The International Monetary Fund's executive body on Tuesday approved a proposal to increase each member's quota by 50 percent without changing the current shareholding ratio, meaning Japan will maintain its No. 2 status within the multilateral lender.
There had been concern among Japanese officials that the country would be overtaken by China if the amount of investment in the IMF was determined by the size of each member's economy. The shareholding ratio is linked to each member's respective proportion of voting rights.
Japanese Finance Minister Shunichi Suzuki had insisted that increasing the IMF's capital resources while maintaining the same ratio was "the only realistic option."
The proposal still needs to be formally approved by members voting in favor by at least 85 percent of total voting power, with the IMF aiming to complete the quota reform procedures by Dec. 15.
Currently, the IMF's largest shareholder is the United States, with 17.4 percent of all quota shares, followed by Japan with 6.5 percent and China with 6.4 percent.
The IMF generally reviews its quotas at least every five years. The plan to increase the Washington-headquartered institution's funding is aimed at assisting emerging and developing countries that are suffering from a shortage of money in the wake of the coronavirus pandemic and other difficulties.
The IMF's previous capital increase took many years to be approved by the U.S. Congress and was finally implemented in 2016.
"As the world grapples with rising fragmentation, today's decision is a strong signal that the membership can still come together in support of cooperative solutions that instill confidence in the IMF's ability to effectively support its membership navigate a challenging global landscape," IMF Managing Director Kristalina Georgieva said in a statement.
The IMF, governed by 190 countries, proposed that its Executive Board should work toward a new quota formula taking into account changes in economic power by June 2025.
China and other fast-growing countries have demanded that the ratio reflect the sizes of their economies.