Don’t Count the IMF Out on the Hill

As expected, the president’s budget includes a request for Congress to approve US participation in the 2010 IMF quota reform agreement.  There’s a very strong case for approving the request, and I’ll simply point you here, here, and here to read it in detail.  Suffice it to say, the IMF is a bargain for US taxpayers, promoting growth and stability globally in ways that directly benefit the US economy and often working in support of US strategic interests around the world. 

Nonetheless, some are understandably predicting an uphill battle for the IMF request on the Hill.  After all, congressional support for an international financial institution (IFI) in today’s political environment?  Let alone something obscure like “voice and vote reform” at an IFI with a dollar amount in the billions (however misleadingly) attached to it?  Surely, Congress will be indifferent at best, with the potential for  some key actors on the Hill being openly hostile. 

But for those of us who very much want to see the IMF deal go forward, there’s already some good news to consider.  Just a few weeks ago, Congress did in fact approve US participation in voice and vote reform at an IFI.  As it happens, this particular IFI resides on the other side of 19^th Street, NW. 

And while the administration is looking to satisfy its part of the IMF quota deal simply by transferring money Congress already approved in 2009*, US participation in the World Bank’s voice and vote package required entirely new money, to the tune of $278 million in budgetary outlays (over 4 years) and a contingent commitment of over $4 billion for the United States. 

With little fanfare, Congress approved precisely these sums for the World Bank agreement in its wrap up of the FY2013 budget last month. 

Approval of the World Bank deal comes on the heels of congressional action on an unprecedented recapitalization of all of the multilateral development banks in FY2012, which in turn was accompanied by approval of record-level US commitments to replenishments of IDA and the African Development Fund (the soft loan windows of the World Bank and African Development Bank). 

All of these actions belie the notion that today’s Congress is hopelessly gridlocked, hopelessly indifferent to the rest of the world, and hopelessly hostile to multilateralism. 

Now that the administration has made a formal request for the IMF package, I hope and expect that the relevant congressional committees will discharge their duties in the form of oversight hearings, meetings with administration officials, and drafting of legislation. 

Getting it done won’t be easy.  Certainly, approval of the MDB commitments was hard won.  But it was won.  And that’s why I’m ultimately optimistic about how the IMF will fare in this Congress.

_{*Importantly, the administration’s budget request asserts a “zero score” position for the IMF package that may or may not be accepted by the Congressional Budget Office or Congress itself.  According to Treasury’s budget justification, “the net cost of the proposed IMF legislation is zero, both in terms of budget authority and outlays.”  This position is consistent with the historical treatment of US commitments to the IMF over many decades, with the exception of the 2009 commitment to the IMF’s “New Arrangements to Borrow” when Congress for the first time required (over the objections of the administration and many independent observers) that it be scored according to the Federal Credit Reform Act.  I’ll avoid the weedy details of that debate here and simply say that there’s a very strong case for sticking with the longer historical treatment when it comes to scoring, and all the more so in this instance where the proposal simply reallocates a portion of an existing US commitment to the IMF – in fact, the very commitment that Congress budgeted for in 2009.}