Abstract

In the context of the financial governance of the IMF, what are the equity implications of the manner in which the IMF distributes the cost of running its regular (non-concessionary) lending operations as well as the modalities of funding its concessionary lending and debt relief operations? While the IMF charges borrowers roughly what it pays its creditor members for the resources used in its regular lending operations, its overhead costs (administrative budget plus addition to reserves) are shared between the two groups of members in a less equitable manner. With the overhead costs rising inexorably to meet an increasing number and range of responsibilities being placed upon the institution – largely at the instance of the IMF's principal creditors by virtue of their dominant majority of voting power – the under-representation of the IMF's debtors undermines the legitimacy of its decision-making. With regard to the concessionary lending and debt-relief operations, some of the IMF's funding modalities have involved a substantial contribution by IMF debtors, sometimes under pressure. While this has been accepted as part of an intra-developing country burden-sharing exercise, it has also meant a significant burden shifting away from the developed countries in the cost of meeting their responsibilities to the poorest members of the international community.

Introduction

An important aspect of governance at the IMF relates to the cost of running the institution and the sharing of that cost between the industrial countries (the IMF's principal creditors) and low-income countries and emerging market economies (primarily borrowers).