International Monetary Fund Managing Director Christine Lagarde urged the U.S. to take responsibility and adopt an overhaul of the fund’s ownership structure that’s been stalled in Congress.
“When the U.S. withdraws, everybody loses,” Lagarde said in an interview with Bloomberg Television’s Tom Keene in Washington, where finance ministers and central bankers from the fund’s 188 member countries are meeting this week. “Do exercise that leadership; it’s there, it’s yours.”
The U.S. is delaying implementation of a 2010 agreement by all IMF member countries that would adjust some nations’ shares, or quotas, in the fund and double its lending capacity to about $739 billion. The plan would give emerging markets such as China more clout at the institution, which was set up at the end of World War II to help safeguard global monetary stability.
Lagarde added to a chorus of countries from Mexico to the U.K. showing impatience with the U.S. Twice this year, Congress rejected a push by the Obama administration to add the IMF provision to unrelated legislation, including an aid package for Ukraine.
The U.S. is the largest shareholder of the fund, with a voting share of 16.8 percent. Major decisions require 85 percent approval, effectively giving the U.S. veto power.
“I would hope that before the end of this calendar year, we complete the reform of the IMF, which means that we make it more credible, better resourced, and capable of jumping on urgent issues like Ukraine, for instance, with adequate financing,” Lagarde said.
The fund last month reached a preliminary agreement for a loan of as much as $18 billion to the fledgling government of Ukraine. The IMF’s board of directors is expected to approve the loan by the end of April or the beginning of May, Lagarde said today.
“The failure to finalize this issue diminishes America’s global standing,” Australian Treasurer Joe Hockey said in a speech yesterday in Washington.
Two days earlier, his British counterpart, Chancellor of the Exchequer George Osborne, called the U.S. inaction “bad for the institution and bad for the international community.”
Speaking earlier today at a news conference, Lagarde said the global “recovery is uneven and remains too weak for comfort, with geopolitical tensions injecting new concerns.”