After A Year Of Haggling, IMF To Get $18 Bln From U.S.
October 14, 1998
By MARK H. ANDERSON and JENNIFER CORBETT DOOREN
Dow Jones Newswires
WASHINGTON -- It only took a year, but Congress has finally agreed to
supply the International Monetary Fund with $18 billion in U.S. funding.
"I think I can say, 'yes,"' Senate Majority Leader Trent Lott, R-Miss., said, when
asked late Wednesday if the IMF funding was included in a budget pact just
reached between Republicans and the White House.
The IMF funds will be tied to a series of reforms sought by House Republicans,
who have been critical of the 182-country organization in the wake of the Asian
and Russian financial crisis. The measure will be included in the broader $500
billion spending bill that includes the IMF language.
The Clinton administration first sought part of the funds last fall to shore up the
IMF's coffers shortly after the Asian financial crisis broke loose.
Since then, Russia has joined the fray of economic casualties and the world's
economic woes are spreading to Latin America, where Brazil is likely to receive
the next multi-billion bailout from the 182-country organization.
White House officials and congressional leaders hovered over a deal on the IMF
spending for days, as those leaders struggled with other U.S. domestic spending
issues. While most of the terms of the deal were set days ago, the package was
open for amendment up until the broader spending pact was sealed.
Deputy Treasury Secretary Lawrence Summers, speaking Wednesday on
C-Span, said the package "reflect's everybody's preferences." He added the
funding approval "enables us to strengthen global economies, which in turn
strengthens our economy."
The conservative Republicans, led by House Majority Leader Richard Armey,
R-Texas, ignored senators' pleas for urgency on the funding, twice overlooking
Senate approval of the $18 billion request tied to more moderate reforms.
"We must have these reforms or there cannot be any increase in funding," Armey
said.
Republican persistence paid off. The IMF funds come with a stiff price.
The reform package, according to a recent draft, would require the IMF to alter
its lending practices. Not only will loan maturities be reduced to between 1 and 2
1/2 years, but those loans must also be made at 3% above LIBOR. The IMF
board must also disclose more information about its meetings as well as
information regarding lending practices.
The Treasury Department, through a new commission that includes members of
Congress, must confirm that other IMF member countries support the reforms
and that the organization is following through with them.
The plan also retains language from earlier Senate action on the IMF funding,
barring IMF funding to South Korea if the government plans to use any of the
money to subsidize local industries, including semiconductor, automotive,
shipbuilding, steel and textile companies. South Korea has already received a
large bailout package tied to the Asian crisis.
As the IMF talks came to a head last last week, Treasury officials signaled to
Republicans that they were willing to accept the broader reforms and were
working with other key countries, such as those in the G-7, to vet the reform
requirements.
This week, jockeying over the package has focuses on the minutia of the IMF
package. After Rubin met with top GOP leaders Tuesday, officials on both sides
of the issue said the final pact was subject to only a handful of words.
"There's a general expectation that we need full funding for the IMF," Treasury
Secretary Robert Rubin said, adding that funding would include "real reforms."
Congressional scrutiny of the IMF isn't likely to end with this agreement. Some
Republicans in the House are characterizing the IMF package as a first step in
attempting to alter how the organization does business.
"We have begun a very serious discussion of this institution," said Rep. Jim
Saxton, R-N.J., promising that he, Armey and others will continue to push for
changes at the IMF when Congress returns next year.
-By Jennifer Corbett Dooren and Mark H. Anderson;202-862-9230 |
