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Montevideo, January 24th 2018 - 09:25 UTC

Lagarde blasts US Congress for blocking reforms: “they jeopardize IMF's credibility”

Monday, October 12th 2015 - 09:18 UTC
Full article 7 comments
“It is an issue for the credibility and the representativeness of the institution, particularly vis-à-vis the under-represented countries,” underlined Lagarde “It is an issue for the credibility and the representativeness of the institution, particularly vis-à-vis the under-represented countries,” underlined Lagarde
“The consequences for the US and the international financial community are very significant if quota reform is not done” said Treasury Secretary Jacob Lew “The consequences for the US and the international financial community are very significant if quota reform is not done” said Treasury Secretary Jacob Lew

Washington's use of its de facto veto at the International Monetary Fund to block reforms giving emerging countries a greater say is jeopardizing the IMF's credibility, complained Managing Director Christine Lagarde.

 The IMF has been caught up in a protracted, politically charged battle over reforms intended to reflect the changing global economy by giving emerging giants such as China more weight at the Fund.

“It is an issue for the credibility and the representativeness of the institution, particularly vis-à-vis the under-represented countries,” IMF Lagarde said at the Fund's annual meeting in Lima, Peru.

The reforms -- a doubling of IMF funding and a reallocation of voting power to boost China and other up-and-coming economic powers -- were originally propelled by Washington, and President Barack Obama's White House has repeatedly endorsed them.

But the US Congress has refused for three years to sign off on the deal, with some legislators not wanting to contribute more money to the IMF and others concerned about eroding US dominance of the IMF.

As the rules stand now, China, the world's second-largest economy, has less than four percent of the voting power at the IMF -- barely more than Italy, an economy one fifth its size.

”I... very much hope that (reforms) will be taken seriously and that the US authorities will actually appreciate the need to reinforce an institution that they participated very actively in creating,“ Lagarde said.

US Treasury Secretary Jacob Lew repeated the administration's support for the reforms, adopted back in 2010. ”The consequences for the United States and the international financial community are very significant if quota reform is not done,” he said.

In related news Lagarde opened the door to a second five-year term at the head of the IMF, saying she is “prepared to serve” if the fund’s shareholders decide to keep her as managing director.

Lagarde's current five-year term expires next July, and she has largely evaded questions about her future at the IMF. But last week Lagarde told reporters attending the IMF’s annual meeting in Peru that she was ready to continue at the fund.

“I’m certainly open to the fact that it could not be my last annual meeting,” she said. “I have served; done my best. I’m prepared to serve, but it’s not my call.”

Categories: Economy, Politics, International.

Top Comments

Disclaimer & comment rules
  • Conqueror

    How does one put “IMF” and “credibility” in the same sentence? Just to take the example of argieland, it has broken so many of the rules. Lied. Misled. And yet the IMF continues to go along with it. When was it that we could see that argieland should be expelled? But it's still there. Manipulating. In debt. Consorting with the enemy.

    I'm with the US Congress. If China and “emerging nations” want a better deal, let them put their money where their mouth is.

    Oct 12th, 2015 - 10:35 am 0
  • Brasileiro

    The Brazil in 2002 had a debt of 24 billion dollars to the IMF. And 0.78% of the voting power. In 2004 Brazil fully paid its debt. In 2010 and 2011 Brazil invested in the IMF 32 billion dollars with the promise of their voting power be increased to 6.24%.

    After four years Brazil continues with 0.78% of the voting power.

    Westerners are masters in deceiving to corrupt.

    Oct 12th, 2015 - 03:36 pm 0
  • Briton

    The US should withdraw from the IMF,
    followed by Britain.

    then Lagarde wont have to worry abt Veto and do what she wants,

    Oct 12th, 2015 - 03:49 pm 0
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