U.S. Treasury secretary says ‘dangerous’ not to pass IMF reforms
(This story corrects CBO estimate of IMF reform costs in paragraph 7 to $300 million from $3.1 billion)
WASHINGTON (Reuters) – U.S. Treasury Secretary Jack Lew on Wednesday said failure by Congress to authorize reforms at the International Monetary Fund it was “dangerous” and would limit U.S. leverage on issues such as the China-led infrastructure bank.
But a senior Republican lawmaker expressed doubt Congress would take up the reforms this year, increasing the likelihood the IMF would seek to move ahead without the United States.
The fund’s member countries agreed in 2010 to reform the institution to give more say to emerging countries, but the Obama administration has so far been unable to persuade Congress to pass necessary funding changes.
U.S. foot-dragging is prompting other countries to question Washington’s commitment to international institutions and putting it on the defensive, Lew said at a hearing before a U.S. House of Representatives subcommittee.
“I think that’s a very dangerous thing strategically; I think that’s a mistake,” Lew said, adding that passing the IMF reforms would give the United States more leverage in pushing its perspective on the Asian Infrastructure Investment Bank.
Germany, France and Italy followed Britain in saying they would join the China-led initiative, despite Washington’s objections to the bank’s environmental and human rights standards.
Kay Granger, chairwoman of the House State and Foreign Operations Appropriations Subcommittee, where Lew testified, said she did not believe Congress would pass the IMF reforms when the Congressional Budget Office estimated they would cost $300 million.
“In the past, there has not been sufficient congressional support for the IMF proposal, and frankly, I do not expect much to change this year,” she said.
In comments to Reuters, Granger also said the Obama administration has been slow in responding to her concerns.
The administration has been pushing Congress for two years to approve a shift of some $63 billion from an IMF crisis fund to its general accounts, which is necessary to make good on Washington’s international promise.
Granger said the proposal may now be considered as part of the budget discussions for the next fiscal year, which begins in October.
The White House says the changes would cost very little, but some lawmakers do not agree and also fret about the risks attached to IMF loans.
U.S. delays on the reforms have prompted the IMF’s board to consider other options, including a proposal under which Washington would lose its veto power at the global lender.
(Reporting by Anna Yukhananov; Editing by Steve Orlofsky)
