Stronger Voice at IMF
IMF to hike Korea's quota in tandem with its economic scale

Korea's International Monetary Fund (IMF) quota will be increased, in accordance with the IMF Financial Committee decision to do so at its meeting in Washington on April 22, the Finance and Economy Ministry made the announcement on April 23.
The MOFE expected that the present quota of 0.764 percent may be increased to 2.225 percent at the IMF annual meeting slated to be held in Singapore in September of this year.
The increase in the quota means that Korea will be able to maintain its directorial position in the IMF with stronger voice in the world public financial institution's decision-making process.
Korea has been sharing the 8-year term of the IMF director, taking turns under the position rotation plan with Australia; Korea for two years and Australia for 6 years. Korea's term will be upgraded to 4 years at the minimum when its IMF quota is increased.
When financial crises develop, IMF can only provide emergency funds based on the quota of the member country in crisis and with the increase in its IMF quota, Korea will be able to receive a larger IMF support funding than in the past.
In 1997, the IMF provided support funds to Korea based on the Standby Arrangement and the Supplementary Reserve Facility since Korea's quota was too small to meet its funding needs and Korea had to pay for reduced credit rating and other additional expenses.
Part of the communique'issued by the IMFC that deals with increasing quota for Korea reads as follows: The committee reiterates that the IMF's effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, emphasizing the importance of having a fair voice and representation for all members. We underscore the role an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy. The committee agrees on the need for fundamental reforms. The committee calls upon the Managing Director to work with the IMFC and Executive Board to come forward with concrete proposals for agreement at the Annual Meeting slated for September, this year.
The government worked hard to push for the IMF quota increase until the last minute leading up to the IMFC. At the finance ministers'meeting of ASEAN+3 in Istanbul, Turkey, in May last year, it was able to secure an agreement on the need for quota reform of the Asian countries. The agreement, read in part,'ASEAN+3 Finance Ministers agreed to call for an urgent review of the quota of the Asian countries and their relative positions in the world.'At the IMF Annual Meeting in September, last year, the government delivered a strong message on quota reform at the IMF Annual Meeting with a keynote speech and the IMFC. Its representatives met with U.S. Treasury Secretary John Snow on the matter. The keynote speech included the following phrase: "While I welcome reform efforts from the IMF itself, I hope the reallocation of quotas will be carried out in the nearest future."At the G-20 finance ministers meeting in Beijing during October 2005, the government pushed hard to produce a detailed roadmap for quota reform and was able to derive the following agreement, which reads in part,"G-20 underscores the critical importance of achieving concrete progress on quota reform at the next IMF/WB meeting in Singapore."At the finance ministers meeting of Korea and Japan in February, this year, the two countries agreed to strengthen their policy cooperation on quota reform.
The government also requested for Japan's cooperation on the matter at the G-7 meetings at the director-generals meeting of Korea, China and Japan. The government also asked for the cooperation from Australia, New Zealand and other Asian countries on the matter.
At the IMFC meeting, the government asserted that the IMF's effort to maintain its credibility and fairness will be jeopardized unless reforms are made on quotas of most under-represented countries including Korea. It has brought to the attention of the 24 participating countries that Korea is ranked in the 10th in order of GDP in the world, but it is ranked 28th in terms of its IMF quota.
The 24 director-countries including the United States, Japan and Britain supported Korea's position and decided to increase IMF quotas from four to five countries including Korea. nw

DPM and Finance and Economy Minister Han Duck-soo, left, joins\ hands with Japanese Finance Minister Sadakazu Tanigaki, center, and Chinese Finance Minister Jin Renqin at the ADB Annual Meeting May 3 in Hyderabad, India.