Geithner urges Congress to back IMF, WB
WASHINGTON US TREASURY Secretary Timothy Geithner on Tuesday urged a tight-fisted Congress laden with conservatives opposed to global institutions to keep up financial support for the IMF and World Bank.
With the International Monetary Fund prodding members for more funding and Washington seeking support for its new nominee to lead the Bank, Geithner told legislators that contributing to both helps further US economic and security interests.
“At a time of domestic resource constraints, the multilateral institutions are highly effective in multiplying the impact of our dollars,” he told a key subcommittee on budget appropriations in the House of Representatives.
“They were indispensable in stabilising the global economy during the recent financial crisis” and “provide unparalleled returns” on US contributions, he added.
The Obama administration is lobbying for the support of conservative Republicans in Congress to endorse its pledged contribution to the IMF’s $365 billion increase in its “quotas”, or permanent capital resources, ahead of the Fund’s target date of October.
The US is slated to roughly double its current quota level of about $65 billion, though the administration has yet to make a formal request to Congress for it.
But failure to eventually ratify the increase could water down Washington’s 18 percent share of IMF quotas, which gives it dominant influence over Fund activities.
IMF managing director Christine Lagarde earlier this month warned that the Fund was far short of support — as of March 12 it had the backing of holders of 53 percent of quotas, and needs to reach the 70 percent threshold.
Geithner stressed that a financially constrained IMF unable to continue play a major role in Europe “would hurt our economy.” “It’s absolutely in the interest of the United States” for the IMF to stay funded and deeply involved in Europe, he said. He also urged support for a proposed $70 million contribution to the World Bank’s selective capital increase included in the Treasury’s fiscal 2013 budget, as the US seeks to maintain its traditional lock on the leadership of the Bank.
Last Friday the White House nominated Korean- American physician and educator Jim Yong Kim to succeed outgoing US diplomat Robert Zoellick as World Bank president.
Washington though faces an unprecedented challenge from two well-qualified nominees from developing countries for the job.
Subscribing to the capital increase “will maintain our shareholding at the World Bank above the critical 15 percent threshold, preserving our veto over amendments to the Bank’s Articles of Agreement,” Geithner said.