WASHINGTON – Congress has rejected a funding request from the Obama administration that would have overhauled the International Monetary Fund. The action leaves the 188-nation group without additional resources and blocks an increase in voting power for China and other emerging markets.
The proposal was left out of the $1.01 trillion spending bill that congressional negotiators approved Monday. Both the Obama administration and IMF Managing Director Christine Lagarde expressed disappointment but pledged to keep working to win congressional support.
The overhaul was adopted by the IMF’s governing board in 2010. The plan would have doubled the IMF’s lending capacity to about $733 billion.
The IMF uses its resources to make loans to countries facing financial difficulties. The plan would have also increased the voting power of emerging-market countries, such as China, Brazil and India. At the same time, it would trim the voting shares now held by some Western European nations.
Approval by Congress is the final remaining action needed to put the overhaul into effect. The United States would remain the IMF’s largest shareholder with the voting power to block actions it did not support.
The administration had asked Congress in the budget bill to shift $63 billion in emergency loans the United States made to the IMF in 2009 to the agency’s general resources account to pay for America’s part of the increase in IMF resources. The administration argued that this shift would not require any new financial support from the United States.
But House Appropriations Committee Chairman Hal Rodgers, R-Ky., told reporters Tuesday that the IMF provision was left out of the bill because “it’s a huge monetary item, fiscally — $63 billion. It’s no small matter.”
In a statement, Treasury expressed disappointment that the IMF plan was not included in the budget, saying the changes were “critical to preserving the United States’ leadership and influence at the IMF.” The statement said the administration was committed to implementing the IMF reforms and was “examining options to do so as soon as possible.”
Lagarde said that “we understand that the U.S. administration will continue to work on securing the necessary legislative authorization and we are hopeful that this will happen.”
Associated Press reporter Donna Cassata contributed to this report.