International Monetary Fund Managing Director Christine Lagarde on Friday expressed her disappointment over the US Congress’s rejection 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 modernize its voting structure.
In October, IMF Managing Director Christine Lagarde jokingly promised to perform a belly dance in front of Congress if it gave its official approval.
The IMF was left hanging untilthis week after US legislators failed to endorse the reforms in the final budget legislation of the year.
“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.”
With the White House supportive of the reforms, the IMF had held out hopes that a 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 endorse ment of 85% of the membership by voting power. Earlier Friday China, the world’s second largest economy but with only four percent of voting rights in the Fund - barely larger than Italy’s - said it was “deeply disappointed” in the US inaction.
The 2010 reforms would have increased China’s shareholding slightly, while leaving the US, Europe and Japan the dominant powers in the Fund.
“Implementing the 2010 funding and governance reform is crucial for maintaining the credibility, effectiveness and legality of the IMF,” foreign ministry spokesman Hong Lei said.