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Report on Operations Under the Bretton Woods and Related Aggrements Act

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Foreword by the Minister of Finance 

I am pleased to present to Members of Parliament and the Canadian public this annual report, entitled Canada at the IMF and World Bank Group 2011: Report on Operations Under the Bretton Woods and Related Agreements Act. 

The global community faces unprecedented challenges arising from the financial crisis that are slowing the pace of the global recovery. The euro area sovereign debt crisis and its current and potential impacts on Canada and the rest of the world are of particular concern. There is also a compelling need to tackle development challenges in low-income and emerging economies, and contribute to their long-term economic growth.

In this extended period of uncertainty, one constant that must be acknowledged is the leadership that has been demonstrated by the International Monetary Fund (IMF) and World Bank Group in pursuing a constructive course of global action. As a Governor of these institutions, I am pleased by the work that has been accomplished, and the role Canada has played to advance these efforts. 

The IMF responded to a number of important challenges over the course of a turbulent year. These include the Fund’s significant role in responding to the euro area crisis with large-scale lending programs and providing improved surveillance and advice. During this time, the IMF underwent a change of leadership, and I congratulate Christine Lagarde on her appointment as Managing Director. I would also like to express my appreciation for the IMF’s support of the G-20 Working Group on the Framework for Strong, Sustainable and Balanced Growth, which Canada co-chairs with India. The IMF’s strong, independent analysis played a critical role in the development of the Cannes Action Plan for Growth and Jobs.

The World Bank Group has taken on some of the most difficult global development challenges, particularly in the area of conflict and fragility. In the context of the Arab Awakening in the Middle East and North Africa region, the Bank became an active member of the Deauville Partnership and is investing in a long-term strategy to support the changes underway in the region. The Bank is also contributing new ideas, through the 2011 World Development Report on conflict, security and development, and implementing new solutions, such as the International Development Association’s Crisis Response Window, in order to further improve upon its ability to respond to crisis situations in poor countries.

This report summarizes the main developments at the IMF and World Bank Group in 2011, and reports on the priorities that Canada has adopted as a member of these institutions. The results achieved provide a clear rationale for Canada’s continuing support. Canada has played an integral role in the formation, growth and modernization of the Bretton Woods Institutions for over 60 years, and we are committed to continuing to play this role in future years. 

The Honourable James M. Flaherty, P.C., M.P.
Minister of Finance

Overview 

This report to Parliament and the Canadian public provides an overview of the operations of the IMF and World Bank Group, discusses key developments at both institutions in 2011, describes Canada’s engagement and contributions, and reports on the progress made on Canada’s priorities.

The IMF and World Bank Group (known as the Bretton Woods Institutions) were founded at the United Nations Monetary Conference in Bretton Woods, New Hampshire, in 1944 to promote reconstruction and economic recovery after World War II. Since then, the mandates of these institutions have evolved to focus on promoting global economic stability and poverty reduction.

Canada is a member country of the IMF and of the World Bank Group’s International Development Association (IDA), International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA).

As a significant shareholder, Canada has an important governance role at both the IMF and World Bank Group. Canada is the ninth largest shareholder at the IMF with 2.56 per cent of voting shares. Canada’s contribution to the IMF’s overall quota is SDR 6.37 billion[1] (about US$9.8 billion). Canada is among the top 10 shareholders at the World Bank Group, having contributed a total of US$5.5 billion in capital subscriptions to the IBRD, IFC and MIGA and US$8.9 billion in donor contributions to IDA. Canada’s voting power ranges from 2.51 per cent to 3.38 per cent within the institutions of the World Bank Group.

The Minister of Finance is Canada’s Governor on the Board of Governors of both the IMF and the World Bank Group. Governors delegate day-to-day decisions to an Executive Director at both institutions. Given Canada’s shareholding and engagement at the IMF and World Bank Group, the Executive Directors representing our constituency at both institutions have traditionally been Canadian.[2]

This report is divided into two parts. The first part focuses on the IMF, outlining key developments over the year, reporting on Canada’s priorities and providing background on the work of the institution. The second part provides a similar report on the World Bank Group.

This report responds to the requirements for annual reporting laid out in section 13 of the Bretton Woods and Related Agreements Act, which states:

The Minister of Finance shall cause to be laid before Parliament, on or before March 31 next following the end of each calendar year or, if Parliament is not then sitting, on any of the first thirty days next thereafter that either House of Parliament is sitting, a report containing a general summary of operations under this Act and details of all those operations that directly affect Canada, including the resources and lending of the World Bank Group, the funds subscribed or contributed by Canada, borrowings in Canada and procurement of Canadian goods and services.

This report is prepared by the Department of Finance in consultation with other government departments and agencies, with input from the Canadian Executive Director’s Office at the IMF and World Bank Group, as well as input from Canadian citizens and civil society through consultations, stakeholder meetings and correspondence. Within the Government of Canada, the Department of Finance coordinates Canada’s policy advice at the IMF and World Bank Group, consulting closely with other government departments and agencies, including the Bank of Canada, the Canadian International Development Agency (CIDA), and Foreign Affairs and International Trade Canada.

Additional information on Canada’s official development assistance activities at the Bretton Woods Institutions is available in CIDA’s annual report on the Official Development Assistance Accountability Act.

This report provides an overview of the activities of the IMF and World Bank Group that are the most relevant to Canada. For more information on the financial performance and operations of these institutions, please refer to their respective annual reports (IMF and World Bank Group).

The International Monetary Fund

Key Developments at the IMF in 2011

Meeting the Continuing Challenges to the Global Economy

The IMF continued to play its critical role of providing advice and responding to the challenges and threats facing the global economy over the course of the year. The IMF also turned to new leadership with the appointment of Ms. Christine Lagarde as the IMF’s new Managing Director, David Lipton as the new First Deputy Managing Director, and Min Zhu and Nemat Shafik as new Deputy Managing Directors. Canada extends its warmest congratulations to this new management team.   

Responding in Europe

The continuing crisis in the euro area[3]posed the greatest risk to the global recovery in 2011. In 2010, the economic difficulties faced by Ireland and Greece caused the IMF to redefine its role in Europe with the establishment of the two largest lending programs as a per cent of quota[4] in the history of the IMF. Not since the 1970s had the IMF established a lending program in an advanced country. This trend continued in 2011 with the establishment of the third largest program as a per cent of quota in Portugal. To face the euro area challenge, and in the spirit of global economic cooperation, the IMF is collaborating with the European Union and European Central Bank in financing, overseeing and providing valuable technical advice on the economic adjustment programs aimed at resolving the root difficulties in all three countries. The IMF is thus playing a valuable role in Europe by setting appropriate conditions and overseeing needed reforms. In the context of lending programs, the preferred creditor status of the IMF protects Canadian taxpayers.

Outside the euro area, the IMF has been further engaged in Europe and has established Stand-By Arrangements in Serbia and Romania, a Precautionary Credit Line in the Former Yugoslav Republic of Macedonia (FYR Macedonia) and a Flexible Credit Line in Poland. The IMF does more than just lend; it has significant expertise in advising its members on their policy frameworks and in identifying and spurring members to respond to risks and deficiencies. The request from Italy for enhanced surveillance of its economic reform program is a further example of the IMF’s policy advice function in Europe. Table 1, Chart 1 and Chart 2 below highlight the IMF’s lending activity.

Identifying Risks

The IMF is a leader in providing candid, independent surveillance of its members’ policies and the global monetary system. Detailed analysis and early warning of vulnerabilities help prepare countries like Canada to meet the risks posed by turbulence in the global economy. One of the lessons of the global financial crisis was the need to modernize IMF surveillance to ensure that spillovers from economic developments and policies are adequately captured in surveillance assessments.

In 2011, the IMF made significant progress in this area with the publication of spillover reports for five of the world’s largest economies: China, the euro area, Japan, the United Kingdom and the United States. These reports enhance global knowledge of interconnections between the world’s economies by outlining the impacts policies in the larger economies have on each other and the rest of the world. The overarching lessons, outlined in the Consolidated Multilateral Surveillance Report (CMSR), were discussed by Finance Ministers and Central Bank Governors at the Fall 2011 Meetings of the International Monetary and Financial Committee (IMFC) in Washington, DC. The CMSR adds significant value to discussions of global risks by Finance Ministers and Central Bank Governors and will continue to be a feature of the bi-annual IMFC Meetings.

To further improve its core surveillance mandate, the IMF completed a comprehensive review of its surveillance activities in 2011. This review included external assessments by leading economists such as Joseph Stiglitz and Martin Wolf. Overall, it was found that the IMF has made important progress in surveillance since the global financial crisis through an increased focus on identifying risks to monetary and financial stability. The review recommended that IMF surveillance be as interconnected as the global economy itself. The review confirms the recent direction taken by the leadership of the IMF to focus on the multilateral aspects of surveillance, including better integration with bilateral surveillance activities.

Focus of Global Leaders

By contributing to international economic and financial stability, the IMF plays a key role in a number of international processes, including the G-20 Framework for Strong, Sustainable and Balanced Growth. The Framework is co-chaired by Canada and India and is the G-20’s signature initiative.

