President Barack Obama renewed a request to Congress to approve an increase in resources for theInternational Monetary Fund as the global lender starts talks for potential aid to Ukraine.
The proposed budget for fiscal 2015, which was sent to lawmakers today, includes a measure to boost the U.S. share, or quota, at the Washington-based IMF by shifting about $63 billion from an existing credit line. After a failed attempt to include the increase in a January spending bill, the Treasury Department now says it would help bolster the fledging Ukrainian government.
“We are working with Congress to approve the 2010 IMF quota legislation, which would support the IMF’s capacity to lend additional resources to Ukraine,” Treasury Secretary Jacob J. Lew said in a statement today that pledges $1 billion in loan guarantees to the country.
The U.S. is holding up a 2010 agreement by all of the IMF member countries to double the fund’s lending capacity to about $733 billion. The package would also give emerging markets such as China more clout at the institution, which was set up at the end of World War II to help ensure the stability of the global monetary system.
Ukraine finds itself at the center of the worst standoff between Russia and the West since the end of the Cold War.
A measure in Congress containing the loan guarantee may provide a more immediate vehicle for the administration to try to get lawmakers’ approval for the IMF request, said Edwin Truman, a former assistant Treasury secretary for international affairs in the Clinton administration.
The Obama administration is facing pressure from other countries to meet its international obligations before a meeting of IMF member countries next month in Washington, he said.
“Adding the IMF legislation provision to that would be something that could be negotiable,” said Truman, now a senior fellow at the Peterson Institute for International Economics in Washington. “I assume Secretary Lew and the White House have actually actually talked to the Republican leadership as well as the Democratic leadership about their broad strategy.”
House Majority Leader Eric Cantor indicated an unwillingness to support a Ukrainian aid measure that included IMF quota changes.
“I believe there is bipartisan support for such assistance, but we must make sure it is done responsibly and any legislation is not delayed by adding divisive provisions,” he said in a statement yesterday.
The divisive provisions would include IMF funding, according to a Republican leadership aide who asked for anonymity to comment on private discussions.
Countries from the U.S. to Germany to Japan say the IMF will lead an international assistance package being put together for Ukraine’s transition government. A delegation from the fund today started a review of the country’s needs.