US Congress rejects Obama’s funding plan for IMF

Washington, Jan 15: The US Treasury Department said Tuesday it was disappointed by Congress’ failure to include a plan that would help the International Monetary Fund (IMF) carry out its quota and governance reform package.

“We are disappointed that Congress failed to include the 2010 quota and governance reforms in the current legislation,” Xinhua quoted Holly Shulman, a spokeswoman of the Treasury Department, as saying.

“The United States remains committed to implementing the 2010 quota and governance reforms, and we are examining options to do so as soon as possible,” Shulman added.

US Congress Monday ignored President Barack Obama’s 2010 funding plan for IMF. Since US is the IMF’s largest shareholder and veto power, its rejection of the funding plan could leave the 188-nation group without additional resources and blocks an increase in voting power for China and other emerging markets.

Christine Lagarde, Managing Director of the IMF, also expressed her disappointment. “We understand that the US administration will continue to work on securing the necessary legislative authorisation, and we are hopeful that this will happen.”

The IMF board of governors approved a quota and governance reform package December 15, 2010. The reform package included a doubling of IMF quotas and a shift in quotas to dynamic emerging markets and under-represented countries.

It also proposed an amendment to reform the executive board that would facilitate a move to a more representative and all-elected executive board.

The IMF previously had intended to make the 2010 reform package effective before October 2012, but the US Congress has become the major stumbling block for the reform.

Although the plan would not require any new financial support from the US and will retain its position as the largest shareholder, members of US Congress insisted the 63-billion-US dollar shift plan is no small matter.

The Treasury Department said the US commitment to the IMF are critical to preserving the United States’ leadership and influence. It also underscored that the IMF is critically important to US economic and national security interests.

As the world’s first responder to financial crisis, the IMF protects the US recovery and promotes America’s strategic interests abroad, while supporting US jobs, exports, and financial markets.

IANS