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Governance reforms at the IFIs

The quota and governance reforms agreed in the IMF in 2010 became effective in January 2016. The reforms doubled the quota resources of the IMF and realigned quota shares, increasing the aggregate voting rights of developing and emerging market countries, as well as improving their representation on the IMF board. The aggregate quota share of emerging market and developing countries increased by 2.8 per cent to 42.4 per cent. All board members are now elected, eliminating the right to appoint an executive director that had been enjoyed by the five largest shareholders. Following the first regular election of all 24 Executive Directors, the all-elected Board is in place effective November 1st. In 2010 Member States also committed to reduce by two the number of IMF board chairs held by advanced European countries. After the November 2016 board election the total number of reduced chairs is 1.64. Belgium and the Netherlands have joined in a single chair, opening a chair to be shared among Turkey, Hungary and the Czech Republic. Switzerland is now rotating its chair with Poland, contributing half of a chair on a pro-rata basis. The Nordic-Baltic constituency has agreed to include Estonia, Latvia and Lithuania in their chair rotation scheme, providing another 0.14 of a chair. Multi-country constituencies with seven or more members may now appoint a second Alternate Executive Director so that their constituencies are better represented on the Board.

Consents to the quota changes are required, and as of July 2016 all but 9 countries had lodged their formal consents with the IMF. The 15th General Review of Quotas, including a new quota formula, was originally to be completed by January 2014, The IMFC, in its 8 October 2016 Communique, reaffirmed its commitment to a strong, quota-based, and adequately resourced IMF, and committed to concluding the 15th Review and agreeing on a new quota formula as a basis for a realignment of quota shares to result in increased shares for dynamic economies, and hence likely in the share of emerging market and developing countries as a whole, while protecting the voice and representation of the poorest members. The IMFC reset the timetable for completing the 15th Review by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019, subject to adoption by the Board of Governors.

The World Bank’s shareholding review agreed in 2010 is still being phased in, as countries have until March 2017 to subscribe to their new shares in the institution and pay in additional capital. In 2010, governors agreed to conduct periodic IBRD and IFC Shareholding Reviews every five years, beginning in 2015. The 2015 review covered the weight of members in the world economy, their contributions to the WBG development mission, and progress towards equitable voting power. At its 2016 autumn meeting, the Development Committee welcomed the Dynamic Formula agreed at the Executive Board and recommitted to reaching an agreement on further reforms by the 2017 Annual Meetings in line with the Shareholding Review principles and the Roadmap agreed in Lima in 2015.