WASHINGTON – More than 130 academics and global policy pundits urged the Congress on Monday to enact delayed changes in voting powers in the International Monetary Fund and warned that failure to do so would diminish U.S. influence in the global financial lender.
The reforms were approved by the IMF in 2010 in a historic deal that makes China the third-largest voting member in the IMF after the United States and Japan. It also boosts the influence of other emerging economies like India and Brazil in the Fund and supports changes on the IMF board that reduces Western Europe's dominance.
The reforms, however, first need congressional approval because they involve making permanent a $65 billion U.S. contribution to the Fund. That is a politically sensitive issue given the tense budget environment in Washington and sweeping government spending cuts that came into effect from March 1.
In a letter to John Boehner, the speaker of the House of Representatives, and Senate Majority Leader Harry Reid, the pundits emphasized the importance of the IMF's vital role in the world economy and the influence of the United States as its largest member country.
"Additional quota resources for the IMF are essential to preserve its central role in a global financial system that benefits the United States," the letter said. "Realignment of IMF quota shares, while preserving U.S. influence in the IMF, will enable the IMF to respond to shifts in the global economy, involving emerging powers more deeply in the institution and avoiding their disengagement.
"Positive action by the U.S. Congress on both elements will also unlock financial contributions from other countries."
The U.S. Treasury requested a provision to be inserted into the pending legislation, but it was rejected by the Republican-controlled House.
A decision is expected this week on whether to include the IMF request in the Senate version of the funding bill, according to congressional aides. Approval by the Democratic-controlled Senate would give it a good chance of inclusion in the final bill after the two chambers work out their difference.
Last week, a group of 19 high-level U.S. officials also wrote to Congress urging action on IMF reforms.
(Reporting By Lesley Wroughton; editing by Christopher Wilson)