	Introduction

In December 2010, the Board of Governors of the International Monetary Fund (IMF, the Fund), the institution's highest governing body, agreed to a wide-ranging set of institutional reforms. If enacted, this reform package would increase the institution's core source of funding and expand the representation of dynamic emerging market and developing countries, such as Brazil, China, and Mexico, within the institution. To date, the United States has not formally approved these reforms. Under U.S. law, specific congressional authorization is required for the United States to consent to change the U.S. quota, or "shares" in the Fund, which determine the United States' total voting power. Proposed Reforms

		Motivation for Reform

IMF member countries and staff have pursued reforms to address two problems facing the IMF: (1) core IMF resources have substantially declined as a share of the global economy, while anticipated needs have increased; and (2) the voice and vote of many emerging and developing countries at the IMF increasingly under-represents their current contribution to the global economy, a development which some analysts believe harms support and buy-in for IMF policies and initiatives among critical constituencies. It also determines a member country's voting power at the IMF. Some analysts view this as evidence that IMF quota resources have not kept pace with increased economic integration and that the IMF needs more financial resources in order to remain effective in responding to economic crises, one of its three major functions. Administrations have generally been supportive of increasing representation of emerging markets at the IMF. Potential Impact on the United States

If implemented, the quota reform would result in a shift in the composition of U.S. financial commitments to the IMF as the NAB is reduced and the quota is increased, but would not increase total U.S. commitments to the IMF. This shift would likely require appropriations for the entire amount of the increase but the net effect on the budget would depend on how much of the funds need to be shifted and whether there are any changes to the budgetary treatment of U.S. IMF contributions (see discussion in the " The Role of Congress " below). The United States has allowed its quota share to fall over the years, partly to facilitate realignment of IMF quota shares to reflect the increasing weight of dynamic emerging market economies in the global economy, while maintaining enough voting power to be able to veto major policy decisions at the IMF that require an 85% majority. Arguments against Reforms

Opponents of the reform argue that the IMF has sufficient resources to address financial crises, through the expansion of the NAB and through the IMF's ability to coordinate bilateral contributions during periods of intense market pressure. Others are skeptical that emerging economies support the existing norms and values of international financial institutions, and question whether they would be "responsible stakeholders." There may be concerns among critics of the reform package that increasing the voice and participation of emerging markets at the IMF could result in the support of economic policies that are less aligned with the preferred policies of advanced economies. Status of Reform

Although the IMF Board of Governors approved the reform package in 2010, some of the key parts of the package require additional action to take effect. With the largest voting power at the IMF (16.75%), the reforms cannot go through without U.S. support, even though a majority of IMF member countries have approved them. Total U.S. financial commitment to the IMF would not change. Any appropriations needed for the transfer would depend on the scoring by the Congressional Budget Office (CBO). In its budget requests for FY2014, FY2015, and FY2016, the Obama Administration has included authorization and appropriation requests for the United States to endorse and ratify the 2010 reform package.
In December 2010, the Board of Governors of the International Monetary Fund (IMF, the Fund), the institution's highest governing body, agreed to a reform package that addresses two major concerns about the institution: (1) that the size of the IMF's resources has not kept pace with increased economic activity in the global economy; and (2) that the representation of emerging and developing economies at the IMF does not reflect their growing importance in the global economy. Key parts of the reform package cannot go into effect until a number of IMF countries formally approve the reforms. If enacted, these reforms would increase the size of the IMF's core source of funding (IMF "quota"), and increase the representation of emerging market and developing countries at the IMF to reflect more accurately their weight in the global economy.
Implementing the Reform Package, and the Role of Congress
IMF rules do not require formal approval of the reform package by all IMF member countries, but the support of the United States, as the largest shareholder at the institution, is necessary. Although many other IMF member countries have submitted their formal approvals for these reforms, to date, the United States has not formally approved these reforms. Under U.S. law, the Administration cannot do so without specific congressional authorization. Appropriations could also be necessary. In its budget requests for FY2014, FY2015, and FY2016, the Obama Administration has included authorization and appropriation requests for the United States to endorse and ratify the 2010 reform package.
Implications of the Reform Package
Arguments for Reforms: Proponents argue that the reform package is necessary for maintaining the effectiveness and legitimacy of the IMF as the central institution for international macroeconomic stability. The IMF's core source of funding needs to be increased, they argue, in order to give the IMF the resources that it needs to respond effectively to financial crises. They also argue that the under-representation of emerging economies at the IMF is broadly perceived as unfair and reduces the support of several member countries for IMF programs and initiatives.
Arguments against Reforms: Opponents argue that since the IMF has found other ways to supplement its resources during economic crises, the IMF's core funding source does not need to be increased. Opponents are also skeptical that emerging economies support the existing norms and values of international financial institutions, and that these countries may prefer financial and trade strategies that are less aligned with those of the United States.
Potential Impact on the United States: Implementing the reforms would not increase total U.S. financial commitments to the IMF and would have little impact on U.S. representation at the IMF. The reforms would require transferring some U.S. financial commitments from a supplementary fund at the IMF (the "New Arrangements to Borrow," or NAB) to the IMF's core source of funding (quota). This transfer could require appropriations, depending on how the Congressional Budget Office (CBO) scores the transfer of funds. The share of U.S. voting power at the IMF would fall slightly, but the United States would still maintain its unique veto power over major policy decisions.