As Global Debt Balloons, Calls to Reform the IMF Grow Ever Louder

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By Cary Springfield, International Banker

“Must we starve our children to pay our debts?” Julius Nyerere, former president of Tanzania, speaking in 1987.

In June 2025, the United Nations Conference on Trade and Development (UNCTAD) reported that global public debt in 2024 reached an astonishing all-time high of $102 trillion, up from $97 trillion recorded in 2023. Since 2010, moreover, developing countries’ debt had grown twice as quickly as that of advanced economies. Such telling numbers underscore an inescapable fact: The Global South is suffering under the weight of a ballooning debt crisis. And many believe that the development-finance institutions ostensibly designed to assist such vulnerable countries are, in fact, exacerbating the situation. As such, calls to reform agencies such as the International Monetary Fund (IMF) and World Bank continue to grow louder with each passing year.

Perhaps the most sobering of all UNCTAD’s findings was that a monumental 3.4 billion people worldwide live in countries that spend more on their debt-interest payments than on health or education. This means that many governments must borrow substantial amounts simply to service their existing debt obligations to wealthy creditors, leaving them with very limited resources to distribute to their own people.

Are the IMF and World Bank—Western-led multilateral institutions tasked in part with reducing global poverty—working to help such countries escape this spiral of indebtedness? The evidence suggests they are not doing nearly enough. Indeed, rather than seeking to alleviate poverty, accusations abound that such organisations exist instead to serve the interests of developed nations.

One key criticism of the IMF, for example, concerns the highly uneven distribution of voting power among member countries, as evidenced by the system of quotas that covers much of the institution’s finances and governance. The size of each member nation’s quota is proportionally linked primarily to its economy’s size, as well as other determinants, such as its “economic openness” and the size of its foreign-exchange reserves. Quotas are also notably used to determine countries’ respective claims to special drawing rights (SDRs)—an international reserve asset created by the IMF to provide liquidity to countries in need.

“Quotas are the building blocks of the IMF’s financial and governance structure,” Kevin P. Gallagher, professor of global development policy at Boston University, and Abebe Shimeles, honorary professor at the University of Cape Town, explained in an October 2024 article for The Conversation. “An individual member country’s quota broadly reflects its relative position in the world economy. Thus, by design, the poorest and most vulnerable countries receive the least when it comes to quotas and voting shares.”

This also means that the likes of the United States, European countries and Japan command the overwhelming bulk of voting shares within the Fund, while the US crucially maintains veto power over a multitude of the IMF’s major issues and decisions. With the Fund conveniently located in Washington, D.C., moreover, it should come as no surprise that IMF staff often consult with—and defer to—the US government on various policy issues. The US and a select few developed countries thus dominate the institution’s prevailing power structure and remain grossly overrepresented vis-à-vis poorer countries.

This disparity has perhaps been no more clearly illuminated in recent times than in a March 2025 study by the Tricontinental: Institute for Social Research, which found that the Global North had as much as nine times more voting power at the IMF than the Global South when adjusting for the respective population sizes of each country. The US, for instance, accounted for 16.49 percent of the votes on the IMF’s board despite representing only 4.22 percent of the world’s population, the study noted, having analysed IMF data on voting power relative to the populations of Global North and Global South states.

This severe imbalance can sometimes lead to disastrous consequences for lower-income nations. Tricontinental highlighted a 2019 case in which the US government’s decision to suspend its recognition of the government of Venezuela led to Washington pressuring the IMF to follow suit. “Venezuela—one of the founding members of the IMF—had turned to the IMF for assistance on several occasions, paid off outstanding IMF loans in 2007, and then decided to no longer come to the IMF for short-term aid. During the pandemic, however, Venezuela, like most countries, sought to draw on its $5 billion reserves in special drawing rights that it had access to as part of the fund’s global liquidity-boosting initiative,” the Tricontinental report noted. “But the IMF—under pressure from the US—decided not to transfer the money. This followed an earlier rejection of a request by Venezuela to access $400 million from its special drawing rights.”

The IMF will soon undergo its 17th General Review of Quotas (GRQ), a process that takes place every five years in which the Board of Governors assesses members’ quota sizes and distributions to ensure sufficient liquidity is on hand to enable the Fund to fulfil its mandate. And calls for reforms to the quota system to be implemented continue to grow louder.

“EMDEs (emerging market and developing economies) account for 60 percent of global gross domestic product (GDP) but hold just 40 percent of IMF voting power. The 16th GRQ, finalised in December 2023, made no changes to quota distribution,” an April 2025 report published by Boston University’s Global Development Policy Center noted. “Quota re-alignment is essential to ensuring the legitimacy and credibility of the IMF as an international organisation.”

The study also listed five key policy recommendations for the IMF to implement to “increase the voice and representation of EMDEs, particularly of those at the bottom of the income distribution”.

Simplify the formula for calculating IMF quotas so it serves as a clearer guide for future realignments.
Complement the revised formula with mechanisms to compensate the poorest EMDEs that have lower quota shares.
Increase member nations’ total basic votes—currently equal to 5.502 percent of the total votes, plus one additional vote for each special drawing right (SDR) of 100,000 of a member country’s quota—to reduce voting-power disparities and further democratise the IMF.
Alongside an increase in IMF basic votes, implement a quota adjustment that raises China’s weight, either by adopting a new formula or through an ad hoc quota increase.
Implement broader governance reforms, including strengthening Executive Board representation, reforming leadership selection, separating the multiple roles of quotas and leveraging multilateral forums for reform consensus.

Other persistent shortcomings further call into question the IMF’s effectiveness, especially the adverse and often severe economic impacts that developing countries experience from the Fund’s controversial Structural Adjustment Programs (SAPs). Packages of economic and financial reforms—first implemented in 1986 through the Structural Adjustment Facility (SAF) and about one year later, the more ambitious Enhanced Structural Adjustment Facility (ESAF)—SAPs are typically marketed as helping countries access loans at attractive borrowing rates.

But the devil is in the details. SAPs also mandate that borrower nations implement strict reforms to be eligible for the credit facilities they seek. These adjustments can include implementing a currency devaluation to correct for balance-of-payments deficits, adopting harsh austerity measures—including tax increases, spending cuts and reductions in public-sector employment—to lower fiscal deficits and conducting broad privatisation programmes of state-owned enterprises and even industries.

Whilst they may lead to more immediate economic stabilisation, such reforms can have painful longer-term consequences for vulnerable countries. ActionAid International’s October 2023 report “Fifty Years of Failure: the IMF, Debt and Austerity in Africa”, for example, found that the IMF’s insistence that 10 African countries—Ghana, Kenya, Malawi, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe—cut or freeze public-sector wage bills seriously undermined their ability to spend on health, education and other crucial sectors, leading to acute shortages of teachers and health workers.

Despite following the IMF’s advice for decades, the report found that 19 of Africa’s 35 low-income countries were in debt distress or at a high risk of it. “The amount African governments are forced to spend on interest payments is often higher than spending on either education or health. Yet there is no serious effort being made to find a systemic solution to the debt crisis,” the report also noted. “The IMF continues to adhere to the cult of austerity despite mounting evidence that it has stifled economic development and human development across Africa.”