Enough voice for the weak? Why climate-vulnerable countries need more voting rights in the International Monetary Fund

Enough voice for the weak? Why climate-vulnerable countries need more voting rights in the International Monetary Fund

By Timon Forster

It has been three years since the International Monetary Fund (IMF) – the organization charged with overseeing the international monetary and financial system – determined that its mandate also includes the macroeconomic consequences of global warming (such as the strain on government coffers caused by natural disasters).

The Fund has since hired climate experts, incorporated climate concerns into its monitoring activities and set up a lending facility to finance climate policies. These changes have been driven by its Executive Director, Kristalina Georgieva, whose term was recently extended for another five years.

But not everything went smoothly. According to the IMF’s Independent Evaluation Office (IEO), the Fund’s members approved a climate budget of $27 million, which is 25 percent below the $36 million needed by staff. This suggests that not all member countries fully support the IMF’s climate direction.

More broadly, research shows that countries in the global North pursue their own interests in international organizations – political priorities that can clash with the institution’s technocratic ideals.

This raises a number of questions in the context of the IMF’s climate reforms: Can the Fund implement ambitious and effective climate policies? And how are climate-vulnerable developing countries, such as those in the Climate Vulnerable Forum’s Vulnerable Twenty (V20) group of finance ministers, and their interests represented in the institution’s day-to-day decision-making processes?

In a new journal article Published in Global politicsLara Merling and I examine the representation of 67 V20 countries that are IMF members and find that these climate-change-vulnerable countries make up just 6.7 percent of the IMF’s voting population. This raises serious questions about the extent to which their voices are adequately represented in the Fund’s approach to climate change.

Voting rightsS Object

Voting shares in the IMF are derived from quotas, which in turn depend primarily on a country’s size in the global economy. For example, the United States has 17.4 percent of the quotas, which corresponds to a vote share of 16.5 percent. This gives the United States a veto right on the most important decisions that require an 85 percent majority, such as the admission of new members or changes to the Fund’s mandate. The large European states can also collectively block such changes. In contrast, the 67 V20 countries have only 6.7 percent of the votes or 5 percent of the IMF quotas. And this despite the fact that the 67 V20 countries together represent more than 1.7 billion people and are responsible for less than 6 percent of historical greenhouse gas emissions.

Quota shares and votes are also important because they determine member states’ financial contributions to the Fund. They are arguably even more important for borrowing countries: they determine the distribution of special drawing rights, the Fund’s reserve, and set the maximum amount of financial resources the IMF will provide in times of need. Access to borrowed funds is particularly important for climate-vulnerable countries, as they have implemented more than half of all IMF conditional lending programs over the past two decades.

A seat on the IMF Executive Board

In day-to-day decision-making, however, countries do not vote as individual member states. Rather, the 190 member countries on the IMF Executive Board are organized into 24 constituencies, which typically make decisions by consensus. The number of countries represented in constituencies varies considerably, from those representing a single country to some that include over 20 member states. Balancing the priorities of so many countries can be challenging for Executive Directors representing constituencies, MMultiple members.

Of the 24 Chairs, 12 have at least one V20 member. The largest constituency of climate-vulnerable developing countries has 4.5 percent of the vote. This constituency is led by Spain and Mexico and includes the V20 countries Colombia, Guatemala, Costa Rica and Honduras, as well as El Salvador – but these countries only account for 15.9 percent of the vote within this constituency. At the other end of the spectrum is the constituency of Francophone Africans with 23 members and 1.6 percent of the official vote, with 12 V20 members controlling 62.3 percent of these votes.

We also examine whether a representative of a V20 country leads their respective constituency as an Executive Director or Deputy Executive Director. Such direct involvement in decision-making can have far-reaching consequences – individual experience, skills and characteristics matter in institutions from the United Nations to the European Union to the IMF. As of January 2024, six V20 representatives serve as Executive Directors or Deputy Executive Directors, although some rotate positions every two years, meaning their potential influence may be short-lived.

Impact on the Fund’s climate response

In March 2023, the Task Force on IMF, Climate and Development issued an initial assessment of the IMF’s efforts to focus on climate change. It identified shortcomings and proposed reforms in the areas of multilateral surveillance, bilateral surveillance and lending. Our work also suggests that these shortcomings can be partly explained by the lack of formal voice for climate-vulnerable countries within the Fund.

Given the urgency of climate change and the IMF’s ongoing efforts to address this issue, it would be good if it leveraged the expertise of the countries most affected by and least responsible for global warming. Reforming the governance structure to strengthen the formal voice and representation of climate-vulnerable countries in day-to-day decision-making is a good place to start. After the IMF adopted the 16^th Although the overall review of quotas in December 2023 was conducted without rebalancing, the Fund is prepared to revisit this issue at the next review in June 2025. Our research suggests that increasing the quotas and voting shares of climate-vulnerable countries could enhance the Fund’s climate reforms and increase its legitimacy.

Timon Forster is a postdoctoral fellow in International Relations at the Faculty of Economics and Political Science at the University of St. Gallen and a former postdoctoral fellow in Global Economic Governance at the Global Development Policy Center at Boston University.

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Data are current as of January 2024, when the research for this study was conducted. The main body of the article refers to the 57 members of the V20 at that time; Appendix A2 contains the updated statistics for the 67 current V20 countries that are IMF members.