The G-20 Framework’s Mutual Assessment Process (MAP) identifies the reforms required to promote a strong and healthy global economy. In 2011, considerable progress was made towards this goal with the support of the IMF and other international organizations. In particular, the IMF advanced the MAP by helping the G-20 develop “indicative guidelines” to identify imbalances. The IMF also prepared Sustainability Reports to provide policy recommendations for the seven members identified as having large and persistent imbalances based on the indicative guidelines. Combined with input from other international organizations, the G-20 developed the Cannes Action Plan for Growth and Jobs. This Action Plan commits G-20 countries to a range of policy actions to mitigate near-term risks and vulnerabilities and sets the stage for robust growth and job creation over the medium term.

Global economic and financial stability supports growth and job creation. To support this goal, G‑20 Leaders pledged to ensure the IMF continues to have adequate resources to play its systemic role, and endorsed the direction being taken by the IMF in improving its lending and surveillance functions. Of particular importance to international stability, the IMF was asked to continue to improve and publish its assessments of exchange rates in order to ensure that G-20 members are meeting their pledge to avoid persistent exchange rate misalignments. 

Enhanced Toolkit

Building on its crisis responder role during the global financial crisis, the IMF further improved its lending toolkit in 2011. In November, it replaced the Precautionary Credit Line, which provided precautionary access to members with no balance of payments need, with the Precautionary and Liquidity Line (PLL). The new PLL provides financing to meet actual or potential balance of payments needs of members with sound economic fundamentals and institutional policy frameworks, but with some remaining vulnerabilities that preclude them from using the Flexible Credit Line (FCL). It is intended to provide liquidity to countries affected by regional or global economic and financial stress. The PLL continues the process of modernizing IMF lending to provide more front-loaded crisis prevention and resolution financing.

The IMF also created the Rapid Financing Instrument (RFI) in 2011 to consolidate and replace two previous emergency assistance policies. The RFI is available to all members and provides small-scale, rapid support for a full range of urgent needs including natural disasters, commodity price shocks and post-conflict situations. The RFI enhances the ability of members to turn to the IMF in times of emergency.

Table 1
Highlights of IMF Lending Activity in 2011
Lending Facility Total Amount
Agreed (SDR)
Countries Entering
Arrangements in 2011
Stand-By Arrangement 4.1 billion Romania, Serbia, and Saint Kitts and Nevis
Standby Credit Facility 5 million Solomon Islands
Extended Credit Facility 1.1 billion Afghanistan, Côte d’Ivoire, Kenya, Kyrgyz Republic, and Mali
Flexible Credit Line 70.3 billion Colombia, Mexico, and Poland
Precautionary and Liquidity Line[1] 413 million FYR Macedonia
Extended Fund Facility 23.7 billion Portugal
1 Formerly Precautionary Credit Line.
Source: IMF Lending Arrangements as of January 31, 2012
Chart 1
Large Approved IMF Lending Amounts: 2001–2011[1]
Chart 1 - This chart  highlights  large approved IMF lending amounts between 2001-2011,   This includes lending for Argentina, Brazil, Turkey, Ukraine, Hungary, Iceland, Mexico, Romania, Poland, Greece, Ireland and Portugal.  A comparison between SDR billions granted in IMF loan sand per cent of country quota is shown.  Not all of these funds were fully drawn upon.  For instance, Poland and Mexico have yet to draw on their FCL arrangements.
[1] These lending arrangements include total lending amounts made available and including cases where lending arrangements were extended beyond initial stand-by facility timelines. The amounts above show the total amounts of lending made available; not all of these funds were fully drawn upon. For instance, Poland and Mexico have yet to draw on their FCL arrangements.

 

Chart 2
IMF Credit Outstanding for All Members, 1984–2011
Chart 2 - This chart illustrates the IMF credit outstanding for all members between 1984 and 2011.
Notes: GRA = General Resources Account; SAF = Structural Adjustment Facility; TF = Transfer Fund;
ESAF = Enhanced Structural Adjustment Facility; PRGF = Poverty Reduction and Growth Facility. 
The PRGF has been replaced by the Extended Credit Facility. Source: IMF Finances (http://www.imf.org/external/fin.htm).

Canada’s Priorities at the IMF

Assessment of Progress Made on Canada’s Priorities at the IMF in 2011

In last year’s report, a series of Canadian priorities for the IMF, under three overarching themes, were identified. The following section assesses progress made on these priorities using the rating system below:

Colour code:

      Good progress

      Some progress

      Little progress

1) Governance and Accountability

The Government of Canada is committed to promoting good governance and accountability both at home and in its relations and operations in the international community. The governance structure of the Bretton Woods Institutions (BWIs) should be representative of their members and their operations should reflect the priorities agreed by those members. Further, the BWIs must be financially sustainable and transparent.

Priority 1.1: Governance Reforms

The IMF should continue to be a legitimate, credible and accountable institution.

2011–2013 Action: The IMF should implement the 2010 quota and governance reform agreement.

      Good progress

In July 2009 Canada ratified amendments to the IMF Articles of Agreement to reflect the 2008 IMF quota and voice agreement. The amendments entered into force in March 2011. The current focus of the IMF’s membership is to implement the follow-up quota and governance reform, approved by an overwhelming majority of IMF Governors in 2010. As of December 31, 2011, good progress had been made towards ratification of the 2010 quota and governance reforms: 75 members constituting 44.77 per cent of total voting power had consented to the quota increase while 50 members constituting 35.15 per cent of total voting power had accepted the proposed governance amendment. The 2010 reforms will become effective when members representing 70 per cent of voting power have ratified the quota increase and when three-fifths of members representing 85 per cent of voting power have ratified the governance amendment. It is anticipated that most of the remaining countries will ratify the quota increase and governance amendment in the first half of 2012 to meet the October 2012 implementation target. In 2012, the Government of Canada will table in Parliament legislation that seeks to ratify the quota and governance reform agreement in order to meet the implementation target.

Taken together with the 2008 reform, implementation of the 2010 reform will result in a significant increase in the voice and representation of emerging market and developing countries (EMDCs) at the Fund. As part of the agreement, there will be a shift in IMF quota shares of over 6 per cent to under-represented dynamic EMDCs, aggregate quota levels will double, and the current quota formula will be reassessed ahead of the next quota review in 2013. In addition, the composition of the IMF Executive Board will be reformed using a number of measures designed to increase the representation of EMDCs. Canada is firmly behind the new quota and governance reform agreement, which constitutes a significant deliverable for the IMF and the G‑20. 

2011–2013 Action: IMF leadership positions should be staffed through open, transparent and merit-based selection processes, regardless of candidate nationality. 

      Some progress

Since the establishment of the BWIs, the IMF Managing Director has been staffed by a European while the World Bank President has been from the United States. Following the resignation of Dominique Strauss-Kahn in May 2011, the IMF began a selection process for a new Managing Director. Canada has long advocated that the leadership positions at the IMF and World Bank should be staffed through an open, transparent and merit-based selection process, regardless of candidate nationality. At their Pittsburgh Summit in 2009 the Leaders of the G-20, which constitute the largest shareholders at the IMF, also supported the call for a merit-based process at the IMF.

The 2011 selection was between two highly credible candidates who were assessed against criteria established by the Executive Board. Canada expressed its support for the candidacy of Agustín Carstens of Mexico. The selection of Christine Lagarde of France reflected the Executive Board’s criteria. The IMF should continue to build on this progress and ensure that the staffing of all leadership positions is based on an open, transparent and merit-based selection process.

2011–2013 Action: The IMF should have strong Ministerial oversight, a strategic role for the Executive Board, and a robust independence-accountability framework for senior management who are hired on merit. 

      Some progress

The IMF must be able to make decisions quickly and transparently, member governments must be ready to act to address threats identified by Fund surveillance, and IMF management and staff must be held more accountable for the quality of their work. In the 2010 report, Canada noted its intention to seek improvements in IMF corporate governance, including the role of the Executive Board and the International Monetary and Financial Committee, the performance and accountability of IMF management, and ways to promote member engagement with the institution.

Some progress was made in 2010 as the IMF increased Ministerial engagement by streamlining the format of the Fall and Spring IMF Meetings, allowing Ministers to attend all Meetings and sessions. In 2011, improvements to the Early Warning Exercise and the introduction of the Consolidated Multilateral Surveillance Report helped to improve the traction of IMF advice through its targeted delivery to Ministers at the Spring and Fall Meetings. 

Further progress was made in focusing the priorities of the institution in 2011. The Managing Director prioritized key items in the IMF work program presented to the Executive Board and Ministers, and there is an effort underway to focus on pressing issues by freeing up Executive Board time through greater use of “lapse of time” decisions for items that do not require formal discussion. This is a welcome step that allows the Board to focus more attention on issues of importance. Canada continues to believe that further corporate governance reforms are necessary, such as increased accountability of the Managing Director and the Executive Board. 

2) Institutional Effectiveness

A second major Canadian objective identified in last year’s report is to ensure that the IMF is effective in carrying out its operations. This means focusing services on core competencies, responding to member country demands, coordinating with other international partners, and exploring innovative ways to reach the institution’s goals.

Priority 2.1: IMF Mandate

Supported by the Articles of Agreement, the IMF’s basic role is to promote international monetary cooperation and global economic and financial stability. It does this primarily through bilateral and multilateral surveillance and dialogue with members, as well as through the provision of balance of payments financing and technical assistance to member countries in need. Canada has consistently stressed that the main focus of IMF reform should be to enhance these core functions without unnecessarily broadening the scope of IMF operations.

2011–2013 Action: The Fund should remain focused on strengthening its core surveillance and crisis lending/conditionality functions, and not expanding into non-core areas.

