Enough Voice for the Vulnerable? Why Climate-vulnerable Countries Need More Voting Power within the International Monetary Fund

By Timon Forster

It has been three years since the International Monetary Fund (IMF) – the organization tasked with monitoring the international monetary and financial system – determined that its mandate encompasses the macro-economic consequences of global warming (e.g., the pressure of natural disasters on government coffers).

In the meantime, the Fund has hired climate professionals, incorporated climate concerns in its surveillance activities and established a lending facility to finance climate policies. These changes have been championed by its Managing Director Kristalina Georgieva, whose term has recently been renewed for another five years.

Yet, it has not all been smooth sailing. According to the IMF’s Independent Evaluation Office (IEO), the Fund’s membership approved a $27 million climate budget that falls 25 percent short of the $36 million in needs estimated by staff. This suggests not all member-states fully back the climate direction the IMF is moving towards.

More broadly, research shows that countries from the Global North pursue their own interests in international organizations – political priorities that may clash with the technocratic ideals of the institution.

This prompts a series of questions in the context of the IMF’s climate reforms: Can the Fund implement an ambitious and effective climate policy? And how are climate-vulnerable developing countries, like those in the Vulnerable Twenty (V20) Group of Ministers of Finance of the Climate Vulnerable Forum, and their interests represented in everyday decision-making at the institution?

In a new journal article published in Global Policy, Lara Merling and I study the representation of 67 V20 countries that are IMF members, finding that these climate-vulnerable countries represent a mere 6.7 percent of the voting power within the IMF, raising serious questions regarding the extent to which their voices are adequately reflected in the Fund’s approach to climate change.

Voting shares matter

Vote shares in the IMF are derived from quotas, which themselves are primarily determined by a country’s size in the world economy. For example, the United States holds 17.4 percent of the quotas, which translates into a vote share of 16.5 percent. This affords the US a veto right on the most important decisions requiring an 85 percent majority, like the admission of new member-states or changes to the Fund’s mandate. Major European states can, collectively, block such changes as well. By contrast, the 67 V20 countries wield just 6.7 percent of the vote, or 5 percent of IMF quotas. This is the despite the fact that the 67 V20 countries collectively represent more than 1.7 billion people and account for less than 6 percent of historic greenhouse gas emissions.

The quota shares and votes also matter because they determine member-states’ financial contributions to the Fund. Arguably more important still for borrowing countries, they determine the distribution of Special Drawing Rights, the Fund’s reserve asset, and set the maximum level of financial resources the IMF will provide in times of need. Access to borrowed resources is particularly important to climate-vulnerable countries, as they have implemented more than half of all conditional IMF lending programs in the last two decades.

A seat on the IMF Executive Board

In everyday decision-making, however, countries do not cast votes as individual member-states. Rather, the 190 member-states are organized into 24 constituencies on the IMF Executive Board, which typically takes decisions by consensus. The number of countries represented by constituency varies significantly, from those representing a single country, to some that include over 20 member-states. Juggling the priorities of so many countries can pose a challenge for Executive Directors representing constituencies with multiple members.

Of the 24 chairs, 12 have at least one member of the V20. The largest constituency with climate-vulnerable developing countries commands 4.5 percent of the votes. This constituency is led by Spain and Mexico, and includes the V20 countries Colombia, Guatemala, Costa Rica and Honduras, as well as El Salvador – yet these countries account for only 15.9 percent of the votes within that constituency. Near the other end of the spectrum is the Francophone African constituency with 23 members and 1.6 percent of the formal votes, where 12 V20 members control 62.3 percent of these votes.

We also examine if any V20 country representative leads their respective constituencies as an Executive Director or Alternate Executive Director. Such direct involvement in decision-making can be consequential – individual experience, skills and traits 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 Alternate Executive Directors, although some rotate the positions every two years, meaning that their potential impact may be short-lived.

Implications for the Fund’s climate response

In March 2023, the Task Force on the IMF, Climate and Development provided an early evaluation of the IMF’s efforts to mainstream climate change. It has identified deficiencies, and proposed reforms, in the areas of multilateral surveillance, bilateral surveillance and lending. Our work further suggests that these shortcomings may partly be explained by the lack of formal voice of climate-vulnerable countries within the Fund.

Given the urgency of climate change and the IMF’s ongoing efforts to tackle the issue, it would do well to harness the expertise of the countries most affected by, and least responsible for, global warming. Reforming the governance structure to increase the formal voice and representation of climate-vulnerable countries in everyday decision-making is a good starting point. After the IMF concluded the 16^th General Review of Quotas without any realignment in December 2023, it is poised to revisit this question during the next review, due in June 2025. Our research suggests increasing the quotas and vote shares of climate-vulnerable countries could improve the Fund’s climate reforms and increase its legitimacy.

Timon Forster is a Post-doctoral Research Fellow in International Relations at the University of St. Gallen’s School of Economics and Political Science and is a former Global Economic Governance Post-doctoral Fellow with the Boston University Global Development Policy Center.

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Data are accurate 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 includes the updated statistics for the 67 current V20 countries that are IMF member-states.