The administration has asked lawmakers to approve a permanent increase in the U.S. contribution to the agency — a step the fund has been waiting on for about three years so it can move ahead with other changes approved in 2010. Those changes have since been ratified by most of the rest of the world.
As it stands, the United States — the fund’s largest shareholder and a blocking vote for any major reforms like this — is the only holdout to what is a broader and carefully crafted deal. Along with more money for the IMF, the changes would shift voting power within the organization so that big developing nations such as China and Brazil get more say in IMF affairs. It would also let developing nations in general replace a few old-line European countries on the fund’s executive board.
But in tight fiscal times — and when the IMF is lending historic amounts to euro-zone nations that can ostensibly look after themselves — the idea of boosting U.S. support for the agency is politically sensitive.
With the presidential election out of the way, the “fiscal cliff” averted and the sequester now a fact of life, Treasury officials decided they needed to finally submit the three-year-old reform package for congressional approval.
Not that it was advertised. News of the submission was released indirectly when the Bretton Woods Committee — a high-level group of political and economic officials that monitors IMF issues — released a letter sent to congressional leaders urging approval.
“The IMF has always been a valuable tool for advancing U.S. national interests globally,” the committee wrote — perhaps inadvertently validating one of the arguments China, Brazil and others have made for why they need a greater say at the fund.
“The United States is committed to implementing the 2010 quota and governance reform. We are actively working with Congress to get quota legislation completed as soon as possible,” a Treasury spokesperson said Tuesday.
In the heat of the presidential campaign, some Republicans pledged to oppose the increase in IMF funding. They argued that the agency’s increasing exposure to Europe put the U.S. Treasury directly at risk.
It’s not clear how much weight that argument will carry in a non-election climate. Even as it ups the permanent U.S. pledge to the IMF, the administration wants to rescind a temporary loan in the same amount that it extended in 2009 as the global economic crisis took hold. Congress approved that loan. Administration officials say there is no cost to the U.S. budget of making the pledge permanent. In fact, the United States earns interest on the resources it deposits with the fund, as do other nations.
The quota increase “would allow the United States to maintain its strong leadership position and influence in the IMF,” the administration said in the continuing resolution.