      Good progress

By improving its lending toolkit, and initializing a thorough review of its surveillance framework, the Fund remained focused in 2011 on its core lending and surveillance functions. 

The IMF looked to expand its core surveillance function by building its role in providing advice on cross-border capital flows. In contrast to trade and services, there are no widely accepted global rules regarding cross-border capital flows. Despite being responsible for overseeing the operation of the international monetary system, the IMF has been unable to forge consensus on such rules, given ambiguities regarding capital flows in the IMF Articles of Agreement and divergent views among members. While no formal rules or decisions were made in 2011, the Fund did publish a paper, entitled “Recent Experiences in Managing Capital Inflows—Cross-Cutting Themes and Possible Policy Framework,” which discusses a possible framework for managing capital inflows that members may choose to follow if they wish. This framework presents important progress in clarifying the IMF’s view on capital flows and providing members with a tool for managing disruptive capital inflows.

The IMF also discussed the possibility of enhancing the role of the Special Drawing Right[5](SDR) in the global economy, including the potential benefits of expanding the basket of currencies that form the SDR. Canada and others stressed the importance of safeguarding the SDR as a reserve currency, and therefore not lowering the requirements for including other currencies in the SDR basket. While the current criteria will be maintained for the foreseeable future, the IMF will continue to examine this issue. It will be important for the IMF to make the case that enhancing the role of the SDR globally will improve the effectiveness of the IMF and the operation of the international monetary system.  

Priority 2.2: IMF Surveillance and Crisis Prevention

Canada has an ongoing interest in effective IMF surveillance of members’ economic and financial policies in order to reduce the risk of global economic, financial and monetary instability. IMF members also have a role by increasing their willingness to heed Fund advice, publishing all surveillance reports, and identifying solutions to common economic and financial threats.

2011 Action: New and updated surveillance initiatives should enhance the efficiency and effectiveness of Fund analysis, fill in gaps in the current surveillance framework, and remain grounded in the core mandate of the Fund.

      Good progress

As noted in Priority 2.1 above, the IMF is focusing on its core surveillance mandate by suggesting, implementing and reviewing surveillance initiatives to enhance the efficiency and effectiveness of its bilateral and multilateral surveillance. New and updated surveillance initiatives in 2011 include:

  • Introduction of spillover reports for China, the euro area, Japan, the United Kingdom and the United States.
  • Introduction of the Consolidated Multilateral Surveillance Report.
  • Improvements to risk assessments in both Article IV and multilateral World Economic Outlook and Global Financial Stability Report surveillance publications.
  • Launch of a vulnerability exercise for low-income countries.

These are in addition to previous improvements in IMF surveillance which include the introduction of the Early Warning Exercise, a vulnerability exercise for advanced countries and emerging markets, the Fiscal Monitor, and mandatory Financial Sector Assessments Programs for systemically important countries every five years. 

The IMF undertook a comprehensive triennial review of its surveillance activities in 2011. Overall, it was found that the IMF has made important progress in core surveillance activities through an increased focus on identifying risks to monetary and financial stability and interconnections between economies. This has been accomplished both through improvements to existing vehicles such as Article IV consultations, and new activities such as vulnerability exercises. The review recommended that five areas of surveillance be prioritized: risk assessments, financial stability, external stability, legal framework, and traction of advice. 

2011 Action: The IMF should work effectively with the G-20 to provide analysis in the G-20 Mutual Assessment Process

      Good progress

The G-20 created the Mutual Assessment Process (MAP) in 2009 to identify the reforms required to promote stability and a strong and healthy global economy. In 2011, considerable progress was made towards this goal. In particular, under the direction of the Working Group on the G-20 Framework for Strong, Sustainable and Balanced Growth (co-chaired by Canada and India), the IMF advanced the MAP by helping the G-20 develop “indicative guidelines” to identify imbalances. The IMF also prepared Sustainability Reports to provide policy recommendations for the seven members identified as having large and persistent imbalances. The Working Group combined the IMF’s input with that from other international organizations to develop the Cannes Action Plan for Growth and Jobs. This Action Plan commits G-20 countries to a range of fiscal, financial, structural and exchange rate policies designed to mitigate near-term risks and vulnerabilities and set the stage for robust growth and job creation over the medium term. It is essential that G-20 members make further progress towards the implementation of these reforms in 2012, and develop a robust framework to enhance reporting and monitoring of their progress in 2012 and beyond.

2011–2013 Action: IMF members should be engaged and transparent with IMF surveillance, and the Fund should be effective in identifying, communicating and spurring member responses to stability threats.

      Some progress

The IMF has made progress in identifying and communicating stability threats, particularly through improved surveillance and increased dialogue with member countries. During the triennial surveillance review, a survey of country authorities found that in the aftermath of the financial crisis, the IMF’s policy advice was timely and responsive, and took into account changing global and domestic economic conditions. The same survey found that among non-G-20 members, the IMF’s advice helped foster appropriate policy changes. Advice to its largest members, however, did not receive the same level of traction. The IMF’s more limited progress in this area is partially due to more widespread access to a variety of analyses in G-20 countries. However, given that the global financial and European sovereign debt crises emanated in the larger advanced members of the IMF, the need for the IMF to more effectively influence policy making among the entire membership is clear. Further, it is crucial that IMF advice remain candid and impartial when the Fund is engaged in a regional partnership. The current European Union/European Central Bank/IMF troika is an example where Fund independence is a crucial element to the credibility of the response.

The IMF has identified the continued improvement of traction as a key priority. It aims to accomplish this through better coverage of issues including unemployment, inequality and inclusive growth; better attention to members’ needs by discussing key issues prior to Article IV consultations; and more reporting on the implementation of past advice.

Members have an equally important responsibility in following through on IMF policy advice. Ireland and Greece are two important examples. Ireland has maintained strong program implementation and has completed important financial sector reforms and a sizeable fiscal adjustment. In the first half of 2011, Ireland’s GDP growth turned positive. In Greece, large fiscal deficit reductions have taken place; however, the pace of structural reforms, fiscal consolidation and privatization plans have proceeded slowly. In 2011, Greece’s economic outlook was revised substantially downward by the IMF. Going forward, the IMF must continue to ensure its advice is impartial and encourage follow-through. The credibility of the IMF and confidence in program countries are enhanced when surveillance is independent and transparent.

Priority 2.3: Resources and Lending Facilities

The IMF should have adequate resources and appropriate instruments to fulfill its lending mandate.

2011 Action: The IMF’s expanded New Arrangements to Borrow should come into effect, and the IMF should secure adequate resources for the transition to this new borrowing framework.

      Good progress

The expanded New Arrangements to Borrow (NAB) came into effect on March 11, 2011. It now consists of 40 members with commitments totalling nearly SDR 370 billion. The expanded NAB was activated for a six-month period on April 1, 2011 and renewed for another six-month period on October 1, 2011 for a maximum of SDR 189 billion. The activation of the expanded NAB supported the ability of the IMF to supplement its quota-based resources over the course of a turbulent year.

A key element of the quota increase agreed to as part of the 2010 quota and governance reform is a rebalancing of the Fund’s financial resources through a “rollback” of the NAB to take account of the doubling of IMF quotas. In order to manage this transition in the IMF’s resource base, the NAB rollback will only take effect once the 2010 agreement is implemented and countries have increased their quota share. This is expected to take place in late 2012.

The IMF has mobilized substantial resources since 2009. However, its engagement in the euro area, combined with continued vulnerabilities in the global economy, led to a renewed discussion of the adequacy of IMF resources in 2011. At the G-20 Cannes Summit in November 2011, Leaders committed to ensuring the IMF continues to have adequate resources to play its systemically important role to the benefit of its entire membership. The adequacy of Fund resources will be examined in greater detail in 2012. Canada will actively engage in assessments of IMF resources and promote the safeguarding of resources against excessive financial risks.

2011–2013 Action: IMF programs should be based on sound economic principles and workable solutions, with targeted conditionality.

      Some progress

The IMF established a number of new lending programs in 2011, including a new Extended Fund Facility for Portugal; the first ever Precautionary and Liquidity Line (PLL) for FYR Macedonia; and the renewal of three Flexible Credit Lines (FCLs) for Mexico, Poland and Colombia.

Though no FCLs have been drawn on to date, countries with FCL arrangements note they are useful complements to their foreign exchange reserves and provide positive signalling effects that come with an IMF credit line reserved for strong performing members. The strong ex ante conditionality associated with the FCL is the catalyzing factor for this effect. The PLL for FYR Macedonia also appears to be fulfilling its intended purpose of providing both financial assistance and a positive signalling effect due to stronger qualification criteria than traditional Stand-By Arrangements.

While the IMF lending program for Portugal is broadly on track, the IMF has noted that 2012 will be a challenging year for Portugal due to the continuing sovereign debt crisis in Europe. Whether this translates into missed targets for the program is yet to be determined. With the program in Greece struggling to gain traction throughout 2011, the IMF needs to better identify the threats to program sustainability and to ensure that program targets and conditionality are credible and appropriately suited to address countries’ core difficulties. This will help safeguard the credibility of the IMF to effectively bring about economic adjustment through financing programs.

2011–2013 Action: New and reformed lending instruments should be consistent with the role of the Fund and designed to protect against moral hazard implications.

