PBoC’s Pan calls for ‘meaningful’ IMF quota adjustments

The governor of China’s central bank has called on the International Monetary Fund to make “meaningful quota adjustments” as soon as possible to safeguard the institution’s credibility.

During a speech at the IMF’s annual meetings last week, People’s Bank of China governor Pan Gongsheng said the IMF was a global safety net and that pursuing quota reform would be crucial for enhancing its legitimacy, effectiveness, and representativeness, according to a statement published October 18. Pan said China was willing to increase its co-operation with the IMF to achieve this.

Pan said the fund should accelerate both the implementation of its sixteenth general review of quotas and preparations for its seventeenth round of reviews. The IMF’s sixteenth general review was completed in late 2023, and resulted in a 50% increase in special drawing rights (SDR) allocations for all members.

In a statement published by the IMF last year, Pan welcomed the increase, while calling for a new quota formula. “The current quota shares of IMF members still cannot reflect their relative weights in the global economy,” he said.

The IMF distributes SDR allocations to its members based on a formula that includes variables representing a country’s GDP, sum of its payments, changes in capital flows and official reserves. In addition to quotas, the formula also determines a member’s voting power, a member’s financial contributions to the IMF and access to its resources.

During his speech last week, Pan also said that the global economy had experienced “profound changes” that presented challenges and opportunities. He said these changes included trade frictions and geopolitical uncertainty that had weighed on global growth.

“Concerns are growing about the fiscal sustainability of developed economies and their spillover effects,” Pan said. “Financial market volatility may intensify, and emerging markets and developing economies face severe challenges.”

Pan said that against this backdrop, the global community should strengthen macroeconomic co-ordination. This should be done while advocating for a rules-based multilateral trade system, which, he said, would inject stability into the global economy.