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What is IMF quota? How it works?

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What is IMF quota? How it works?
posted Oct 23, 2017 by anonymous

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In the IMF, quota is the financial contribution made by a member. As per the working of the IMF, each member has to subscribe to the quota of the Fund. Quota constitutes the resource base of the IMF and it is out of the quota that the IMF gives loans to the needy members.

Quotas for member countries are initially determined by a calculation based on the size of the national economy (GDP, current account transactions in the balance of payments). They are periodically increased, in response to needs for the IMF's operations through quota revisions. The Articles of Agreement provide for a general review of the quotas every five years.

For any member country, out of the quota, 25 % should be paid in the form of foreign currency or gold (called as reserve tranche or gold tranche) to the Fund, and the remaining 75% in the form of domestic currency (called as credit tranche).

answer Oct 24, 2017 by Shantanu Arora
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