At a time when more than 90 U.S. House members have co-sponsored legislation by Rep. Cathy McMorris Rodgers (R-Wash.) to rescind the additional $100 billion Congress voted to give to the International Monetary Fund in 2009, the managing director of the IMF today addressed criticism of funding for the financial titan from its largest shareholder.
At the opening of the regular IMF/World Bank meeting in Washington, D.C. Thursday morning, IMF Managing Director Christine LaGarde told Human Events that “no country has ever lost money on the IMF” and that it is important that “the leading economic power in the world has to have a leadership role” in the Fund during the current times of economic turmoil.
“First of all, the IMF does not receive ‘donations,’” said LaGarde, gently correcting this reporter’s use of the term to describe the regular funding from the IMF’s 180-plus member nations. “We receive loans from members of the IMF who become creditors, and we only draw on those loans if need be. So we don’t receive donations. I wish we could, but we don’t.”
Recalling the $100 billion that Congress voted to give the IMF in 2009 above its regular financial participation, she explained, “many, many members committed to increase their participation in the lending pot of the IMF. And the United States of America, which is my leading member in terms of quotas and voices and governance and all the rest of it, did participate, like many others. This took the form of what we call the ‘New Arrangement to Borrow,’ which has to be rolled into, for those members that have actually participated, into the quota reform, which was quoted, agreed and approved, including by the [U.S.] back in 2010.” (She explained that the reform was intended to increase the overall quota and shift “a little bit of quota” to the “under-represented countries,” and that this has to be ratified by the U.S. Congress.)
Regarding her meeting in December of last year with the leading congressional opponent of additional U.S. tax dollars for her organization, LaGarde said “I don’t think the excellent, productive meeting I have had with Cathy McMorris Rodgers, who understands the issues very well, is sufficient to withdraw her proposed bill.
But LaGarde also left no doubt that she is well aware of the criticism of her organization from U.S. officials and that, in the wake of efforts by McMorris Rodgers and others on Capitol Hill, the White House and Secretary of the Treasury Tim Geithner recently announced there would be no further special U.S. funding for the IMF.
“What we need to constantly demonstrate are two things,” she told us, “number one, the efficiency of the IMF, the fact that we don’t give money, we don’t give grants, we give loans. We are paid back. The loans generate interest for the creditors. It is money that is well-managed. No country has ever lost money on the IMF.
“The second thing that I hope is clear is that the leading economic power in the world clearly has to have a leadership role and I think it’s in the tradition of the United States, very much so, and that’s one way to demonstrate it.”