      Good progress

As part of the major reform to its lending toolkit in 2009–10, which included the introduction of the FCL and the Precautionary Credit Line (PCL), the IMF committed to reviewing the effectiveness of its two new instruments in 2011. The review found that despite their limited use, the instruments provided valuable insurance and helped boost market confidence during a period of heightened risk. In order to make the PCL more flexible and useful for members, the IMF converted the instrument into the PLL. The PLL differs from the PCL in that it provides liquidity access to members who have an actual or potential balance of payments need, whereas the PCL was intended to boost market confidence for members at risk but not facing a specific balance of payments need. The strong conditionality associated with the PLL, coupled with relatively low caps on levels of access, constitutes adequate safeguards under the facility. 

3) Sustainable Poverty Reduction and Growth

The IMF and World Bank Group should provide financial resources to developing countries in a manner that promotes development and does not jeopardize the sustainability of their debt.

Priority 3.1: Debt Sustainability

2011–2013 Action: The IMF and World Bank should continue to work collaboratively with other organizations, such as United Nations Conference on Trade and Development and the Organisation for Economic Co-operation and Development, to ensure that their responsible lending guidelines are consistent with the Debt Sustainability Framework.

      Good progress

Canada and other debt management stakeholders have submitted comments to the IMF and World Bank to help guide their upcoming review of the Debt Sustainability Frameworks for market access and low-income countries. As the reviews continue through 2012, Canada will work with other stakeholders to ensure the Debt Sustainability Framework remains a useful tool for potential sovereign lenders.

2011–2013 Action: The IMF should ensure that programs supported by the Poverty Reduction and Growth Trust (PRGT) always include a comprehensive debt sustainability analysis and, where appropriate, explicit lending (concessional and non-concessional) limits that are consistent with the institution’s new non-concessional borrowing policy.

      Good progress

The IMF prepares debt sustainability analyses for all PRGT programs and often provides both concessional and non-concessional borrowing limits for countries with PRGT programs, depending on their debt dynamics. These limits are an integral part of securing long-term debt sustainability for many PRGT-eligible countries, particularly those that have already benefitted from substantial debt relief through the Multilateral Debt Relief Initiative and Heavily Indebted Poor Countries Initiative.

Canada’s Objectives at the IMF in 2012

The Government of Canada’s has three objectives for 2012 which focus on core issues of importance to Canada. Further, the Government is identifying actions which the Minister of Finance, the Canadian Executive Director, senior officials and other Canadian officials will engage in to further these objectives.

The first objective is to ensure the Fund continues to have the appropriate tools and governance structure to promote global economic and financial stability. In keeping with the Cannes Summit commitment, the G-20 is examining the adequacy of IMF resources in 2012. The Fund needs to credibly demonstrate that potential financing needs are supported by robust analysis to justify any requests for additional resources. Further, Canada has an ongoing interest in the governance of the IMF’s activities, particularly regarding oversight and accountability.

The second is to increase the traction of IMF surveillance and policy advice to bolster crisis prevention. Recent crises have demonstrated that IMF policy advice and surveillance activities are important to both advanced economies, and emerging market and low-income countries. 

The third is to promote effective IMF lending programs and conditionality to address the root causes of instability. An important feature of the IMF’s lending programs is the design of the conditions that must be met to access loan instalments. These conditions are essential to ensuring the credibility of reform plans and returning countries to strong and stable growth.

1. Ensure the IMF has the appropriate tools and governance structure to promote global economic and financial stability.
  • Promote the importance of IMF quotas as the resource base of the institution.
  • Actively engage in assessments of IMF resources and promote safeguarding of resources against excessive financial risks.
  • Encourage continued enhancements to internal governance and Ministerial oversight, thereby increasing the effectiveness and accountability of the Executive Board.

 

2. Increase the traction of IMF surveillance and policy advice to bolster crisis prevention.
  • Promote enhanced analysis of exchange rates and cross-border spillovers in IMF surveillance.
  • Advocate for IMF advice that is impartial, candid and transparent, including when the Fund is engaged in a regional partnership, to promote confidence in its surveillance activities.
  • Leverage the IMF’s surveillance role in supporting the G-20 Framework for Strong, Sustainable and Balanced Growth to ensure members fulfill their commitments to implement sound policy frameworks.

 

3. Promote effective IMF lending programs and conditionality to address the root causes of instability.
  • Encourage programs that are robust, have credible conditionality and address core balance of payments difficulties facing program countries. 
  • Ensure high standards for accessing new precautionary lending instruments are rigorously upheld, fostering sound and sustainable economic policies.
  • Engage in a review of the Poverty Reduction and Growth Trust facilities to ensure they meet the needs of low-income countries.

Background on the IMF 

The IMF works to safeguard the stability of the international monetary system while promoting sustainable economic growth and raising global living standards.

The IMF:

  • Promotes international monetary cooperation.
  • Facilitates the expansion and balanced growth of international trade.
  • Promotes exchange rate stability.
  • Assists in maintaining a multilateral system of payments.
  • Provides resources to members experiencing balance of payments difficulties.

A Brief History of the IMF

1945—Canada and 28 other countries sign the IMF Articles of Agreement.

1947—IMF begins operations; first loan drawn by France.

1971—United States informs IMF that it will no longer freely buy and sell gold to settle international transactions; the established US dollar-gold fixed exchange rate system (Bretton Woods System) collapses.

1974—IMF adopts “Guidelines for the Management of Floating Exchange Rates.”

1976—IMF establishes trust fund to provide balance of payments assistance to developing country members with profits from the sale of gold.

1977—To adapt to the new era of largely floating exchange rates, IMF Executive Board adopts the “1977 Decision” to guide IMF surveillance of member economies and exchange rate policies.

1986—IMF establishes Structural Adjustment Facility, later replaced by the Enhanced Structural Adjustment Facility (1987) and the Poverty Reduction and Growth Facility (1999), to provide balance of payments assistance on concessional terms to low-income developing countries.

1993—Systematic Transformation Facility established to assist countries of the former U.S.S.R. that face balance of payments difficulties arising from the transition from a planned to a market economy.

1996—IMF endorses joint debt relief initiative for heavily indebted poor countries (HIPC Initiative).

2005—IMF begins to implement the Multilateral Debt Relief Initiative to relieve debt owed to the IMF by countries with per capita income below $380 a year, along with other HIPCs.

2008–2009—In response to the global financial crisis, IMF mobilizes new resources from its members and revamps its lending facilities, creating the Flexible Credit Line and a new set of lending facilities for low-income countries.

2010—IMF continues to reform its lending toolkit by creating the Precautionary Credit Line (later becoming the Precautionary and Liquidity Line). Following the earthquake in Haiti, IMF establishes the Post-Catastrophe Debt Relief Trust to provide debt relief to low-income countries hit by catastrophic natural disasters.

2011—IMF improves surveillance activities by strengthening reporting on interconnections between and spillovers from systemically important economies, and further consolidates and refines lending toolkit.

Membership and Governance Structure

Headquartered in Washington, DC, the IMF is governed by and accountable to the governments of its 187 member countries. Each of the 187 member countries appoints one Governor and one Alternate Governor, usually the Minister of Finance and/or the Governor of the central bank, to the Board of Governors. The relationship between the IMF Board of Governors, the International Monetary and Financial Committee, the joint IMF-World Bank Development Committee and the IMF Executive Board is illustrated in Figure 1.

The Managing Director, nominated and appointed by the Executive Board, serves as chair of the Executive Board and chief of the operating staff of the IMF. The present Managing Director, Christine Lagarde, took office on July 5, 2011.

IMF staff members are appointed by the Managing Director and are solely responsible to the IMF. As of September 15, 2011, the IMF employed 2,470 staff from 141 member countries.

The Independent Evaluation Office (IEO) conducts independent evaluations of IMF policies and activities. The IEO is fully independent of IMF management and operates at arm’s length from the Executive Board. The Director of the IEO is selected by the Executive Board for a renewable four-year term.

As one of 187 member countries, Canada plays an important collaborative role with our international partners to ensure that the IMF has the tools it needs to fulfill its mandate of promoting international monetary and financial stability. A healthy global economy helps create more jobs for Canadians, promotes stable prices for goods and services, and improves our standard of living. Canada’s participation at the IMF encourages international cooperation, sustainable economic growth and better living standards for Canadian residents and across the globe.

Figure 1
IMF Organizational Chart
Figure 1 - This figure is an illustration of the IMF organization structure.  For details, refer to the text in the preceding section.

General Financial Resources

The IMF works much like a credit union. It has access to a pool of liquid resources provided by its members, primarily through their payment of quotas, which consist of convertible national currencies, Special Drawing Rights (SDRs) and other widely used international currencies. Upon joining and subject to regular reviews, each member of the IMF is assigned a quota, based broadly on its relative size in the world economy. The sum of each country’s quota currently equals SDR 238 billion.[6] Quotas play an important role at the IMF as they largely determine a country’s voting share as well as access norms for financing programs. Quotas make up the base of the IMF’s lending resources. In 2010 IMF members approved a major reform of quotas and IMF governance. The reforms include a doubling of aggregate quotas to SDR 476 billion and a major realignment of quota shares among members to better reflect the increasing weight of emerging market and developing countries. The target date to implement this reform is the October 2012 IMF Annual Meetings. Quota shares will be reviewed again in 2013 and are subject to regular reviews every five years.

