WASHINGTON: International Monetary Fund (IMF) Managing Director Christine Lagarde said on Friday she was disappointed that the US Congress failed this week to ratify crucial IMF reforms supported by other major countries.
She said the US inaction on the reforms, delayed now more than two years by Washington, would force the global crisis lender to seek other ways to build its financial resources and modernise its voting structure.
“The IMF’s membership has been calling on and was expecting the United States to approve the IMF’s 2010 Quota and Governance Reforms by year end,” Lagarde said in a statement.
“Adoption of the reforms remains critical to strengthen the Fund’s credibility, legitimacy, and effectiveness, and to ensure it has sufficient permanent resources to meet its members’ needs.”
“I have expressed my disappointment to the US authorities and hope that they continue to work toward speedy ratification.”
The IMF was left hanging this week after US legislators failed to endorse the reforms in the final budget legislation of the year.
With the White House supportive of the reforms, the IMF had held out hopes that ratification would be included in the huge budget bill that was passed late Thursday.
But Republicans in Congress prevented the bill from including Congressional endorsement.
Washington officially supported the reforms in 2010 when they were formulated. As the IMF’s largest single shareholder by far, the US ratification is essential to get the necessary endorsement of 85 per cent of the membership by voting power.
Lagarde earlier this year said IMF staff were putting together options for a “Plan B” in case US ratification failed. She said Friday that the IMF would move in that direction beginning next month.
“As requested by our membership, we will now proceed to discuss alternative options for advancing quota and governance reforms and ensuring that the Fund has adequate resources, starting with an Executive Board meeting in January 2015,” she said.
Earlier Friday China, the world’s second largest economy but with only four per cent of voting rights in the Fund — barely larger than Italy’s — said it was “deeply disappointed” in the US inaction.