International Monetary Fund managing director Christine Lagarde met yesterday with new U.S. Treasaury Secretary Jack Lew. One item on their agenda was the festering issue of IMF reform. Via Agence France Presse:
Lew and Lagarde also discussed the US commitment to implementing the IMF's 2010 quota and governance reform, "and the Treasury Department's continued work with Congress to get quota legislation completed as soon as possible."
In December 2010, the IMF board of governors approved major reforms of the Washington-based global lender which give greater voting power to emerging-market economies and doubles quotas, the contributions members make to its financial resources.
The reform proposal has languished in the United States, by far the IMF's biggest stakeholder with 16.7 percent voting rights.
To take effect, the reforms need approval of 113 of the Fund's 188 members, representing 85 percent of the voting rights on the board.
The issue is less the administration than Congress. In early March, appropriators reportedly rejected an administration request to increase U.S. IMF funding. On March 13, a group of academics, former U.S. government officials, and policy experts wrote to House Speaker John Boehner in an effort to unstick the Congressional process:
The IMF is the leading international institution dedicated to promoting U.S. objectives of advancing, financial stability, and sound economic policy. The IMF has played a crucial role in the global approach to recent financial crises and in navigating the world economy through severe threats. While the United States is on a path to recovery, threats remain. Uncertainty in Europe continues; Japan’s growth outlook is sluggish; growth even in big emerging market economies is slowing. In times like these, a financially strengthened and reformed IMF is in the U.S. interest.
The IMF's role in the initally botched Cyprus bailout will probably not help that campaign. And that means that one of the most ambitious attempts to reform the global governance architecture will have to wait a while longer.