IMF Voting Reform: Need, Opportunity and Options

The IMF’s economically-weighted voting system gives rise to a major asymmetry of political power, both directly and indirectly, and to serious systemic inertia. The increasing financial pressure on the Fund, a credible “walk-away” threat by “emerging market” economies, and the potential for effective domestic pressure in developed countries together provide an important opportunity for change. The paper proposes a long-term strategy for developing countries, aimed at combining the political strengths of low- and middle-income countries (in providing a moral case for reform and a credible “walk-away” threat respectively). It proposes as an opening position and long-term objective splitting the three functions of IMF quotas, on the grounds of the fundamental changes in the Fund’s membership, nature and role, and in political culture, since it was established in 1944; and the weighting of votes exclusively on population, recommending the square root of population as the preferred basis.