Congress Should Care About the IMF
The elephantine spending bill just passed by the U.S. Congress includes, among its numberless provisions, a measure that's shamefully overdue. Since 2010, Washington's paralysis has blocked badly needed changes at the International Monetary Fund. The bill will let them go forward.
This is good news. It serves U.S. as well as global interests. But the protracted delay draws attention to a deeper problem, still unresolved: Rather than lead the IMF in its vital work, the U.S. continues to settle for the role of glum bystander.
Five years ago, IMF members agreed, among other things, to increase the fund's financial resources and rebalance countries' voting power -- mainly shifting votes from Europe and giving more say to big emerging economies, notably China. Congressional approval was needed, and this is only now being granted. (A further review of quotas was due in 2014, by the way. That's still stalled.)
An effective IMF is an essential tool in promoting global economic stability. It can support governments that lose access to financial markets, demanding fiscal and other reforms in return. It's also a forum for international policy coordination and analysis. These roles assume enormous importance in times of global systemic stress. Its record isn't flawless, and further changes are needed, but nobody who's given it a moment's thought questions the fund's necessity.
The U.S., out of negligence rather than calculation, has said it isn't much interested in having an up-to-date IMF and can't be bothered to recognize the new standing of China and other big emerging economies. The sum of Washington's thinking on the IMF is, in effect: "Who cares?"
Doesn't the spending bill put this right, finally? Better late than never? That would be generous. Buried along with who knows what else in the mammoth bill, the IMF provisions have not been properly debated or explained to voters. The case for an effective, adequately resourced and well-run IMF is compelling, and the U.S. government should be making it, the better to modernize and lead the institution.
Reforming the IMF by stealth, after prolonged delay, is better than not doing it all. For its own sake, and everybody else's, the U.S. should aim a bit higher than that.
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