Reuters: Politics: IMF urges U.S. to bury budget hatchet, support Fund reforms

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IMF urges U.S. to bury budget hatchet, support Fund reforms Sep 19th 2013, 18:25 The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. Credit: Reuters/Yuri Gripas WASHINGTON | Thu Sep 19, 2013 2:16pm EDT WASHINGTON (Reuters) - The International Monetary Fund on Thursday urged U.S. policymakers to support historic reforms at the global lender and bury political differences over the budget to ease one source of risk to the economy and markets. The IMF agreed to reform its governance structure in 2010 to give greater influence to emerging economies and make China the third-largest member. But the reform of voting rights, known as quotas, cannot proceed without approval from the U.S. Congress. IMF Managing Director Christine Lagarde said the reforms will give the global financial institution more money to prevent and resolve crises. "These 'quota' reforms need the support of all our member countries â€" including the United States," Lagarde told the U.S. Chamber of Commerce, according to prepared remarks. It was the first time an IMF managing director had spoken to the chamber in two decades, perhaps a sign the IMF wants to better make its case to U.S. business leaders. The United States is the Fund's largest member and holds the only controlling share of IMF votes, meaning no major changes can happen without its approval. Under the reforms, U.S. voting power would decrease slightly but it would still maintain veto power over decisions. Formal agreement on the quota reform could be included in budget bills expected in the next month, but is likely to be overshadowed by heated debate over U.S. public finances. Lagarde called on the United States to quickly resolve the political uncertainty over the budget and the debt ceiling. U.S. lawmakers continue to wrangle over raising the legal limit on the nation's borrowing. Congressional Republicans have called for further spending cuts and a delay in the president's healthcare program before they agree to raise the limit. "It is essential to resolve this â€" and the earlier the better â€" for confidence, for markets, and for the real economy," Lagarde said. The U.S. Federal Reserve cited uncertainty about the fiscal debate as one reason not to scale back its support for the U.S. economy on Wednesday, a decision which surprised many investors. Lagarde did not comment directly on the Fed's decision to maintain the current pace of asset purchases in her prepared remarks but said the IMF had always argued policy had to be properly calibrated. "Our advice is that exit from unconventional monetary policies should be gradual, linked to progress in the recovery and employment, and that it should be clearly communicated and in a dialogue," she said. (Reporting by Anna Yukhananov; Editing by Krista Hughes) Link this Share this Digg this Email Reprints

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