Mon Mar 17, 2014 7:45pm
(Reuters) – Approval of reforms at the International Monetary Fund is key to helping countries in need such as Ukraine, Brazilian Finance Minister Guido Mantega said on Monday, in a call for Washington to ratify changes agreed upon in 2010.
Speaking to reporters after meeting U.S. Treasury Secretary Jack Lew in Sao Paulo, Mantega said the so-called quota reforms are essential to build up the global lender’s war chest. The quotas represent the size of a country’s stake in and financial contribution to the IMF.
Brazil and other big developing economies including China and Russia have expressed frustration at the U.S. Congress’ failure to ratify a package of reforms that would increase their influence in the IMF.
“We need to conclude (the reforms) so that we have a new distribution of quotas and to strengthen the IMF,” Mantega said.
“It is important that we keep strengthening the IMF so it can fulfill its role of helping countries in need, like Ukraine.”
Russia is pushing the IMF to move ahead with the reforms without the United States, in a direct challenge to the fund’s largest shareholder, which has veto power over major decisions.
Russian pressure comes at a time of tensions between the former Cold War foes over Ukraine’s move away from Moscow’s control. The United States and Europe imposed sanctions against high-ranking Russian officials on Monday after Moscow backed a referendum in Crimea over the prospect of breaking away from Ukraine.
Although Brazil has not taken a position on Russia’s attempt to isolate the United States at the IMF, it has insisted that Washington honor its 2010 promise to approve the reforms.
Lew said he expressed to Mantega that IMF quota reform was a priority for the Obama administration. He also echoed Mantega’s comments about a strong IMF’s importance to countries like Ukraine.
“I emphasized the imperative of passing IMF governance reform legislation so the fund can continue to support emerging markets and economic stability worldwide,” he said.
A prolonged delay in adopting the reforms could further roil relations between Brazil and the United States after last year’s revelations that the U.S. National Security Agency had spied on President Dilma Rousseff’s personal communications.
If the United States fails to ratify the reforms by April, Brazil and other emerging nations could explore ways to get them adopted, Brazilian officials have said.
The Obama administration has been trying to get Congress to sign off on IMF funding changes that would alter the composition of the Fund’s board and make China its third-largest member and give emerging nations such as India and Brazil more say.
To ease approval, the Obama administration plans to attach the funding to a financial aid package for Ukraine now under consideration in Congress.
The delay has stalled talks for more reforms to overhaul the way the IMF calculates its membership quotas, potentially giving even a bigger stake to emerging nations.