India, Russia and China to get louder voice in IMF

US Congress dismantles barrier to reforms that give emerging markets more say

WASHINGTON: China, India and Russia will soon speak with a louder voice at the International Monetary Fund (IMF).

After years of opposition, the US Congress has dismantled the final barrier to reforms that will give the emerging-market powers more say in the affairs of the 188-nation global crisis lender.

The IMF reforms are part of a $1.1 trillion spending package approved by Congress on Friday, and signed into law by President Barack Obama. Adopted in 2010 by the international community, the reforms were expected to take effect in 2012.

But with the United States holding by far the largest share of voting rights at the IMF, Congress’s refusal to approve the reforms had held up their implementation, to the consternation of IMF management and members.

The blockage has been a sore point between President Barack Obama’s Democratic administration and the opposition Republicans who control Congress.

Republicans had rejected the slightest favorable gesture toward the multinational organization, the object of some criticism in Washington for its largesse toward Greece.

In recent years, international summits have unfailingly included a pointed reminder about the stalled reform process - seen as all the more frustrating since the US was among the first countries to call for an IMF overhaul in 2010 amid the global financial crisis.

At the end of their last summit in mid-November in Turkey, the Group of 20 economic powers said in a statement that they “remain deeply disappointed” with the delay in reforms and “we urge the US to ratify these reforms as soon as possible.”

The long stall also led the so-called BRICS - Brazil, Russia, India, China and South Africa - to set up an economic alternative, launching in July 2014 their own monetary fund and development bank. The US approval will likely ease their frustrations with the 70-year-old IMF, dominated by the US, Europe and Japan, as well as remove a major headache for the Obama administration.

The reforms, however, are crucial for the IMF itself. They double the crisis lender’s permanent financial resources, known as quotas, to some $660 billion. The green light by Congress thus paves the way for the IMF to abandon some makeshift mechanisms it had adopted to keep its finances afloat and finance rescues of members in crisis.

Published in The Express Tribune, December 20^th, 2015.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.