Congress urged to pass voting power changes for IMF
WASHINGTON (Reuters) - More than 130 academics and global policy pundits urged the U.S. Congress on Monday to approve delayed changes in voting powers in the International Monetary Fund and warned that failure to do so would diminish U.S. influence in the global financial lender.
The reforms were approved by the IMF in 2010 in a historic deal that makes China the third-largest voting member in the IMF after the United States and Japan. It also boosts the influence of other emerging economies, like India and Brazil, and supports IMF board changes, which reduce Western Europe's dominance.
The reforms, however, need congressional approval because they involve making permanent a $65 billion U.S. contribution to the Fund. That is a politically sensitive given the tense U.S. budget environment in Washington and sweeping government spending cuts that came into effect from March 1.
In a letter to John Boehner, the speaker of the House of Representatives, and Senate Majority Leader Harry Reid, the pundits emphasized the importance of the IMF's role in the world economy and the influence of the United States as its largest member country.
"Additional quota resources for the IMF are essential to preserve its central role in a global financial system that benefits the United States," the letter said.
"Realignment of IMF quota shares, while preserving U.S. influence in the IMF, will enable the IMF to respond to shifts in the global economy, involving emerging powers more deeply in the institution and avoiding their disengagement.
"Positive action by the U.S. Congress on both elements will also unlock financial contributions from other countries."
The U.S. Treasury requested a provision to be inserted into pending legislation but it was rejected by the Republican-controlled House.
The Democratic-controlled Senate could still include the request in its version of the funding bill, according to congressional aides. Senate approval would give it a good chance of inclusion in the final bill after the two chambers work out their differences.
If the request is rejected, the $65 billion would remain locked in the IMF crisis fund, known as the New Arrangements to Borrow, until the end of the fiscal year. IMF reform would also be delayed, adding to frustrations by emerging economies which have long pushed for their growing clout in the world economy to be reflected in greater IMF voting power.
Signatures include Tim Adams, former under-secretary of the U.S. Treasury; Martin Baily, ex-chairman of the Council of Economic Advisers; Ken Rogoff, former IMF chief economist now at Harvard University; John Sewell, former president of the Overseas Development Council; Jo Marie Griesgraber, executive director of New Rules for Global Finance; Gawain Kripke, policy advisor for Oxfam American; Christopher Padilla, former undersecretary of commerce for international trade; Robert Richter, producer of The Money Lenders; and James G. Wallar, ex US Treasury attaché to Iraq, EU, Afghanistan, Russia and Germany.
Last week, 19 high-level U.S. officials, executives and legislators wrote a similar letter, urging lawmakers to pass the legislation to maintain overall U.S. leadership in the IMF.