Suspension of Debtor Countries' Voting Rights in the IMF: An Assessment of the Third Amendment to the IMF Charter

Abstract

Two conclusions emerge from an examination of the Third Amendment to the IMF Charter, which was approved in 1992 to introduce a new form of sanction against countries failing to repay the IMF. First, going to the effort of formally amending the IMF Charter was preferable as a legal matter to suggesting that the IMF has an implied power to suspend a member country's voting rights. Hence the IMF could not have legally imposed such a suspension without an amendment to its charter. Second, the Third Amendment was, from a different perspective, neither necessary nor wise. Adding the threat of suspension to the various forms of rebuke already at the disposal of the IMF seems unlikely to persuade recalcitrant countries to clear their arrears to the IMF. Nor does the new suspension power offer any means of overcoming the deeper economic and political problems that underlie those arrears. In short, the Third Amendment represents only a reaction to the problem of growing arrears to the IMF, not a solution to it.