Opinion of the European Central Bank of 19 March 2024 on the increase of Austria’s quota in the International Monetary Fund (CON/2024/9)

OPINION OF THE EUROPEAN CENTRAL BANK of 19 March 2024 on the increase of Austria’s quota in the International Monetary Fund (CON/2024/9) Introduction and legal basis

On 20 February 2024 the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft law on the increase of Austria’s quota in the International Monetary Fund (IMF) (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC , as the draft law relates to the Oesterreichische Nationalbank (OeNB). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1. Purpose of the draft law

1.1 As noted in the explanatory memorandum to the draft law, the purpose of the draft law is to increase Austria’s quota in the IMF. On 15 December 2023, the IMF Board of Governors finalised the Sixteenth General Review of Quotas and agreed to a 50 % increase in quotas while maintaining the existing relative quota shares. The quotas are expected to increase by 238.6 billion Special Drawing Rights (SDR) to SDR 715.7 billion. The Board of Governors’ resolution also states that the IMF’s lending capacity should be maintained and its dependence on borrowed funds reduced. This is to be achieved by reducing the New Arrangements to Borrow (NAB) and phasing out bilateral borrowing agreements. The IMF member countries have until 15 November 2024 to agree to a corresponding increase in their quotas. This increase comes into force only when (1) IMF member countries that together hold no less than 85 % of the previous quota funds have agreed to the increase and (2) the participants under the NAB agree to a reduction in the NAB. 1.2 The draft law incorporates the IMF quota increase into Austrian law. In particular, Austria’s quota will increase from SDR 3 932 million to SDR 5 898 million. The draft law entitles and obliges the OeNB to assume Austria’s additional quota in the IMF. The explanatory memorandum to the draft law notes that the authorisation for the OeNB to assume the entire Austrian quota also applies to future increases in accordance with the Law of 23 June 1971 on the increase of Austria’s IMF quota and

the transfer of the entire quota by the OeNB . According to Article 2(1) of this Law, the OeNB is authorised to fulfil all financial commitments resulting from Austria’s membership of the IMF.

2. General observation

The issues raised in this opinion are likely to be relevant for other Member States legislating to facilitate an increase in their respective quotas in the IMF in response to the IMF’s Sixteenth General Review of Quotas.

3. Monetary financing prohibition

Article 123(1) of the Treaty prohibits the national central banks (NCBs) from granting overdraft facilities or any other type of credit facility to public authorities and bodies of the Member States. Article 1 of Council Regulation (EC) No 3603/93 defines ‘any other type of credit facility’, inter alia, as ‘any financing of the public sector’s obligations vis-à-vis third parties’. However, Article 7 of Regulation (EC) No 3603/93 provides that the financing by NCBs of obligations falling upon the public sector vis-à-vis the IMF is not regarded as a credit facility within the meaning of Article 123(1) of the Treaty. The fourteenth recital of Regulation (EC) No 3603/93 sets out the rationale behind this exemption, stating that it is appropriate to authorise the financing by the NCBs of obligations falling upon the public sector vis-à-vis the IMF because such financing results in ‘claims which have all the characteristics of reserve assets’. Therefore, the exemption set out in Article 7 of Regulation (EC) No 3603/93 should be interpreted in line with that rationale. As the payment by the OeNB of the proposed increase in Austria’s IMF quota would result in claims which have all the characteristics of reserve assets, the draft law complies with the monetary financing prohibition .

This opinion will be published on EUR-Lex.

Done at Frankfurt am Main, 19 March 2024

[signed]

The President of the ECB

Christine LAGARDE