US deadlock now broken
The final consent to the IMF's reforms took a number of years, as the US Congress could not reach agreement on the subject for a long time. The voting share of the United States gives it a veto in major IMF decisions, which is why its consent was needed to implement the IMF's reforms, which had been agreed upon as early as 2010. The US administration had always pledged its support to the agreement, but the complex relationship between Democrats and Republicans proved an impediment. Congress could give the green light only in December 2015. Further to the formal ratification by the United States at the end of last week, the IMF concluded on 26 January that its major modernisation effort could become effective.
IMF will double its resources
At the heart of the reform is a doubling of the IMF's quotas, which its members contribute. As shown in Figure 1, quotas expressed as a percentage of global GDP had fallen from around 1% to less than 0.5% by 2014. The doubling of quotas due to take effect will see the IMF quota resources bounce back to a level of 0.9%, similar to the level seen following previous quota reviews in 1978, 1990 and 1998.
Figure 1. IMF total quota resources (since 1960)
Percent to world GDP