Japan, the second-largest shareholder of the International Monetary Fund (IMF) for over thirty years, is likely to drop to fourth place by the end of 2023, according to reports by Kyodo News and Sputnik on Tuesday. This shift in hierarchy is expected due to the upcoming completion of IMF's quota reform. The country is predicted to be overtaken by China and Germany in the shareholder rankings.
The quota at the IMF dictates the size of a country's contribution and significantly influences its voting power. Currently, the United States holds the largest share with a quota of 17.43%, followed by Japan (6.47%) and China (6.4%).
Despite supporting the initiative to increase IMF's financial resources, Japan insists on maintaining the existing quota distribution, as per official sources. However, reforms to these quotas have been proposed by UN Secretary-General Antonio Guterres in early June, suggesting that representation of developing nations in both IMF and World Bank should be expanded. This is aimed at addressing inequities and systemic biases in international financial architecture.
Guterres proposed that IMF quotas should be decoupled from access to resources and changes should be made to IMF's voting and decision-making rules. Following this, in later June, Julie Kozack, IMF communications chief, confirmed that the fund was undergoing its 16th review of quotas with plans for completion in December 2023.
The impending changes signal a significant reshuffle in the global economic power balance within the IMF structure.
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