MURAD SEZER
February 10, 2015
WASHINGTON/MOSCOW
(Reuters) - The IMF's board last month discussed two options for moving
forward on voting reforms without the United States, including a
proposal under which Washington would lose its veto power at the global
lender, according to three sources familiar with the proposals.
The sources, who have seen an IMF staff paper laying out the options, said the plan would ask the United States to temporarily give up its controlling share of IMF votes, amid growing frustration with U.S. foot-dragging on reforms meant to give emerging markets more say at the institution.
Russia and Brazil have pushed for this idea publicly over the past year, and Russian Finance Minister Anton Siluanov on Tuesday said it could encourage the U.S. Congress to act.The IMF's member countries agreed in 2010 to reform the institution's voting rights, but the Obama administration has so far been unable to persuade Republicans in Congress to pass the necessary funding changes.
The 2010 reforms would double the fund's resources and increase the voting power of countries like China and India. They would also reduce the dominance of Western Europe on the fund's 24-member board.Under one proposal, known as "de-linking," the IMF board would detach the doubling of resources from the changes to the board, though the United States would have to agree to do so.
"In our view the de-linking would be the most logical," Siluanov told reporters on the sidelines of a Group of 20 meeting in Istanbul, though he admitted the United States has asked countries to wait another six months as it pushes for congressional approval.
The U.S. Treasury said it is working "intensively" to get Congress to pass the 2010 reforms.The second proposal, which does not require U.S. approval, would raise the voting rights of some emerging countries under an 'ad hoc' increase, without touching U.S. veto power.But countries like China would only get a small bump in their shares.
This option would also not resolve the IMF's financial crunch, as it increasingly relies on temporary arrangements approved during the height of the global financial crisis to fund major loan programs in countries like Greece and Ukraine.The board has not yet decided which of the two options to pursue, and will discuss the issue further during the April meetings of the IMF and World Bank before settling on a plan, according to people who were not authorized to speak publicly.
(Reporting by Anna Yukhananov in Washington and Lidia Kelly in Moscow; Additional reporting by Dasha Afanasieva in Istanbul; Editing by James Dalgleish)
The sources, who have seen an IMF staff paper laying out the options, said the plan would ask the United States to temporarily give up its controlling share of IMF votes, amid growing frustration with U.S. foot-dragging on reforms meant to give emerging markets more say at the institution.
Russia and Brazil have pushed for this idea publicly over the past year, and Russian Finance Minister Anton Siluanov on Tuesday said it could encourage the U.S. Congress to act.The IMF's member countries agreed in 2010 to reform the institution's voting rights, but the Obama administration has so far been unable to persuade Republicans in Congress to pass the necessary funding changes.
The 2010 reforms would double the fund's resources and increase the voting power of countries like China and India. They would also reduce the dominance of Western Europe on the fund's 24-member board.Under one proposal, known as "de-linking," the IMF board would detach the doubling of resources from the changes to the board, though the United States would have to agree to do so.
"In our view the de-linking would be the most logical," Siluanov told reporters on the sidelines of a Group of 20 meeting in Istanbul, though he admitted the United States has asked countries to wait another six months as it pushes for congressional approval.
The U.S. Treasury said it is working "intensively" to get Congress to pass the 2010 reforms.The second proposal, which does not require U.S. approval, would raise the voting rights of some emerging countries under an 'ad hoc' increase, without touching U.S. veto power.But countries like China would only get a small bump in their shares.
This option would also not resolve the IMF's financial crunch, as it increasingly relies on temporary arrangements approved during the height of the global financial crisis to fund major loan programs in countries like Greece and Ukraine.The board has not yet decided which of the two options to pursue, and will discuss the issue further during the April meetings of the IMF and World Bank before settling on a plan, according to people who were not authorized to speak publicly.
(Reporting by Anna Yukhananov in Washington and Lidia Kelly in Moscow; Additional reporting by Dasha Afanasieva in Istanbul; Editing by James Dalgleish)
