having only 6% voting power while being a global and economic superpower.

Reforms to funding are necessary to avoid the "devastation" that would be wrought if the IMF remains without adequate financial resources to aid struggling countries, she said.

However, Georgieva noted she is "optimistic that we will go there", in reference to voting changes, and pointed to the way the IMF "has been able to mobilise and overcome differences in views so many times".

Each country that is a member of the IMF has a ‘quota', which dictates how much it contributes to the fund, as well as its voting weight and access to emergency financing. This is based on its ranking in the global economy.

Currently China's quota is less than Japan's, despite its larger share of global gross domestic product. The US holds roughly 17%, making it the IMF's largest shareholder, and giving it veto power over quota decisions, which require 85% support.

The IMF's board of governors reviews quotas at least once in every five year period, but changes can take a while to take effect, with the last round of changes agreed in 2010 and put in place in 2016. China's economy has grown considerably in the 13 years since the last quota reforms.

IMF chief supports giving China greater voting rights

International Monetary Fund managing director Kristalina Georgieva has backed reforms to give China more voting power in decisions made by the institution.

www.investmentweek.co.uk

 

[beijingwalker]

IMF Considering Increasing China’s Voting Rights To Reflect Its Position In Global Economy​

POSTED BY: THE CORNER 4TH OCTOBER 2023

Banca March: The International Monetary Fund (IMF) is considering increasing China’s voting rights to bring its share in the fund in line with its position in the global economy.

Each country contributes a quota based on various factors reflecting economic positioning relative to the world economy. This quota designates the amount each country has to pay into the fund, as well as its voting rights. Currently, the Asian giant has only a 6% share, despite having three times the weight in global GDP.

In order to be able to exercise a revision of the percentage, 85% of votes in favour are necessary. The United States, which has a 17% voting right, has warned that it will veto any expansion by China.

IMF considering increasing China's voting rights to reflect its position in global economy | The Corner

Banca March: The International Monetary Fund (IMF) is considering increasing China's voting rights to bring its share in the fund in line with its position in

thecorner.eu