Banks, Estonia, Financial Services, Legislation

This is part of the final phase of reform of the IMF quotas, which aims to increase the voting rights of developing countries. Estonia's participation or quota increased by some 150 million SDRs, or 188 million euros, and will be 244 million SDRs after the payment, or about 306 million euros. This will give Estonia 0.07% of the voting rights in the IMF. The increase in Estonia's quota was approved by the Riigikogu in June 2012, the central bank said.      

SDRs, or Special Drawing Rights, are units of account created by the International Monetary Fund. Their value is based on a basket of four currencies, the US dollar, the euro, the Japanese yen and the pound sterling, and as of Oct. 1, 2016 the Chinese yuan will be added to the currency basket.

The Riigikogu has appointed Eesti Pank as the representative of Estonia at the IMF, and Eesti Pank made the payment to the IMF in relation to the increase in the quota, paying 25%, or 47 million euros, in SDRs and 75%, or around 141 million euros, in the local currency, which is the euro. The quota payment does not affect the state budget, as the only changes are in the structure of the central bank's assets.

On 30 June 2012, member states whose quotas added up to 70% of the total approved the increase in quotas. The increase in quotas also needed changes to be made to the Articles of Agreement of the IMF, which required the approval of 60% of the member states, representing 85% of the total votes.

The last to ratify the reform was the USA, which did so in January 2016, after which all the member states, including Estonia, had to make their payments within no more than 30 days. Estonia's increased participation in the IMF will apply after Wednesday's payment.

The total value of the IMF quotas will be almost doubled from 238 billion SDRs to 477 billion SDRs. The IMF's proposal to raise the quotas was prompted above all by the need to double the IMF's resources in the face of a global financial crisis, given the changed position of quickly developing member states, including Estonia, in the global economy. The IMF regularly reviews the quotas of its member states at least once every five years.

The quota determines the maximum participation of a member state in the IMF. The size of the quota is calculated for each country using a formula that considers that country's GDP, openness to trade, economic volatility in terms of capital flows and the current account, and currency reserves. Quotas are also important in determining whether member states can borrow from the IMF, as access to the IMF's credit lines is usually linked to the applicant's quota.