What is an IMF Quota? UPSC Economy Notes
Think of an IMF Quota as a membership fee that every country pays when they join the IMF. This fee is based on the country’s economic strength (GDP)
What is an IMF Quota? Think of an IMF Quota as a membership fee that every country pays when they join the IMF. This fee is based on the country’s economic strength (GDP, trade, etc.). 💡 Example: A big economy like the USA pays a higher quota because it has a large GDP and more international trade. A small economy like Bhutan pays a lower quota because its economy is smaller. How is a Country’s Quota Decided? The IMF uses 4 factors to determine a country’s quota: Size of GDP (50%) → Bigger economies contribute more. Openness (30%) → Countries that trade more (exports & imports) have higher quotas. Economic Variability (15%) → If a country’s economy fluctuates a lot, it gets a higher quota. Foreign Exchange Reserves (5%) → Countries with more reserves (like India & China) get a higher quota. The 50% weightage on GDP does not mean a country is giving 50% of its GDP to the IMF. Instead, it is just a formula used to decide how much money a country contributes to the IMF’s resources. How Much…