In periods of global or regional economic instability, the potential borrowing needs of members may exceed the loan capacity of quota-based resources. In these cases, the IMF has the ability to augment its general resources with loans from member countries. The IMF currently has two standing multilateral borrowing agreements with its largest members, including Canada: the General Arrangements to Borrow (GAB) and the New Arrangements to Borrow (NAB). The IMF has GAB arrangements with 11 countries totalling SDR 17 billion and NAB arrangements with 40 countries totalling SDR 370 billion. The IMF also entered into a number of bilateral borrowing arrangements and note purchase agreements in response to the financial crisis to further augment its resources.  As of September 2011, 17 bilateral arrangements and 2 note purchase agreements were in place for a total of US$267 billion. Table 2 provides an overview of the IMF’s general resources.

In addition to its general resources, the IMF holds gold amounting to 90.5 million troy ounces; however, the IMF’s Articles of Agreement strictly limit the use of gold, which cannot be used to lend to member countries. The IMF is further prohibited from buying gold or engaging in other gold transactions; however, if approved by an 85 per cent majority voting power of member countries the IMF may sell gold. The IMF’s concessional lending and debt relief for low-income countries are financed through separate contribution-based trust funds rather than from quota subscriptions.

Special Drawing Right (SDR) The SDR is the international reserve asset created by the IMF to supplement the existing official reserves of member countries. The SDR serves as the unit of account of the IMF and its value is based on a basket of currencies comprising the US dollar, euro, pound sterling and Japanese yen. The SDR interest rate is a weighted average of interest rates on short-term financial instruments in markets of the currencies in the SDR basket. The SDR interest rate is the rate charged to members on non-concessional loans, the rate paid to members on their SDR holdings, and the rate paid on the portion of quota holdings that are used to fund lending programs. A special allocation of SDRs was undertaken in September 2009. The one-time measure increased members’ cumulative SDR allocations by SDR 21.5 billion and provided allocations to those countries that had never received one (members that joined the Fund after 1981),[7] so that they too could participate in the SDR system.

 

Table 2
IMF General Resources
Source Purpose Status
Quotas Each member contributes quota which serves as the base component of the IMF’s financial resources. Quotas are permanently active. Quota levels and their distribution are reviewed every five years.
New Arrangements to Borrow (NAB) Rules-based set of multilateral borrowing arrangements with 40 IMF members to augment IMF resources in times of global or regional economic instability. The NAB was enlarged in March 2011 and activated for 6-month periods in April and October 2011. 
General Arrangements to Borrow (GAB) Older, smaller set of multilateral borrowing arrangements with 11 countries, which can only be activated when a proposal to activate the NAB is not accepted. The GAB has not been activated since 1998.
Bilateral borrowing Temporary supplement to IMF resources when necessary. Sixteen temporary bilateral loan arrangements were still in place in 2011. Arrangements may only be used to supplement Fund resources for programs agreed to prior to the coming into force of the enlarged NAB.

What the IMF Does

IMF activities focus on three primary areas, all aimed at promoting a prosperous global economy by contributing to international monetary and financial stability:

  • Surveillance: Promoting financial and macroeconomic stability and growth through surveillance activities and providing policy advice that can help members prevent or resolve financial crises, sustain strong economic growth and alleviate poverty.
  • Technical assistance: Providing technical assistance and training to help countries build the expertise and institutions they need to implement sound macroeconomic, financial and structural policies.
  • Lending programs: Providing temporary financing and policy support to member countries to help them address balance of payments and/or fundamental macroeconomic problems.

Surveillance

The IMF identifies risks to global economic and financial stability through the surveillance of national, regional and global economic developments. Article IV of the IMF Articles of Agreement requires the Fund to undertake regular consultations with each member country on economic conditions and policies. The Article commits each member country to pursuing policies conducive to the stability of the international monetary system, and global growth and prosperity. Through its consultations, the IMF identifies policy strengths and weaknesses of member countries and provides advice on appropriate corrective measures. Consultations consist of regular staff visits with government and central bank officials, as well as legislators and representatives from the financial sector, industry, trade unions and academia.

Summary of Article IV Obligations

Article IV of the IMF Articles of Agreement sets the “rules of the game” to which each member country has voluntarily committed. Each member country is generally obligated to:

  • Pursue economic and financial policies that promote orderly economic growth with reasonable price stability.
  • Promote a stable monetary system by fostering orderly underlying economic and financial conditions.
  • Avoid manipulating exchange rates or the international monetary system in a way that prevents effective balance of payments adjustment or allows for an unfair competitive advantage over other members.
  • Facilitate the sharing of information necessary for the IMF to exercise firm surveillance over the exchange rate policies of members.

The IMF has developed specific principles for the guidance of all members with respect to exchange rate policies consistent with the above, but that respect the domestic social and political policies and circumstances of members.

In addition to its bilateral consultations with members under Article IV, the IMF produces the semi-annual World Economic Outlook (WEO), the Global Financial Stability Report (GFSR) and the Fiscal Monitor. These documents summarize the IMF’s important regional and multilateral surveillance of the global economy, financial and monetary systems and fiscal developments. The IMF also publishes Regional Economic Outlook (REO) reports on a semi-annual basis, which discuss recent economic developments and prospects for various regions.[8]In 2011, the IMF also introduced the Consolidated Multilateral Surveillance Report to analyze and report on the interconnections between the world’s economies and to demonstrate how policies in larger economies impact each other and the rest of the world. These reports foster discussion at the Executive Board, the International Monetary and Financial Committee, and within member governments. The Executive Board also holds regular informal discussions on the state of world economic and financial market developments.

Following the global financial crisis, the IMF increased its surveillance activities to better fulfill its mandate of promoting international monetary and financial stability. Mandatory financial sector assessments for systemically important countries, vulnerability exercises and cross-country spillover reports are examples of this increased surveillance.

Technical Assistance

Technical assistance is an integral part of the IMF’s mandate. Improving the technical capacity of member countries is fundamental to promoting sound monetary and macroeconomic policies and enabling effective IMF surveillance. The IMF offers technical assistance and training to members in areas such as macroeconomic policy, tax and revenue administration, expenditure management, monetary policy, exchange rate systems, financial sector sustainability, and macroeconomic and financial statistics. Approximately 85 per cent of this assistance goes to low-income and lower-middle-income countries. The IMF also provides technical assistance to help countries design and implement poverty-reducing and growth-promoting programs, and to help heavily indebted poor countries with debt reduction and management.

In collaboration with member countries, the IMF delivers technical assistance through missions from headquarters, short-term expert assignments, long-term resident advisors and regional centres. Recently, the IMF has adopted a more regional approach to the delivery of technical assistance and training and is increasingly relying on donor financing for its programs. In addition to the training offered at the IMF Institute based in Washington, DC, seven regional training institutes for country officials and eight Regional Technical Assistance Centres (RTACs) deliver more accessible and regionally tailored programming to member countries across the globe. Table 3 provides a list of all RTACs currently in operation. The Fund is also planning to open two new centres: one in Africa and one in Central Asia.

Table 3
Regional Technical Assistance Centres (RTACs)
Centre Name (Location)
Year Opened
Beneficiary Countries and Territories
Pacific RTAC
(Suva, Fiji)
1993
Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, and Vanuatu.
Caribbean RTAC
(Bridgetown, Barbados)
2001
Anguilla, Antigua, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, and Turks and Caicos.
East AFRITAC—Africa Regional
Technical Assistance Centre (Dar es Salaam)
2002
Eritrea, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, and Uganda.
West AFRITAC
(Bamako, Mali)
2003
Benin, Burkina Faso, Côte d’Ivoire, Guinea, Guinea-Bissau, Mali, Mauritania, Niger, Senegal, and Togo.
Middle East RTAC
(Beirut, Lebanon)
2004
Afghanistan, Egypt, Iraq, Jordan, Lebanon, Libya, Sudan, Syria, West Bank and Gaza, and Yemen.
Central AFRITAC
(Libreville, Gabon)
2007
Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Republic of Congo, Equatorial Guinea, and Gabon.
Central America, Panama,
Dominican Republic TAC
(Guatemala City, Guatemala)
2009
Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.
South AFRITAC
(Port Louis, Mauritius)
2011
Angola, Botswana, Comoros, Lesotho, Madagascar, Mauritius, Mozambique, Seychelles, South Africa, Swaziland, Zambia, and Zimbabwe.

Lending Programs

As part of its central role in the international financial system, the IMF makes its resources, a repository of currencies and reserve assets, available to help members finance temporary balance of payments problems. To fund this lending, the IMF calls on countries that are considered financially strong to provide reserve assets determined by quota to be made available to borrowing countries. Borrowing countries therefore draw from other members, with the IMF acting as intermediary, and repay these members with interest over a specified period of time.

Members providing the resources lent to a country facing balance of payments difficulties receive a market-based rate of interest consistent with the return members would have received on alternative safe and liquid investments. The IMF’s resources are protected by a number of financial safeguards including preferred creditor status, encashability of claims, and precautionary balances. The IMF has never suffered a loss on its lending activity. Further, as members do not provide grants to finance the Fund’s general operations, membership in the IMF does not entail a direct budgetary cost and resources provided to the IMF are treated as official international reserves.

For the majority of IMF programs, members requesting financial assistance reach an agreement with the IMF staff on a set of economic measures and reforms aimed at removing the underlying source of the country’s balance of payments difficulty. The details of this integrated economic program (often referred to as conditionality) and the amount and duration of financing are then approved by the Executive Board. Typically, IMF financial assistance is provided in stages, or tranches, with the release of each tranche accompanied by verification that the country is continuing to follow the agreed economic program, and is meeting agreed policy conditions.

