http://www.economist.com/news/leaders/21599772-congresss-failure-support-international-monetary-fund-shameful-and?zid=307&ah=5e80419d1bc9821ebe173f4f0f060a07
The article defends the role of the IMF the goal of global economic development around the world, especially in the developing nations. Economist uses a recent example of Ukraine that needs funds to established crumbled institutions in order to start the rebuilding process on its road to greater European integration.
Article criticizes the Congress' failure to live up to their commitments to support countries like Ukrine. While the US approved $1 billion dollar package, the IMF is working on the package of $15 billion, which is significantly larger and more impactful. Meanwhile, the Congress is opposed to reforms that would strengthen the IMF and give them more ability to fund economic recoveries. The reforms are for the quota systems, that determines how much the country pays in, how much say it has in decision making and how much it can borrow from the fund in case of a downturn. The main issue is that the US has the largest quota and can singlehandedly veto the deal. Also, a number that small European economies have significant say, while emerging economies have very little. Thus the reforms would give emerging economies more input, but the Congress have be rejecting the reform for the past three years.
The Congress did so again recently when President Obama attempted to attach the quota reform in the legislature approving bilateral aid to Ukraine. The main argument from the lawmakers is that new reforms would put additional pressure on taxpayers and reduce the US's influence. According to the Economist both of those claim carry no weight because the US will still retain its veto power and the larger role of emerging economies would be at expense of European economies, that seem to be approving this reform. US's refusal to approve this critical package to Ukraine could be seen as the country's failure to live up to its expectations and create dissent between the US and other members.
In recent history of increased criticism of the IMF and its austerity measures, this is a very different look at the importance of the IMF for the economic growth around the world.
1 comment:
When congress repeatedly rejects reforms that will give developing countries a greater say in the IMF, they are sending a message that they are ok with supporting economic aid to developing nations, but they are not ok with giving more power to developing economies so that they can support themselves in the future.
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