WASHINGTON/MOSCOW: Russian officials are pushing for the International Monetary Fund to proceed with reforms without the United States, which could mean the loss of the U.S. veto over major decisions at the global lender, sources said.
Russian Finance Minister Anton Siluanov brought up the idea at a meeting of top finance officials from the Group of 20 nations in Sydney late last month, two G-20 sources told Reuters this week.
The failure of the U.S. Congress to approve IMF funding has held up reforms agreed in 2010 that would double the Fund’s resources and give more say to emerging markets like China.
The United States is the only country that holds a controlling share of IMF votes, meaning its approval is necessary for any major decision to go forward.
Moving ahead on reforms without Washington would likely require complicated changes to the IMF’s rules. But the discussions show the level of frustration within the G-20 with the Obama administration’s inability to win the needed congressional support.
A third source would not confirm it was Russia that brought up the issue, but said the G-20 generally agreed to give the United States until the April meetings of the IMF and World Bank before taking more aggressive measures, a point confirmed by one of the other sources. All three sources spoke on condition of anonymity.
“It was agreed that in the absence of progress by the United States on the 2010 package by the April meeting of the IMF and G-20, there will be formulated a list of ‘bad options,’ which will allow [the IMF] to move forward in this matter, excluding the opinions of the United States,” the third source said.
For a year, the Obama administration has been trying to get Congress to approve a shift of some $63 billion from an IMF crisis fund to its general accounts in order to make good on its 2010 commitment.
The U.S. Treasury is now seeking to attach the funding to a financial aid package for Ukraine that is under consideration in Congress. It argues the reforms would allow crisis-hit countries like Ukraine to borrow more money from the IMF.
“It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Treasury Secretary Jack Lew told lawmakers Thursday during a hearing in the U.S. House of Representatives.
The Ukraine bill may be the administration’s best chance of passing the IMF funding shift this year, analysts say.
But a senior House Republican aide said Wednesday that the House assistance package for Ukraine would not include IMF funding. The Senate said it was still deciding whether to include the IMF in its version of the bill.