G20 "deeply disappointed" by US impasse on IMF reform

Source:Xinhua Published: 2015-4-18 16:07:36

The Group of 20 (G20) economies on Friday blasted the United States for stalling the governance reform of the International Monetary Fund (IMF).

G20 finance ministers and central bank governors said in a communique after a two-day meeting that they remained "deeply disappointed" by the continued delay in implementing the 2010 IMF quota reform.

Recognizing the importance of these reforms for the IMF, G20 countries reaffirmed that the "earliest implementation" of the reform agenda was their "highest priority."

To reflect the growing and under-represented influence of emerging economies, the IMF 2010 reforms call for a 6-percent shift in quota share to the emerging economies, which will lift China to the third largest shareholder. Shares for Russia, India and Brazil will also see hefty rises.

The reforms, however, have been delayed for five years due to the blocking of the US Congress as the United States retains a veto.

After last April's G20 meeting, G20 finance ministers set the end of 2014 as the deadline for the United States to ratify the long-delayed IMF quota reforms and threatened to move forward without it if the United States fails to do so. But US Congress still hasn't approved the reform plan until now.

"We continue to urge the United States to ratify the 2010 reforms as soon as possible," said the communique.

"We support the US administration's all efforts to deliver," said Agustin Carstens, chairman of the International Monetary and Financial Committee (IMFC), IMF's policy advisory committee, at a press conference after the G20 meeting.

To get around the United States, the IMF's board had proposed an "interim" plan to raise the voting rights of some emerging countries under an "ad hoc" increase without touching US veto power.

The "ad hoc" interim plan made it into a draft communique by the G20 finance ministers and central bank governors, but was dropped from the final version after officials failed to come to an agreement.

"We call on the IMF Executive Board to pursue an interim solution that will meaningfully converge quota shares as soon as and to the extent possible to the levels agreed under the 14th review," said the communique.

Even under the "ad hoc" plan, countries like China would only get a small bump in their shares, as all reallocations must allow the United States to keep at least 15 percent of the votes.

The interim proposal also would not resolve the IMF's financial crunch, as it increasingly relies on temporary arrangements approved during the height of the 2007-2009 financial crisis to fund major loan programs in countries like Greece and Ukraine.

"Interim solution would imply some benefits for some countries. Certainly large fast growing emerging markets would have more recognition, would have a larger quota share and so on," said Carstens, adding that the interim solution would still be the "second best" compared with the full implementation of the 2010 quota reform.

China's central bank governor Zhou Xiaochuan said here Friday that IMF members are frustrated with the long delay of the fund's 2010 quota reform and called for early passage of the reform.

"The 2010 quota reform has been delayed for so long. IMF members are not simply disappointed but frustrated," Zhou told Xinhua on the sidelines of the ongoing World Bank-IMF Spring Meetings.

"The interim plan should not be an alternative of the original reform program. We are pushing for fully implementing the 2010 quota reform," Zhou added.

Posted in: Economy

blog comments powered by Disqus