US delay in ratifying reforms 'threatens stability of IMF'

US delay in ratifying reforms 'threatens stability of IMF'
International Monetary Fund chief Christine Lagarde.

WASHINGTON - Ms Christine Lagarde, the managing director of the International Monetary Fund (IMF), had some strong words for the organisation's most powerful member as the US Congress continues to stall on ratifying reforms to strengthen funding for the IMF.

While the need to depend on sources like short-term loans has not halted operations, she said the lack of progress in the United States threatens to affect the stability of the organisation.

"I don't think it is a factor of strength or stability to have your lead member doubting the institution that it has contributed to create. And I don't think it is a good representation of the world as it is," she told The Straits Times on Wednesday.

It was a point she also made on the same day at a public speech at Johns Hopkins University.

"Our mission is to be an agent of stability, an agent of cooperation. And to be an agent of stability and an agent of cooperation, we need to be stable ourselves... To be stable means having solid, sustainable resources."

The reforms, agreed to in 2010, would double the contributions to the IMF's general fund it receives from its 188 member countries. It would also shift some of the burden of those contributions from developed nations to developing ones and increase the voting power of the latter.

Opponents to the reforms say they would weaken US influence in the IMF.

Senate Democrats had recently tried to pass those reforms by piggybacking them on to a Bill providing aid to Ukraine. However, they dropped the IMF changes from the Bill last week in the face of stiff Republican opposition.

Ms Lagarde said she still hoped the US lawmakers would endorse the reforms eventually.

She also noted that the US is one of the best performing developed economies.

She dismissed suggestions that the current US revival was shaky.

"The revival in the job market is often questioned because the employment numbers are not as positive as the improvement in unemployment rates. But the numbers are there - the creation of value is there, and there is a private sector that has started to invest again. We do not have too much doubt about the recovery in the US," she said.

Ms Lagarde was speaking at a wide-ranging interview ahead of the IMF's spring meetings next week that will bring together finance ministers and central bank chiefs of the 188 member states in Washington where they are expected to discuss global economic cooperation and integration.

She paid tribute to Singapore's Deputy Prime Minister Tharman Shanmugaratnam who heads the IMF's International Monetary and Financial Committee that manages monetary and financial policy.

"For the last 2 1/2 years, he has been a terrific chairman for the IMFC. He is capable of brokering arrangements, compromises, because he understands people and he can listen to their position without involving a big, huge ego as part of it."

jeremyau@sph.com.sg

This article was published on April 4 in The Straits Times.

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