Depending on the prospective size and duration of the problem, these measures are agreed to as part of various loan facilities or instruments that are customized to address the specific circumstances of each member. The Stand-By Arrangement, which provides the bulk of Fund’s non-concessional assistance, addresses short-term balance of payments problems and typically lasts one to two years. On the other hand, the Extended Fund Facility addresses longer-term balance of payments problems requiring fundamental economic reforms and generally runs for three years.

Following the financial crisis, the IMF created two credit lines for countries with a sound policy framework that do not require full lending programs: the Flexible Credit Line (FCL) in 2009 and Precautionary Credit Line (PCL) in 2010. The FCL provides countries that have strong economic fundamentals and policies with a credit line they can use for crisis prevention purposes. As of December 31, 2011, Colombia, Mexico and Poland have obtained FCL arrangements but have not drawn from them. In 2011, the IMF revamped the PCL, which was intended only for countries that did not have an actual balance of payments need. The PCL was renamed the Precautionary and Liquidity Line (PLL) and is intended for members who are facing spillovers from regional or global economic stress that result in an actual or potential balance of payments need. The PLL provides insurance to support members with sound policies but some remaining vulnerabilities that preclude them from accessing the FCL. The first and only PCL/PLL arrangement to date was approved for FYR Macedonia in January 2011. It was partially drawn in March 2011. 

In 2011, the IMF created the Rapid Financing Instrument (RFI) to consolidate and replace two previous emergency assistance policies. The RFI is available to all members and provides small-scale, rapid support for a full range of urgent needs including natural disasters, commodity price shocks and post-conflict situations.

Additional instruments are available for low-income member countries. The financial crisis prompted the IMF to overhaul these facilities, creating a new set of below market rate (concessional) flexible lending facilities that are now available under a new brand, the Poverty Reduction and Growth Trust (PRGT). 

There are three lending facilities in the new PRGT framework:

  • The Extended Credit Facility, which replaces the former Poverty Reduction and Growth Facility, provides flexible medium-term support to low-income members that have protracted balance of payments problems.
  • The Standby Credit Facility, which addresses short-term and precautionary balance of payments needs, is similar to the Stand-By Arrangements in regular Fund lending.
  • The Rapid Credit Facility provides rapid access at low levels with limited conditionality to meet urgent balance of payments needs.

Further, as part of the response to the global financial crisis, the IMF provided temporary interest relief with zero payments on concessional lending arrangements through the end of 2012 to help low-income countries cope with the economic crisis. Also, in 2010 the Fund created the Post-Catastrophe Debt Relief Trust to provide debt relief to low-income countries hit by catastrophic natural disasters. Its purpose is to help these countries meet exceptional balance of payments needs that arise from such catastrophes. The first beneficiary of the trust was Haiti.

Finally, a Policy Support Instrument (PSI) is an option for any member that does not need or want IMF financial assistance but voluntarily requests IMF endorsement and continued monitoring of its policies. PSIs signal IMF support for member countries’ policies, informing private and public creditors, official donors and the general public. As of September 2011, Cape Verde, Mozambique, Nigeria, Senegal, Uganda, Tanzania and Rwanda have benefited from PSI arrangements. Table 4 outlines the lending facilities of the IMF.

Table 4
IMF Lending Facilities
Credit Facility (Year Established) Purpose Conditions
Credit tranches and Extended Fund Facility
Stand-By Arrangements (1952) Provide medium-term assistance for members with short-term balance of payments difficulties. Adopt policies that provide confidence that the members’ balance of payments difficulties will be resolved within a reasonable period.
Extended Fund Facility (1974) Provides longer-term assistance to support members experiencing serious medium-term payments imbalances due to structural weakness, to address long-term balance of payments difficulties. Adopt a 3-year program with a structural agenda and an annual detailed statement of policies for the next 12 months.
Flexible Credit Line (2009; reformed 2010) Provides large-scale, targeted and precautionary assistance for members with access to international capital markets. Very strong ex ante macroeconomic fundamentals, economic policy framework and policy track record.
Precautionary and Liquidity Line (2010; reformed 2011) Provides financing to support members with an actual or potential balance of payments need and facing moderate vulnerabilities. Sound economic fundamentals, institutional policy frameworks and policy track record. Need to commit to a focused set of policies aimed at reducing the remaining vulnerabilities identified.
Rapid Financing Instrument (2011) Provides small-scale, rapid financing for any member facing an urgent balance of payments need without but not requiring a program. Limited and transitory shock such as a natural disaster, post-conflict situation, or commodity price shock. Need to cooperate with IMF to solve balance of payments difficulty.
Facilities for low-income members
Extended Credit Facility (2009) Succeeds the Poverty Reduction and Growth Facility to provide flexible medium-term support to low-income members with protracted balance of payments problems. Adopt policies adequate to correct external imbalances and make progress toward a stable and sustainable macroeconomic position. May extend over the medium or longer term.
Stand-By Credit Facility (2009) Provides financial assistance to low-income members with short-term balance of payments needs. Adopt policies adequate to correct external imbalances and restore a stable and sustainable macroeconomic position. Aim to resolve balance of payments needs in the short term.
Rapid Credit Facility (2009) Provides rapid access at low levels with limited conditionality for urgent balance of payments needs. Assistance is provided as an outright disbursement. The facility does not have program reviews or ex post conditionality, except in the case of repeated use, where a track record of performance would be required in advance of the disbursement unless the financing need is primarily caused by an exogenous shock.
Source: International Monetary Fund.

Canada’s Engagement at the IMF 

As a result of the relatively large size of the Canadian economy and its openness to international trade, Canada has a significant voting share at the IMF (see Table 5). Canada holds a seat on the Executive Board, which is composed of 5 appointed member countries and 19 elected member countries and constituencies. Canada’s seat on the Executive Board represents a constituency that includes Ireland and most member countries from the Commonwealth Caribbean. Canada’s voting share declined in 2011 as a result of the coming into force of the 2008 quota and voice reforms, which increased the weight of dynamic emerging market and developing countries. Although Canada’s voting share at the IMF is now 2.56 per cent (down from 2.88 per cent), the Executive Director casts the votes of all members of the constituency, for a total of 3.60 per cent.[9]In the event of a vote, the Executive Directors of multi-country constituencies must cast all of the votes of their members as a bloc. 

Table 5
Voting Shares of the 12 Largest Members of the IMF
Country % of Total Voting Shares
United States 16.73
Japan 6.23
Germany 5.80
United Kingdom 4.29
France 4.29
China 3.81
Italy 3.15
Saudi Arabia 2.80
Canada 2.56
Russia 2.39
India 2.34
Belgium 2.08

 

Office of the IMF Executive Director for the Canadian, Irish and Caribbean Constituency

Executive Director
Hon. Thomas Hockin (Canada)
Alternate Executive Director
Mary O’Dea (Ireland)
Senior Advisor
Antoine Brunelle-Côté (Canada)
Senior Advisor
John Rolle (Bahamas)
Senior Advisor
Kimberly Beaton (Canada)
Senior Advisor
Mathew Sajkunovic (Canada)
Advisor
Peter McGoldrick (Ireland)
Administrative Assistant
Basia Manitius
Administrative Assistant
Sandra Mendes
Phone/fax
202-623-7778/202-623-4712
Address
11-112, 700 – 19th Street N.W., Washington, DC 20431, USA

Canada’s contribution to the IMF’s overall quota is SDR 6.37 billion. Canada’s quota represents 2.67 per cent of the total and, during times when the New Arrangements to Borrow (NAB) or other bilateral loan arrangements are not in force, corresponds to the maximum amount that it could be asked to lend to the IMF from its international reserves to assist other members experiencing financial difficulties. In addition to its quota, Canada has contributed SDR 893 million to the General Arrangements to Borrow (GAB) and SDR 7.62 billion to the NAB, most recently activated for a second six-month period on October 1, 2011. Canada also provided a temporary US$10 billion bilateral loan to the IMF in 2009 to bridge the IMF’s resource gap until the expanded NAB entered into force in 2011. The bilateral loan remains active until the end of 2013 to ensure liquidity for the financing of commitments approved prior to the coming into force of the expanded NAB. There were no drawings under the bilateral loan at the end of 2011. Table 6 summarizes Canada’s financial position at the IMF.

Funds provided to the IMF do not affect Canada’s net debt measure as they constitute financial assets of the Government. Canada earns interest on these claims at the SDR interest rate when they are drawn to fund lending programs. IMF claims are booked as a part of the official international reserves of the Government of Canada. The preferred creditor status of the IMF, in addition to other financial safeguards, permits Canada to classify claims as official international reserves. 

Canada is also a major contributor to the IMF’s technical assistance and training centres, including the Caribbean Regional Technical Assistance Centre (CARTAC), the African Regional Technical Assistance Centre, and initiatives to support financial sector reform such as the Anti-Money Laundering and Combating the Financing of Terrorism Trust Fund. In addition, Canada provides ongoing support and funding to the Central America, Panama, Dominican Republic Technical Assistance Centre, established in 2009. Canada is the largest international donor to the CARTAC, providing $25 million for 2010–2013. To support the poorest countries, Canada provides loan and subsidy resources to support concessional lending through the IMF’s Poverty Reduction and Growth Trust. In Budget 2010 Canada announced a further $800 million in loan resources and $40 million in subsidy resources. These resources are aimed at ensuring the PRGT has the capacity to lend concessional resources of up to SDR 11.3 billion over the 2009–2014 period.

