Ad hoc reforms for IMF seen unlikely
Posted by EXOGEN on April 11, 2014 at 12:02pm By Anna Yukhananov
WASHINGTON Thu Apr 10, 2014 10:01pm EDT
International Monetary Fund (IMF) Managing Director Christine Lagarde (2nd R) takes a question during a news conference in Washington April 10, 2014.
Credit: Reuters/Gary Cameron
(Reuters) - Global finance officials appear inclined to give the United States more time to endorse a series of long-delayed International Monetary Fund reforms aimed at giving more weight to emerging economy nations, rather than trying to implement alternative proposals to get around U.S. intransigence.
Finance ministers gathering in Washington this weekend for the twice-yearly meetings of the IMF are set to debate a handful of ad hoc measures to achieve at least some of the 2010 governance overhaul for the global lender without a formal U.S. approval.
Last month, Democrats in the U.S. Senate dropped an effort to include the reforms as part of an aid package for Ukraine because the Republican-led House of Representatives refused to consider the matter.
Frustrated by the U.S. foot-dragging, international finance officials are bandying about a clutch of alternatives.
These include proceeding with an ad hoc increase in the voting share of emerging economies, which like the formal reforms would reduce the U.S. voting weight, and a more drastic proposal to refuse to extend the IMF's emergency borrowing authority, Australian Treasury Secretary Martin Parkinson said.
The options will be debated at a meeting of the IMF steering committee and the top 20 economies on Friday.
"They are all legitimate options," Parkinson said ahead of the start of the meetings.
Still, Parkinson and others say that a likely outcome is to just give the United States more time.
"It would be a mistake not to give the United States the opportunity to get it done," Mexican Finance Minister Luis Videgaray said in an interview.
Videgaray said there would be a window for the U.S. Congress to pass reforms increasing funding and widening representation at the IMF following U.S. midterm elections in November.
The United States has faced backlash from other countries over the refusal to approve the reforms, particularly from emerging economy countries whose voting share at the IMF would increase under the overhaul.
"I think failure to deliver the 2010 IMF reform is a serious damage to the G20 leadership," People's Bank of China Vice Governor Yi Gang said. "And I think failure to deliver this reform ... is a threat to IMF legitimacy."
"It creates some uncertainty for the future resources of the IMF," Yi said at a conference in Washington ahead of the spring meetings.
The governance reforms were adopted by the IMF in 2010, and initially a deadline of the end of 2012 had been set for all member countries to endorse them. The administration of U.S. President Barack Obama has so far been unable to persuade Republicans in the House to act on the measure.
Many Republican lawmakers complain that the reforms would cost too much at a time the United States is facing high deficits and budget cuts, and would lessen U.S. influence at the IMF.
(Reporting by Anna Yukhananov, Krista Hughes and David Brunnstrom; Writing by Dan Burns; Editing by Mohammad Zargham)