America’s Neglected Financial Children
The US Congress recently rejected a modest appropriation that would have shored up financing for the IMF and enhanced emerging economies' role. While events in Ukraine may force Congress finally to agree to the funding increase, the question of why US lawmakers rejected the measure in the first place remains vital.
WASHINGTON, DC – This week, the US Congress again failed to approve a modest appropriation that would have shored up financing for the International Monetary Fund and given China and other emerging economies greater responsibility there. Support for the IMF may seem arcane, but it has important implications for America’s global role – and the signs are not good.
Indeed, if there was ever a moment for Congressional approval of the IMF reform package, this was it: the measure would have greatly increased the IMF’s ability to support Ukraine, a key American objective, at a much lower cost than the alternative of a US bilateral credit guarantee.
The failed measure involved only a transfer of previous US commitments from a supplementary account to the IMF’s core funding source, at virtually no cost to taxpayers. Congressional approval would have implemented a deal, concluded at the G-20’s Seoul Summit in 2010, to double the Fund’s lending capacity.