Table 6
Summary of Canada’s Financial Position at the IMF
Canada’s IMF-Related Finances, as of December 31, 2011

(in SDR, billions)
Allocated
Contribution
Amount
Drawn
Current quota 6.4 1.7
NAB commitment1 7.6 0.8
GAB commitment 0.9 0
Total 14.9 2.5
1 Canada’s exposure under its US$10 billion bilateral loan agreement and the NAB together is limited at the NAB commitment.

Canadian Outreach in 2011

In 2011, Canada’s Executive Director at the IMF and his staff met with many Canadian, Irish and Caribbean officials and civil society organizations, often alongside officials from the Executive Director’s Office at the World Bank. These meetings included representatives from various Canadian universities and colleges. Staff from the Executive Director’s office also participated in seminars and events with various civil society guests, hosted by the IMF’s External Relations group.

Canada’s Voting Record in 2011

Since the vast majority of decisions at the IMF are taken on a consensus basis, formal votes by Governors and the Executive Board are rare. Canada attempts to influence the development of policy proposals before they are brought to the Board (through informal discussions with staff and management) or to influence other members of the Executive Board before or during the course of Board deliberations. Below are the positions taken by Canada’s Governor on the seven resolutions of the Board of Governors in 2011. As well, the Executive Director representing Canada, Ireland and the Caribbean recorded two abstentions and one opposition in 2011.

Voting Record of the Canadian Governor in 2011

In August 2011, Canada’s Governor approved the dates and venue (Washington, DC) of the 2013 and 2014 Annual Meetings of the IMF.

In September 2011, Canada’s Governor voted against a salary increase for Executive Directors and their Alternates, citing the need to contain expenditure increases at the institution in light of the economic circumstances facing member countries.

In March and September 2011, Canada’s Governor approved the activation of the NAB for a period of six months.

In November 2011, Canada’s Governor voted in favour of South Sudan’s application for membership in the IMF.

In November 2011, Canada’s Governor approved the admittance of Poland to the NAB.

In December 2011, Canada’s Governor approved the details of the NAB “rollback” that will coincide with the implementation of the 2010 quota increase.

 

Voting Record of the Executive Director Representing Canada in 2011

(Only Oppositions or Abstentions listed)

In February and April 2011, the Executive Director abstained on the decisions to complete the second and third reviews under the Extended Credit Facility arrangement for the Democratic Republic of Congo. Canada’s decision reflected reservations related to the sustainability of reform efforts, which could negatively impact the investment climate and development objectives.

In October 2011, the Executive Director voted against the resolution to increase the direct remuneration of Senior Advisors to Executive Directors due to Canadian views on the need for the IMF to further control its expenses.

Canadian Statements at the International Monetary and Financial Committee of the Board of Governors of the IMF, 2011

The Honourable Jim Flaherty, Minister of Finance for Canada,

on behalf of Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Ireland, Jamaica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines

Washington, DC
April 16, 2011

On behalf of Canada, Ireland and the Caribbean countries I represent, I would like to take the opportunity to welcome the new Chairman of the International Monetary and Financial Committee (IMFC). Minister Tharman’s leadership and extensive economic and financial experience will add tremendous value to the work of the Committee.

To my fellow IMFC members, we meet at a time when the global economy continues to recover from the financial crisis, but also continues to face significant risks. The imbalances and vulnerabilities that existed before the onset of the crisis have begun to re-emerge, and new sources of instability have emerged.

Global policy coordination and cooperative dialogue continues to be an essential part of the international toolkit to enhance global economic stability. The International Monetary Fund (IMF) was an important contributor in assisting the global economy through the worst of the financial crisis. Its role in overseeing a lasting recovery and preventing future crises through the timely identification of risks and the fostering of global economic cooperation will be equally important as we look to the future.

Canadian Developments

An economic recovery in Canada is underway, reflecting improved global financial market conditions and a rebound in commodity prices, as well as significant fiscal and monetary policy stimulus. The Canadian economy has expanded for six consecutive quarters since the third quarter of 2009, fuelled by a strong rebound in consumer and business expenditures. This has translated into a labour market recovery, with all the jobs lost during the recession now recouped. Canada’s recovery remains fragile, however, given continued global economic uncertainty.

Irish Developments

2010 was a difficult year for the Irish economy, although the decline in economic activity was much less severe than in the two previous years. While domestic demand remained weak, the downsizing of the construction sector is now almost complete. Improvements in the external environment and significant reductions in the cost base were reflected in increased exports of 9½ per cent, the strongest rate of growth in a decade. 2011 will see a return to positive gross domestic product (GDP) growth driven by exports. The growth potential of the Irish economy remains strong, given the flexibility of the economy, the high skills base and the openness of the economy. These factors will help support growth over the medium term.

The budgetary consolidation which has been underway since mid-2008 is continuing with the Budget for 2011 setting out a further €6 billion or 3¾ per cent of GDP in adjustment measures with the main focus being on curtailing expenditure. The end-March 2011 revenue and expenditure outturns comfortably met the performance criteria set under the joint European Union/IMF programme of financial support.

On 31 March 2011, the Financial Measures Programme Report was published, which details the outcome of the Central Bank of Ireland’s review of the capital and funding assessments of domestic Irish banks. The Irish authorities have committed to a radical reorganization of the Irish banking system to create two pillar banks that will be smaller and more focused on the Irish economy. The continued presence of foreign-owned financial institutions will ensure that a competitive environment is maintained. Recapitalization of the banks to challenging capital targets aims to ensure that they become viable financial institutions in a position to fund themselves in the future.

Caribbean Developments

In the Caribbean, a very slow recovery has begun, paced by a firming in tourism activity. While output gains are expected to be consolidated during 2012, medium-term performance is still expected to trail emerging markets and Latin America in particular. However, this growth potential has to be enhanced to underpin sustainable medium-term fiscal consolidation, sustain further poverty reduction efforts and aggressively confront structural unemployment. Caribbean authorities are therefore committed to policies to strengthen the business environment, enhance labour force productivity and diversify the sources of growth. Oversight of the financial sector remains at a heightened state, in view of still very elevated cyclical credit risks and the continued redress of structural weakness which were exacerbated by the economic crisis. In these regards, regional authorities view the continued engagement of the international financial institutions and other development partners as vital to ensure that economic vulnerabilities are addressed. They also see this support as vital to allow the region to effectively adapt to the changing global landscape of financial regulations and standards.

The Role of the IMF

As the IMF highlights in its current World Economic Outlook, global imbalances are not expected to unwind over the near to medium term as demand growth in deficit and surplus countries will likely not change substantially. These imbalances, represented by huge gross international asset positions, likely represent a misallocation of capital.

Effective IMF surveillance is crucial to provide sound and comprehensive advice regarding the key problems facing the IMF as well as potential remedies. The Fund must continue to build on the important work it has done recently in this regard, including its reports on managing capital flows and assessing reserve adequacy. This work should aim to ensure an open and resilient international monetary system.

As recently pointed out by the Independent Evaluation Office Evaluation of IMF Performance in the Run-Up to the Financial and Economic Crisis, the quality and candour of Fund surveillance needs to be enhanced. The upcoming Triennial Surveillance Review and Review of the 2007 Decision will also provide an important opportunity to assess and improve the effectiveness of Fund surveillance.

Economic crises vary in nature and magnitude. The IMF took important steps in 2010 to ensure that a diverse set of lending options are available to assist members that have difficulties coping with all types of economic shocks. Enhancements to the Flexible Credit Line and the creation of the new Precautionary Credit Line have improved the lending toolkit of the Fund. We must have a clear understanding of the impacts of these changes before we consider whether other reforms to the lending toolkit are required.

With the recently agreed expansion of the New Arrangements to Borrow, the IMF’s lending has been substantially strengthened. This is important given the extent of Fund lending in Europe. To safeguard its resources, it will remain important for the IMF to play the lead role in negotiating conditions with borrowers, even when other lending institutions are involved.

Tangible and significant progress has been made at the IMF in the past year that will increase the legitimacy, credibility and effectiveness of the institution. Canada and its constituents commend the IMF membership for obtaining the necessary domestic ratifications to bring the 2008 quota agreement into force. This, coupled with the broad range of IMF governance reforms agreed to in the fall of 2010, constitutes a significant deliverable towards aligning the voice and representation of member countries with their global economic weight. All of the members in our constituency will carry out the necessary domestic ratifications to bring the 2010 reforms into force in a timely manner, and we urge all Fund members to do the same.

While recent measures constitute valuable progress on corporate governance reform, we must continue to identify ways to enhance the governance structure of the Fund. Clarifying the roles and responsibilities of Fund management and the Executive Board to enhance accountability, and introducing a management selection process that is based on merit and is without regard to nationality, are still important goals.

Washington, DC
September 24, 2011

On behalf of Canada, Ireland and the Caribbean countries in the constituency, I would like to formally welcome the International Monetary Fund’s (IMF’s) new Managing Director, Christine Lagarde, the new First Deputy Managing Director, David Lipton, and the new Deputy Managing Director, Min Zhu, to the institution.

The sovereign debt crisis in Europe, high unemployment and elevated debt levels in some advanced economies, and inflation pressures in many emerging markets, are stark reminders of the need for governments to maintain sound economic policy frameworks to support our collective well-being. The IMF has a critical global role to play in advising its members on their policy frameworks and in providing candid advice on risks and deficiencies. In this regard, I would like to extend my appreciation to the IMF’s support of the G-20 Working Group on the Framework for Strong, Sustainable and Balanced Growth, which Canada co-chairs with India.

