January 23, 2009 / 12:35 AM / 9 years ago

Obama supports more say for emerging nations in IMF

WASHINGTON, Jan 22 (Reuters) - U.S. President Barack Obama wants to reform the International Monetary Fund to give developing nations a greater say in the institution, U.S. Treasury Secretary nominee, Timothy Geithner, said on Thursday.

"We need to send a strong signal that we are ready to give developing countries a voice within the IMF that is commensurate with their importance to the world economy," Geithner said in written answers following a congressional hearing on his nomination on Wednesday.

His nomination won Senate Finance Committee backing on Thursday despite concerns expressed by some lawmakers that he underpaid $34,000 in taxes while he was employed by the IMF.

Geithner, who worked in the IMF's policy and review department from 2001 to 2003, said the Obama administration would work with Congress to bring about reform at the IMF, where the United States is the biggest shareholder.

The Bush administration supported a decision by the IMF in March last year to redistribute voting power, or quotas, among its 185 members and boost the influence of emerging economic powers such as China, India, Brazil, Mexico and South Korea.

The United States and European countries have clung to their long-standing dominance of the global lender with the United States refusing to give up its veto power.

The decision on quota reform and a separate proposal to sell a limited portion of the IMF's gold stocks is currently awaiting approval by U.S. Congress.

Geithner said it would be better if both decisions were dealt with at the same time.

"Rather than dealing with IMF reform on a piecemeal basis, it probably makes sense to handle the gold sale issue and quote reform at the same time," he said.

Geithner said the gold sales would put the IMF on sounder financial footing, following years of declining income as fewer countries needed its loans.

But the global economic crisis has prompted countries to turn to the IMF for financial help once again, including recently Hungary, Latvia, Ukraine, Serbia, Belarus and Iceland.

"It makes sense to ensure that the IMF can carry out these central functions without having to rely on income from crisis lending," Geithner said.

"The IMF may well need more resources to shepherd emerging economies through this crisis, but the sale of IMF gold is not intended for that purpose (nor would it raise enough money)," he added. (Reporting by Lesley Wroughton; Editing by Andre Grenon)

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