The International Monetary Fund (IMF) Executive Board has approved a proposal, seeking a 50 per cent increase the quotas allocated to the member states – a move that can help Pakistan more financial assistance in future.
Pakistan is currently in a $3 billion stand-by arrangement with the lender, which will expire on March 31, 2024. After releasing the first tranche soon after inking the deal, an IMF team is now in Islamabad for its first review, the success of which will result in disbursement of $710 million as second tranche in December.
Meanwhile, the third tranche is scheduled for March next year after a second and final review in February, thus concluding the nine-month agreement which came into effect earlier this year on July 1.
The IMF Executive Board has requested that the Board of Governors vote on this proposal by December 15, 2023, which requires an 85pc majority of the total voting power.
The IMF quota determines the maximum amount of loans a member can obtain from the Washington-based top lander under normal access and its share in a general allocation of special drawing rights (SDRs), conducted at least every five years.
“Concluding the 16th Review with a quota increase will help preserve a strong, quota-based and adequately resourced IMF at the center of the Global Financial Safety Net. An adequately resourced IMF is essential to safeguard global financial stability and respond to members’ potential needs in an uncertain and shock-prone world,” IMF Managing Director Kristalina Georgieva said after the Executive Board’s decision.
The quota increase would enhance the IMF’s permanent resources and strengthen the quota-based nature of the Fund by reducing the reliance on borrowing and thus ensuring the primary role of quotas in its resources.
The proposal envisages that once quota increases are in effect, borrowed resources comprising the Bilateral Borrowing Agreements and New Arrangements to Borrow (NAB) would be reduced to maintain the Fund’s current lending capacity.
