Fate of IMF Overhaul Rests in Congress' Hands (CQ Roll Call)
Visiting Fellow Scott Morris discusses why the IMF cannot move forward with proposed changes without the support of Congress in a CQ Roll Call article.
World leaders on Friday convened for the International Monetary Fund’s annual spring meeting amidst uncertainty over whether a major overhaul of the multilateral lender’s structure will proceed as planned.
But the biggest stumbling block may be Congress, which could prevent those changes. The overhaul would realign how much influence other countries have over IMF decisions, but would not change the United States’ dominant position at the fund.
Congress has to authorize United States participation in the new system, which the IMF is trying to implement in order to give emerging economic powers like China, Brazil and India more say in how the fund operates and shrink the influence of Europe. The United States will retain, on a relative basis, its same level of influence — it is and will remain the only country in the IMF with enough shares to have an effective veto over decisions.
That also means, however, that if Congress does not approve the proposed changes, they cannot go forward.
“Because of the level of shareholding we do have, until we proceed with it . . . the overall agreement can’t proceed,” said Scott Morris, a former Treasury Department official now with the Center for Global Development think tank.
World leaders on Friday convened for the International Monetary Fund’s annual spring meeting amidst uncertainty over whether a major overhaul of the multilateral lender’s structure will proceed as planned.
But the biggest stumbling block may be Congress, which could prevent those changes. The overhaul would realign how much influence other countries have over IMF decisions, but would not change the United States’ dominant position at the fund.
Congress has to authorize United States participation in the new system, which the IMF is trying to implement in order to give emerging economic powers like China, Brazil and India more say in how the fund operates and shrink the influence of Europe. The United States will retain, on a relative basis, its same level of influence — it is and will remain the only country in the IMF with enough shares to have an effective veto over decisions.
That also means, however, that if Congress does not approve the proposed changes, they cannot go forward.
“Because of the level of shareholding we do have, until we proceed with it . . . the overall agreement can’t proceed,” said Scott Morris, a former Treasury Department official now with the Center for Global Development think tank.
In its fiscal 2014 administration request, the administration is arguing that the commitment — which the Congressional Budget Office scored at about $5 billion in 2009 to reflect the risk the U.S. was assuming making the loan — doesn’t need to be included in the budget because it should be considered mandatory, not discretionary, spending.
As Morris noted, this is how the U.S. government has categorized all previous financial commitments to international financial organizations, until 2009. But the 2009 supplemental effectively categorized the $100 billion as discretionary funding.
“That set a new precedent,” said Morris. “The administration this time around is continuing to assert the historical practice is the right one.”
