Congress Should Care About the IMF

The U.S. is a glum by­stander when it should be tak­ing a lead­er­ship role in the key or­ga­ni­za­tion

Bloomberg Businessweek (Asia) - - Bloomberg View -

The ele­phan­tine spend­ing bill passed by the U.S. Congress on Dec. 18 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 by shift­ing votes from Europe and giv­ing more say to big emerg­ing economies, no­tably China. Con­gres­sional ap­proval is only now be­ing granted.

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. Th­ese roles as­sume enor­mous im­por­tance in times of global sys­temic stress. Its record isn’t flaw­less, 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?”

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. <BW>

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