Following the onset of the global financial crisis, the IMF has implemented important reforms to its surveillance practices, lending tools and governance framework, while providing a key forum for international economic dialogue and cooperation. Given the prevailing environment, the Fund will continue to face significant pressures on its analytical, financial and technical resources, which must be carefully managed. At the same time, the Fund must continue to be flexible and responsive to circumstances, further enhance its surveillance and governance regimes, and strive at all times to provide timely and balanced advice to its members.

In this Statement, I provide updates on economic developments in the constituency countries of Canada, Ireland, and the Caribbean, and constituency views on key IMF issues.

Canadian Developments

Canada weathered the recession better than most and has, among advanced economies, had one of the strongest recoveries to date, reflecting significant policy stimulus and solid economic fundamentals. This has been visible throughout the recovery as growth has been underpinned by a strong rebound in private domestic demand. Beginning with the third quarter of 2009, the Canadian economy expanded for seven consecutive quarters before pausing in the second quarter of 2011, with the recent slowdown reflecting weak external demand. In spite of the recent pause in growth, Canada’s economic resiliency during the recession and the strong recovery have left both real gross domestic product and real final domestic demand significantly above pre-recession levels.

To maintain and preserve Canada’s strong financial position, the Government is committed to returning to budgetary balance over the medium term. In Budget 2010, the Government set out its initial three-point plan to bring Canada’s finances back to balance. Building on these actions, Budget 2011 announced new measures to achieve additional savings by closing tax loopholes and launching a comprehensive one-year strategic review of departmental spending that is expected to help return the budget to balance by 2014–15, one-year earlier than originally planned.

The IMF expects that Canada, on a total government basis (including the federal, provincial/territorial and local government sectors), will be one of only two G-7 countries, along with Germany, to return to budgetary balance by 2016. This would allow Canada to maintain by far the lowest net debt burden among G-7 countries.

Irish Developments

The Irish economy continues to exhibit strong signs of stabilization, despite the continuing turmoil in international financial markets. The Irish authorities have shown a resolute determination to set the economy back on track and to meet, and in some cases exceed, the challenging benchmarks set out in the IMF program. Growth continues to recover and is expected to turn positive this year, driven, as expected, by a robust external sector, with domestic demand subdued. Wage growth and inflation remain below that of competitors, while unit labour costs continue to fall and productivity is increasing. The results are evident in strong net exports and a current account surplus. Fiscal consolidation continues with combined revenue and expenditure measures setting the public finances on a strong footing.

The process of stabilizing the Irish banking system is well underway. A major restructuring of the sector has involved a thorough examination of all assets, subsequent significant recapitalizations and a program of asset deleveraging which has already commenced and will carry through to 2013. Deleveraging will also reduce the reliance of the banking system on Eurosystem liquidity support and thus return the banks to normal funding operations. An early success of this banking strategy was the injection of private capital into one major bank.

Further positive news for Ireland resulted from the decision by the European Union (EU) to lower the interest rate for Ireland and to extend maturities on EU loans. The resulting improved debt sustainability and maturity profile will assist Ireland in its attempts to regain market access. In a movement against the general tide, Irish sovereign spreads have come in considerably in recent times and Standard & Poor’s recently confirmed Ireland’s current credit rating.

Caribbean Developments

In the Caribbean, economic prospects remained weighed down by weak conditions, particularly in the United States and Western Europe. In some countries signs of a mild recovery have emerged, with very modest firming in tourism and foreign direct investment (FDI) inflows. While growth is expected to be more broad-based in 2012, the medium-term forecasts are for gains that are below averages experienced before the global crisis, and therefore with more persistent unemployment. FDI inflows are likely to be constrained by tight credit conditions in global financial markets, and public sector investment capacity limited, given the pressing budgetary consolidation needed to rebuild spending buffers and reduce debt overhang. However, beyond the external influences from fuel and commodity prices, core inflation expectations in the Caribbean should remain mild.

In addition to their efforts to return to more sustainable fiscal policy paths, the Caribbean authorities will maintain their focus on enhancing regional financial stability, particularly to address vulnerabilities which the crises exposed. They are also increasing efforts to achieve more diversified and accelerated growth, through increased productivity, more efficient public sectors and by forging stronger trading linkages with large emerging markets. Caribbean authorities value the ongoing policy dialogue with the IMF and multilateral development partners on these issues. In view of the policy priorities, technical assistance needs will remain elevated. The financial capacity to provide advice, particularly through the Caribbean Regional Technical Assistance Centre, must therefore be preserved. Meanwhile, Caribbean authorities continue to encourage the Fund to take on more of an advocacy role for their development interests, and those of other similarly vulnerable small states, in multilateral forums which promote policy harmonization and cooperation.

The IMF
IMF Surveillance

Candid, targeted and even-handed surveillance is central to the Fund’s mandate and critical to its effectiveness. The IMF has made important progress recently on improving the quality of its surveillance products, including through the integration of Financial Sector Assessment Programs into Article IV reviews, the introduction of spillover reports for systemic economies, and the Fund’s new Consolidated Multilateral Spillover Report. The current Triennial Surveillance Review provides a vital opportunity to further strengthen Fund surveillance by identifying areas for improvement and setting strategic priorities going forward. To maximize effectiveness, the Fund’s surveillance products, including Article IV reports, must be made public.

The IMF will continue to play an important role in supporting the global recovery and ensuring greater progress is made in reducing global imbalances through its constructive contributions to the G-20 Framework for Strong, Sustainable and Balanced Growth. Since 2009 the Fund, working with other international organizations, has provided valuable technical advice to G-20 countries under the Mutual Assessment Process, a process co-chaired by Canada and India, to help evaluate the consistency of members’ individual policies with our collective goals for global economic growth, and suggest improvements to policy frameworks where necessary.

Reform of the International Monetary System (IMS)

While much work has been devoted to strengthening the IMS over the last year, the system will not work properly so long as the global economy’s ability to adjust to shocks remains impaired by exchange rate regimes that frustrate adjustment. Thus, while we welcome efforts to reform the IMS, the focus of these efforts should be on ensuring that global adjustment mechanisms work.

The Fund has also made important progress in strengthening its lending toolkit. The creation of the Precautionary Credit Line and Flexible Credit Line went a long way in filling gaps in the lending framework of the Fund. The near-term priority should be to ensure that these new tools are used and evaluated. A clear case needs to be made that gaps in the toolkit still remain before considering additional instruments.

Canada supports ongoing discussions at the IMF and in the G-20 on the possible expansion of the Special Drawing Right basket of currencies. The current criteria are appropriate and a high bar for entry should be maintained.

IMF Governance

IMF governance reform has also seen its share of important progress recently. The landmark quota and governance reform agreement reached in the fall of 2010 will go a long way towards greater aligning Fund representation with global economic weights. All IMF members should carry out the necessary steps to ratify the 2010 agreement in a timely manner. For our part, Canada, Ireland and our Caribbean constituents have begun this process and look forward to delivering on this commitment in the coming months. Looking ahead to the quota formula review and next general quota, Fund members will have to demonstrate flexibility in order to reach agreement, as they did in 2010.

While essential to the credibility and legitimacy of the IMF, voice reforms are not the only aspect of Fund governance that deserves attention. Important governance reforms remain to be implemented, such as enhancing Ministerial engagement and oversight, and further aligning and clarifying the accountability mechanisms of the Fund. Of critical importance, IMF members, as well as those of other international financial institutions, should commit to a management selection process that is based on merit criteria alone and that pays no regard to candidate nationality.

The Role of the IMF in Low-Income Countries (LICs)

Canada strongly supports the Fund’s efforts to help LICs, and has backed such support with substantial commitments of loan and subsidy resources on several occasions. Canada urges other bilateral donors to finalize their commitments to the Poverty Reduction and Growth Trust (PRGT) and continues to support moving ahead with the use of previous gold sale profits to generate PRGT subsidy resources in line with the agreed 2009 LIC financing package. Canada also welcomes the upcoming review of the PRGT lending architecture and believes it will be another opportunity to better tailor the Fund’s assistance to LICs requiring financial assistance.


[1] The SDR, or Special Drawing Right, serves as the unit of account of the IMF, and its value is based on a basket of currencies comprising the US dollar, euro, pound sterling and Japanese yen.

[2] Canada’s constituency includes Antigua and Barbuda, the Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Guyana (World Bank Group only), Ireland, Jamaica, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.

[3] The euro area is defined as the grouping of 17 countries within the European Union that share the euro as their common currency

[4] Each member country of the IMF is assigned a quota, based broadly on its relative position in the world economy. A member country’s quota determines its maximum financial commitment to the IMF and its voting power, and has a bearing on its access to IMF financing. For more details, see the section ”Background on the IMF.”

[5] The SDR is the international reserve asset created by the IMF to supplement the existing official reserves of member countries. See the section ”Background on the IMF” for further information on the SDR.

[6] As of December 31, 2011, 1 SDR = 1.56 Canadian dollars.

[7] Factsheet — Special Drawing Rights.

[8] September 2011 WEO, September 2011 GFSR, October 2011 REO, September 2011 Fiscal Monitor.

[9] The voting share of all members of the constituency will change somewhat once the 2010 quota and voting share agreements come into effect.


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