The International Monetary Fund said Monday it has formally approved a 50 percent capital increase without changing each member nation's current shareholding ratio, bringing the cumulative financial commitment via the quota system to $960 billion.
This is the first time in 13 years that the IMF has decided to increase its capital base. The decision will allow Japan to maintain its No. 2 status within the multilateral lender behind the United States.
IMF Managing Director Kristalina Georgieva said in a statement that the endorsement will reduce the reliance of the fund on borrowings and reinforce its "capacity to help safeguard global financial stability and respond to members' potential needs in an uncertain and shock-prone world."
There had been concern among Japanese officials that the nation would be overtaken by China if the amount of investment in the IMF was changed to reflect the current size of each member's economy.
Quotas determine the amount of money each country is required to commit to the Washington-based institution, members' respective voting power and the size of loans they can receive in a crisis.
The IMF's executive board approved a U.S.-backed plan in November that would strengthen its lending capacity but put off any quota increases for fast-growing countries, including China and India.
The proposal had to be approved by members voting in favor by at least 85 percent of total voting power. The IMF, with 190 member countries, said 92.86 percent of total votes favored the recommended increase of about $320 billion.
According to Japan's Finance Ministry, the amount of Tokyo's additional capital injection to the fund is about 3 trillion yen ($21 billion). It said that a related bill will be submitted to an ordinary Diet session next year.
The IMF said it will explore possible approaches for a new quota formula by June 2025.
For the increase to take effect, members representing more than 85 percent of quotas need to complete domestic procedures, which often involve legislative approval, by Nov. 15, 2024.
The IMF's previous capital increase took many years to be approved by the U.S. Congress and was eventually implemented in 2016.
