U.S. Calls for Emerging Markets to Be Given Greater Voice at IMFby and
Changes would reflect emerging clout, Treasury’s Sheets says
U.S. should continue to finance the IMF, Sheets says
The U.S. called for emerging markets to be given a bigger voice at the International Monetary Fund as a reflection of their expanding role in the world economy.
“As emerging economies grow, they desire and deserve a greater stake in the institutions at the center of the global economy,” Nathan Sheets, Treasury undersecretary for international affairs, said in the prepared remarks of a speech Tuesday in Washington. “Further enhancing the voice of emerging markets at the IMF is necessary to preserve the legitimacy and effectiveness of the institution.”
Together with the World Bank, the IMF is “the cornerstone of the international economic system that the United States helped design in the wake of World War II,” he said. “The global economic system in general, and the international financial institutions specifically, remain indispensable to U.S. interests.”
The Washington-based fund was conceived during the Second World War to prevent a reprise of the protectionist policies that took hold after the Great Depression. It eventually evolved into a lender of last resort for countries facing balance-of-payments shortfalls.
The IMF’s executive board in January approved reforms to the institution’s governance that increased the voting share of emerging economies such as China and India. The changes had been held up by Republican lawmakers in the U.S. until Congress approved the plan last year.
The Treasury later this year plans to support the renewal of a $250 billion pool of funds that can be accessed by the IMF, known as the New Arrangements to Borrow, or NAB, said Sheets. Congress will need to give Treasury the authority to extend participation in NAB, which is funded by 38 countries, including the U.S., he said.
Ending U.S. funding for NAB “would create uncertainty about the IMF’s finances at a time when the global economy continues to face sizable risks,” Sheets said.