China urges IMF to give more power to emerging markets

January 16, 2014 - 9:10:31 am
BEIJING: China called on the IMF yesterday to stick to a commitment to give emerging markets more power at the world body after US lawmakers set back historic reforms that would give developing countries a greater say.    

The remarks by Chinese Foreign Ministry spokesman Hong Lei were an indirect criticism of the United States, the biggest and most powerful IMF member, where lawmakers failed on Monday to agree on key funding measures, though Hong did not mention the United States by name.     

The proposed $1 trillion spending bill for the US federal government did not include funding for the International Monetary Fund. 

Congress must sign off on the IMF funding to complete 2010 reforms that would make China the IMF’s third-largest member and revamp the IMF board to reduce the dominance of Western Europe.

The changes would also give greater say to nations such as Brazil and India to reflect their growing economic heft.

But the changes have been held up by the lack of approval from the United States.

“The IMF quotas reform is an important decision made by the organisation,” Hong said at a daily news briefing. 

“The relevant organisation’s members should earnestly implement the decision, and honour and enhance the voice and representation of developing countries within the IMF.”

The reform of the voting shares, known as quotas, cannot proceed without the United States, which holds the only controlling share of IMF votes.

After putting off the request in 2012 because of the US presidential election, the US Treasury has sought to tuck the provision into several bills since March.

The administration’s requests, however, have been met with scepticism from some Republicans, who see them as tantamount to approving fresh funding in a tight budget environment.

Some lawmakers have also raised concerns about how well the IMF is helping struggling economies in Europe and the risks attached to IMF loans, suggesting Congress is in no hurry to approve any changes

India’s Finance Ministry did not immediately respond to requests for comment. But an official at the ministry, who has been dealing with multilateral institutions including the IMF, said India was “disappointed” at the Congress lack of action.