RP plans to hike quota share with International Monetary Fund

MANILA, Philippines - The country is planning to increase its quota share with the International Monetary Fund (IMF), a move that would correspond to the increase in the country’s voting share in the Fund.

Central bank officials disclosed over the weekend that the government had already indicated its intention to increase the country’s quota subscription to reflect what they said was an improvement in the country’s economic strength.

Bangko Sentral ng Pilipinas (BSP) Governor Diwa Guinigundo said the increase in the country’s subscription would be brought up at the spring meeting of the IMF.

“That will somehow increase our voting share, if only a bit, and therefore our voice, however marginal,” Guinigundo said.

Countries that join the IMF are assigned an initial quota in the same range as the quotas of existing members that the Fund said are broadly comparable in economic size and characteristics.

Quotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account. The largest member of the IMF is the United States, with a quota of SDR 37.1 billion (about $58.2 billion), and the smallest member is Palau, with a quota of SDR 3.1 million (about $4.9 million).

The IMF explained that the quota largely determines a member’s voting power in IMF decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR 100,000 of quota.

Accordingly, the United States has 371,743 votes (16.77 percent of the total), and Palau has 281 votes (0.01 percent).

The Philippines’ quota was last reported at SDR879.9 million, equivalent to a total of 9,049 votes or about 0.41 percent of total votes in the IMF. In contrast, the US’ total subscription is equivalent to 16.77 percent of total votes.

The amount of financing a member could obtain from the IMF was also based on its quota. Under the Fund’s rules, a member was allowed to borrow up to 100 percent of its quota annually and 300 percent cumulatively.

BSP managing director Cyd Amador said the IMF itself had increased the country’s quota on the number of shares in the IMF the Philippines was allowed to subscribe to.

“This reflects the country’s economic strength,” so the Philippines is taking advantage of that,” Amador said.

For comparison, regional peers have significantly larger quota allocations, with Indonesia subscribing to SDR2.079 billion equivalent to 21,043 votes or 0.95 percent of total votes.

Malaysia, on the other hand, has a quota subscription of SDR1.486 billion, equivalent to 15,116 votes or 0.68 percent of the total. Thailand has SDR1.081 billion which gave it 11,069 votes equivalent to 0.5 percent of total votes.

The largest votes, other than the US, were Japan with SDR13.312 bllion, which gets it 122,378 votes or 6.02 percent of the total and China with SDR8.090 billion equivalent to 81,151 votes or 3.66 percent of the total.

The Philippines has been considered a “prolonged user” of IMF resources, with 23 IMF-supported programs since 1962 but the country exited from the Fund for the first time in 40 years in 2006.

Upon exit, the IMF’s new role in the Philippines became somewhat limited but probably more relevant to the emerging stage in the country’s development.

Following the end of the stand-by arrangement with the IMF in December 2000, the Philippines entered into the Post Program Monitoring where the Fund conducted periodic review of economic developments and assessment of economic policies.

The PPM ended early when the country prepaid its remaining obligations and the Philippines became free of the IMF for the first time in 2006.