WASHINGTON (ABC Live): The International Monetary Fund (IMF) Managing Director Christine Lagarde Tuesday urged U.S. Congress to support the much-delayed IMF quota and governance reform package which would boost the global institution’s resources and give emerging economies a bigger say.
The IMF has been an “international first responder” in global economy, “but to meet tomorrow’s challenges, the IMF needs to adapt,” Lagarde said in an op-ed on The Wall Street Journal.
“A large majority of the member countries have approved reforms to strengthen the resources and governance of the IMF. These reforms await approval of the U.S. Congress. The IMF’s continued ability to fight economic and financial crises rests on its approval,” she added.
“The IMF reforms come at no additional cost or risk to the American taxpayer. Money that Congress already appropriated five years ago will simply be transferred from a temporary fund at the IMF into its permanent resources,” said Lagarde.
The U.S. quota contribution to the 188-member IMF is set to increase by 63 billion U.S. dollars. The Obama administration has pushed the Congress several times to approve a shift of 63 billion dollars from an IMF crisis fund to its general lending fund to give a green light to the reform package, but efforts stalled in the Congress due to political dispute.
The IMF’s Board of Governors approved the quota and governance reform package in December 2010. The plan included a doubling of IMF quotas and a shift in quotas to dynamic emerging markets and under-represented countries, and a proposed amendment to reform the executive board that would facilitate a move to a more representative and all-elected 24-member board.
If the reform package is implemented, four large emerging economies, namely China, India, Russia and Brazil, will all become top 10 shareholders of the Washington-based global lender.
IMF figures show, as of March 24, 143 members having 76.22 percent of total voting power had accepted the proposed amendment on reform of the executive board, falling short of the 85 percent threshold. Meanwhile, 158 members having 78.71 percent of total quota had consented the changes in quotas, reaching the 70 percent minimum required. But the entry into force of the proposed amendment to reform the executive board is a prerequisite for the quota changes to take effect.
The United States currently holds 16.75 percent of the IMF voting shares, which gives it the veto power to the reform package.
U.S. lawmakers have been wrangling over ratification of the IMF reforms in recent weeks. Democrats in the Senate wanted to add the IMF reform measure into a Ukraine aid bill, while House Republicans refused to link assistance to Ukraine with the IMF provision.
