Brian Hayes (Dublin South West, Fine Gael)

We will try to obtain copies for the Senators. The main objective of the IMF, which was established following the Bretton Woods conference in 1945 and which Ireland joined in 1957, is to support global financial stability in the interest of all its members. Since the onset of the global financial crisis, the fund has played a key role in helping to restore stability to the international system. We are particularly aware of this in the context of the EU-IMF programme for Ireland.

The IMF is a quota-based institution. Each member country is assigned a quota based mainly on its relative position in the world economy. Quota subscriptions generate most of the IMF's financial resources. A member's quota determines its maximum financial commitment to the IMF and its voting power and has a bearing on its access to IMF financing and the cost of borrowing from the fund. However, current quotas have not kept up with changing economic realities, especially the increased economic weight of major emerging countries in the world economy. While the quota adjustments will benefit emerging market economies in the main, a number of economically advanced countries, including Ireland, which have been significantly under-represented in the past, will also receive a quota increase.

In December 2010, the board of governors agreed on a package of quota and governance reforms building on decisions which were taken in 2008 and which were designed to strengthen the fund's legitimacy and effectiveness. It is worth recalling that, under the 2008 reforms, it was agreed to realign voting power in the IMF to reflect changes in the global economy and to increase the voting power and participation of low-income countries. The related amendments to the IMF articles were provided for under the Bretton Woods Agreements (Amendment) Act 2011, and the Bill before the House continues this process of governance reform.

The 2010 reforms involve a shift of more than 6% of quota shares to dynamic emerging market and developing countries while protecting the quota shares and voting powers of the poorest members. The amendment on the reform of the executive board is, by resolution of the IMF board of governors, required to have entered into force before the quota increases can become effective. This requires acceptance of the amendment by a voting threshold of three fifths of members, with 85% of total voting power. While it is not possible to be definitive with regard to the timeline for the implementation of the 2010 quota changes by resolution of the board, each member has committed to use its best efforts to complete the necessary steps for acceptance before the annual meeting in October of this year. That is the entire objective of the exercise. As I stated on Committee Stage in the Dáil, we are trying to put the legislation in place in advance of the annual meeting to which I refer. This will enable Ireland and other countries to implement the reforms contemplated in the legislation, which are important for all members of the IMF.

While the quota adjustments will benefit emerging market economies in the main, a number of economically advanced countries which have been under-represented in the past, including Ireland, will receive a quota increase. When the amendment has been accepted by the requisite majority of IMF members, the quota increases agreed in 2010 will come into effect. The adjustments will result in a significant increase in Ireland's quota and this will result in an important reduction in the interest rate margin on our borrowings from the fund. The legislation is, therefore, designed to allow the Government to agree to the reforms in question at the annual meeting of the IMF in October. By logical extension, those reforms will allow for a lower rate of interest on our borrowings from the IMF. That is an important and significant point, particularly in the context of the situation in which we find ourselves. The Central Bank has estimated that, taking into account the previous quota adjustments, which were implemented in March 2011 and the further increase under the 2010 reforms, there could be an overall reduction, on a weighted average basis, of the order of 100 basis points in the cost of our IMF borrowings. This is a very welcome development and the present Bill is part of the process of delivering this adjustment. It should be noted that these expected savings may change either upward or downward in light of future quota revisions. This is a very short Bill with just three sections. The main provisions relate to acceptance by the Government of the amendment on the reform of the executive board. The text of the amendment is contained in the Schedule to the Bill.

Section 1 of the Bill sets out the definitions of terms used in the Bill. Section 2 provides for approval of the acceptance of the amendment of the IMF articles by the Government. Section 3 contains the provisions relating to the Short Title, construction and collective citation.

The amendment on the reform of the executive board is set out in the Schedule to the Bill and has 15 sections. The first section provides that the executive board shall consist of 20 executive directors-----