Tags: IMF | G-20 | Congress | lending

G-20 Deeply Disappointed US Preventing IMF-Resources Boost

Friday, 11 Apr 2014 01:31 PM

Global finance chiefs pressed the U.S. to allow an increase in the financial resources of the International Monetary Fund as they argued the Ukraine crisis underscores the lender’s importance.

“We are deeply disappointed with the continued delay in progressing the IMF quota and governance reforms,” Group of 20 finance ministers and central bankers said in a draft of a statement scheduled for release after talks in Washington today. “We urge the U.S. to ratify these reforms at the earliest opportunity.”

The U.S. Congress is delaying implementation of the 2010 pact by all IMF member countries that would adjust some nations’ shares, or quotas, in the fund and boost its permanent lending capacity to about $739 billion. The plan would give emerging markets such as China more clout at the institution, which was set up at the end of World War II to help safeguard global monetary stability.

The Ukraine crisis, which pits G-20 member Russia against the U.S. and its European allies, highlights the importance of the IMF as the “world’s first responder to financial crisis,” according to the draft statement obtained from a G-20 official.

The G-20 said prospects for global growth are strengthening although officials pledged to remain vigilant, according to the draft statement. It reiterated its members are committed to achieving exchange-rate flexibility and will be “mindful of impacts on the global economy as policy settings are recalibrated.”

India Criticism

Amid criticism from emerging markets such as India that there is too little coordination among central banks, the G-20 officials said they will “continue to provide clear and timely communications of our actions and be mindful of impacts on the global economy as policy settings are recalibrated.”

With the U.S. threatening to impose fresh sanctions on Russia, the G-20 focused on the economic fallout from the crisis in Ukraine, saying they will watch it for threats to growth and financial stability. They welcomed the IMF’s engagement, including talks for a loan package worth as much as $18 billion.

The U.S. is the largest shareholder of the fund, with a voting share of 16.8 percent. Major decisions require 85 percent approval, effectively giving the U.S. veto power. Twice this year, Congress rejected a push by the Obama administration to add the IMF provision to unrelated legislation, including an aid package for Ukraine.

‘Everybody Loses’

“When the U.S. withdraws, everybody loses,” IMF Managing Director Christine Lagarde said in an interview with Bloomberg Television’s Tom Keene in Washington yesterday. “Do exercise that leadership; it’s there, it’s yours.”

The G-20’s call on the U.S. reflects increased frustration over a 3 1/2-year-old agreement that hasn’t yet come into force and is delaying another planned round of talks that would give developing economies more power. While criticism used to come mainly from emerging markets such as Brazil, it’s recently spread to developed counterparts including the U.K. and Australia.

“The IMF quota reform has been delayed for too long,” Chinese Vice Finance Minister Zhu Guangyao said in an interview in Washington today. Chinese central bank Deputy Governor Yi Gang yesterday warned that failure to deliver “is a threat to IMF’s legitimacy and creates uncertainty for future IMF resources.”

Russian Finance Minister Anton Siluanov today suggested emerging markets could seek to change the rules that govern the IMF’s emergency lending pool, which is temporary and needs approval from contributors to be activated.

In a statement to the IMF steering committee, U.S. Treasury Secretary Jacob J. Lew renewed the U.S. commitment to “fulfill our pivotal responsibility” in getting the measure approved.

“There is important bipartisan support for taking action,” he said. “We will continue to work actively with Congress to enact the necessary legislation this year.”

© Copyright 2017 Bloomberg News. All rights reserved.

   
1Like our page
2Share
Markets
Global finance chiefs pressed the U.S. to allow an increase in the financial resources of the International Monetary Fund as they argued the Ukraine crisis underscores the lender's importance.
IMF, G-20, Congress, lending
610
2014-31-11
Friday, 11 Apr 2014 01:31 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved