IMF ‘collateral’ victim of US politics: Lagarde

12 April 2014

AFP, Washington :
The International Monetary Fund has become a "collateral" victim of US politics, preventing it from completing a sweeping funding increase and reform plan, IMF chief Christine Lagarde said Thursday.
Lagarde said the Fund was still hoping the US Congress would ratify the plan, with the approval of the Fund's largest stakeholder necessary to implement it.
But she acknowledged that, four years after being agreed by the Fund it has become stuck on Capitol Hill.
"We're not there because the US hasn't ratified it," the IMF managing director said at the annual World Bank/IMF spring meetings, in Washington.
"For some reason we've been a bit of collateral damage of that perennial difference that we see" between Democrats and Republicans.
The administration of President Barack Obama has repeatedly tried to push approval through Congress, insisting that doing so would not cost the US any extra money.
But Republicans have constantly rejected it.
Lagarde pointed out that the reforms, that would give more voice in the Fund to emerging market economies while spreading the funding burden, were originally agreed with Washington's strong backing.
With most other major IMF stakeholders already having endorsed the plan, only the US is holding it up.
"Now we're all stuck," Lagarde added.
Asked if the Fund, which has been led by the United States and Europe since its founding at the end of World War II, had a "Plan B" for moving ahead, Lagarde said they were still aiming for ratification of the reforms by Congress.
"I don't think that our institution should move to Plan B until we have full certainty and massive disappointment that Plan A is definitely dead," she said. "I'm not prepared to declare that at this point."
While she did not divulge if there was a backup plan, Lagarde said she hoped that pressure from IMF members on the United States would bear fruit "in the not-too-distant future."
Chilean central bank head Rodrigo Vergara, who represents several Latin American countries at the IMF, including Argentina, expressed frustration over the "situation of stalemate" in the reforms.

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