WASHINGTON (Reuters) - Funding for the International Monetary Fund did not make it into U.S. spending legislation this year, another setback for historic reforms aimed at giving emerging markets more say in how the world lender is run.
A $1.1 trillion U.S. spending bill unveiled late on Tuesday did not include funding for the IMF, according to a text of the bill, meaning the reforms will not get passed by a year-end deadline.
Finance chiefs from around the world had given the United States until Jan. 1 to ratify the reforms, and have threatened to move forward without it if it fails to do so.
The reforms would double the fund’s resources and hand more IMF voting power to countries like the BRICS: Brazil, Russia, India, China and South Africa. They would also revamp the IMF’s board to reduce the dominance of Western Europe.
The changes to the voting shares, known as quotas, cannot proceed without the United States, which holds the only controlling share of IMF votes.
The Obama administration has been pushing Congress for nearly two years to approve a shift of some $63 billion from an IMF crisis fund to its general accounts to make good on its international promise and maintain Washington’s influence at the global lender.
“Without these reforms, emerging economies may well look outside the IMF and the international economic system that we helped design, potentially undermining the fund’s ability to serve as a first responder for financial crises around the world,” Nathan Sheets, U.S. Treasury undersecretary for international affairs, said in a speech last week.
Some observers believe the stalled IMF reforms gave the BRICS group of emerging markets further impetus to launch their own currency reserve pool and development bank earlier this year, intended as a challenge to Western dominance in global financial institutions.
But some Republicans have complained that the IMF changes would cost too much at a time of big budget deficits in Washington. They are also critical of how efficiently the IMF was helping struggling economies in Europe and the risks attached to billion-dollar IMF loans to countries like Greece.
The Obama administration last made a push to include the IMF reforms in a broader funding package for Ukraine in March, but U.S. Senate Democrats dropped the language to ensure smooth passage of the bill.
Reporting by Anna Yukhananov; Editing by Jonathan Oatis
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