FOCUS-U.S. Congress readies deal on IMF
Sunday October 11, 6:47 pm Eastern Time
(Recasts throughout)
By Adam Entous
WASHINGTON, Oct 11 (Reuters) - Congressional Republicans on Sunday
hammered out a draft agreement to free up $18 billion for the International
Monetary Fund, but were unlikely to finalize the deal until other budget disputes were settled.
''It's done,'' one Republican aide said of the IMF funding and reform package under negotiations with the White
House.
But another negotiator said funding for the IMF was caught up in the contentious battle over an end-of-session
spending package. ''It's not a deal until everything's a deal,'' he said.
An agreement handing over $18 billion to the cash-strapped lending agency would be a major victory for the
White House, which is desperate to shore up confidence in the IMF's finances so it can tackle the spreading
global economic crisis.
That crisis has swept across Asia and Russia to Brazil and other Latin American nations and has thrown world
financial markets into turmoil.
Republicans are seeking several lending and policy reforms at the IMF in exchange for the $18 billion requested
by the White House. Specifically, Republicans want the IMF to lend at closer to market rates, to trim loan
maturities and to publish detailed summaries of its secretive board meetings.
The administration had warned that some of these demands would be impossible to implement at the IMF, which
reports to 182 governments, not just the United States.
The draft of the latest Republican plan was not immediately available. But negotiators said it would give the IMF
greater leeway on loan rates and maturities, while yielding to other Republican reform objectives.
U.S. Rep. Sonny Callahan, a top Republican negotiator, said a compromise was imminent. Rep. David Obey, a
top Democrat in negotiations, was also optimistic a deal would be announced soon. ''You can see a solution to
that on the horizon.''
The $18 billion package has already been approved by the Senate. But the money has been held up for months
by the Republican leadership in the House.
Lawmakers plan to wrap the money for the IMF into a catchall government spending package, the subject of
tense negotiations between Republicans and the White House.
''IMF ... is the one area where we're moving much closer to agreement,'' Obey of Wisconsin said after talks with
Republicans.
But a final agreement on the broader spending package that will include the IMF was not expected until later this
week.
Because of IMF rules, other countries are waiting for the United States, the fund's largest shareholder, to pay up
before they chip in their share to replenish IMF coffers, drained by huge bailouts for Russia and three Asian
states.
Under the Republican plan unveiled last week, IMF lending must be at market rates, adjusted for risk. If rates
were increased, Republicans believe countries would have new incentive to stick to sound economic policies
because it would be more expensive to turn to the IMF for a bailout.
Republicans have also demanded that IMF limit lending to 12 months, to wean countries quickly off the dole. But
House Majority Leader Dick Armey, a Texas Republican, said the leadership was flexible on maturities.
The Republican plan would require greater openness at the IMF, including public release of summaries of
executive board meetings and internal IMF documents on loan agreements. The IMF already releases information
about loans and annual country reviews, but board meetings are held behind closed-doors and the discussions
are kept secret.
The Republican proposal would also create an advisory commission to report to Congress on the future roles and
responsibilities of the IMF, the World Bank, and the World Trade Organization.
''The reforms are necessary,'' Armey told ABC television on Sunday. ''The IMF can have American tax dollars
if the IMF is responsible and productive in the world economy.''
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