United States Financial Position In The International Monetary Fund
Of the 110-billion Euro Greece bailout, 30-billion (approx $40 billion) will be paid for by the IMF. The IMF’s resources come mainly from the money that countries pay as their capital subscription when they become members. Each member of the IMF is assigned a quota, based broadly on its relative size in the world economy, which determines its maximum contribution to the IMF’s financial resources. Upon joining the IMF, a country normally pays up to one-quarter of its quota in the form of widely accepted foreign currencies (such as the U.S. dollar, euro, yen, or pound sterling) or Special Drawing Rights (SDRs). The remaining three-quarters is paid in the country’s own currency.
Quotas are reviewed at least every five years. The 1998 quota review led to a 45 percent increase in IMF quotas. The reviews concluded in January 2003 and January 2008 resulted in no change in quotas. Initial ad hoc quota increases of 1.8 percent were agreed in 2006 as the first step in a two-year program of quota and voice reforms. Further ad hoc quota increases were approved by the Board of Governors on April 28, 2008, which will raise quotas by an additional 9.55 percent (with an overall increase under the reform of 11.5 percent).
The IMF provides two primary types of financial assistance to low-income countries: low-interest loans under the Poverty Reduction and Growth Trust (PRGT), and debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). These resources come from member contributions and the IMF itself, rather than from the quota subscriptions. They are administered under the PRGT, the PRG-HIPC, MDRI-I and MDRI-II Trusts, for which the IMF acts as Trustee.
The predecessor of the PRGT was established to provide lending to eligible low-income countries in support of the related arrangements and to subsidize the market rate of interest down to 0.5 percent per annum. Loan resources of about $26 billion have been committed by 17 contributors to the PRGT and its predecessors, while a larger number of IMF member countries have made subsidy contributions.
In July 2009, the IMF’s Executive Board approved far-reaching reforms of the concessional facilities, in which the PRGT replaced the PRGF-ESF Trust. As part of the reform package, the Board also agreed to provide exceptional interest relief on its concessional loans to all low-income countries, with zero interest payments through end-2011, to help them cope with the crisis. These reforms became effective in January 2010, when all lenders and bilateral subsidy contributors to the PRGF-ESF Trust consented to the reforms.
The US supplies almost 20% of the IMF’s funding (per quotas). So that means US taxpayers are providing ~$8 billion of the $145 billion going to kick the Greek can down the road.
United States: Financial Position in the International Monetary Fund (IMF), as of March 31, 2010
|I. Membership Status: Joined: December 27, 1945;||Article VIII|
|II. General Resources Account:||SDR Million||%Quota|
|Fund holdings of currency||29,511.34||79.44|
|Reserve Tranche Position||7,639.22||20.56|
|Lending to the Fund|
|Holdings Exchange Rate|
|III. SDR Department:||SDR Million||%Allocation|
|Net cumulative allocation||35,315.68||100.00|
|IV. Outstanding Purchases and Loans: None|
|V. Latest Financial Arrangements: None|
|VI. Projected Payments to Fund 1/|
|(SDR Million; based on existing use of resources and present holdings of SDRs):|
|1/ When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.|
|VII. Implementation of HIPC Initiative: Not Applicable|
|VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable|
|Prepared by Finance Department|
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