Perky,
Speaking of the IMF it looks like there may be emerging and agreement on continued funding. As am IMF critic I am curious as to your thoughts on the outlined compromise.
Best,
Stitch
reprinted for personal use only:
GOP Leaders Lays Out Proposal
For $17.9 Billion in IMF Funds
By GREG HITT and BOB DAVIS
Staff Reporters of THE WALL STREET JOURNAL
WASHINGTON -- Congressional Republicans laid out what they portrayed as a compromise that could clear the way for full U.S. funding of the International Monetary Fund, but it's far from clear whether the Clinton administration will agree to the terms.
Significantly, GOP leaders want to link $17.9 billion in new funds for the IMF to certification that other major donors to the institution, not just the U.S., are pursuing congressionally mandated changes. The proposal emerged Thursday as Treasury Secretary Robert Rubin conferred with Republicans on Capitol Hill. Among other things, GOP leaders are insisting that the IMF cut back on subsidized lending and limit the length of loans to one year.
"We've got a constructive suggestion," said Mr. Rubin, before retreating to the White House to brief President Clinton.
Under the proposal, none of the new funds approved by Congress would be released to the IMF until after the Treasury secretary and the Federal Reserve chairman certify in writing that "the major shareholders of the fund have publicly agreed to and will act to implement" the detailed package of congressional changes.
"I thought the initial response was very encouraging," said House Majority Leader Richard Armey (R., Texas).
Renewed Clinton Appeal
At the White House, Mr. Clinton renewed his pitch for approval of the IMF funds, while his spokesman, Joe Lockhart, struck a cautionary note about the talks on Capitol Hill. "We've heard some positive sounds over the last few days about getting IMF," Mr. Lockhart said. But "we can't allow a debate on reforms to hold up the important work that the IMF's doing."
The administration, struggling with the global economic crisis, says the funds are needed to ensure that the IMF is able to deal with problems in Russia and Asia, and potentially South America. Of the $17.9 billion requested by Mr. Clinton, $3.4 billion represents the U.S. contribution to an international effort to double an existing IMF credit line to $48 billion. The remaining $14.5 billion would be used to increase the IMF's core capital.
The GOP's proposed conditions are outlined in a 35-page legislative package pieced together over the past several days in meetings coordinated by Speaker Newt Gingrich (R., Ga.). The document reflects midlevel discussions that have already taken place between Treasury officials and GOP staffers, but at its core is a proposal that bows to the Republican Party's influential conservative wing.
Elements of the Plan
Among other things, the GOP proposal would:
Require the fund to charge much higher interest rates, perhaps twice as much as traditionally charged. The proposal would require the rates to be at least three percentage points above the monthly London Interbank Borrowing Rate, or Libor, an internationally recognized benchmark for bank lending. The Libor rate Wednesday was 5.37%.
In a new program for short-term lending that the fund approved in December at the behest of the U.S., the maximum rate is five percentage points over the IMF's traditional rate-meaning about 9%. But the rates under that new program would only reach that point after a number of years.
Require loans for countries in severe distress, suffering "exceptional balance of payments difficulties due to ... a sudden and disruptive loss of market confidence," to be made in shorter maturities and at higher interest rates, providing "an incentive for early repayment and encouraging private-market financing."
Create a special commission to study all international financial institutions, not just the IMF, and recommend long-term reforms. The commission, among other things, would examine "possible mergers or abolition" of existing institutions.
Such advisory committees are a staple of trade agreements. The North American Free Trade Agreement, for example, has a passel.
However, the GOP's proposal to hinge the new U.S. funds on the support of the rest of the Group of Seven industrial powers could be difficult for Mr. Rubin, since it would require the coordination of Britain, France, Germany, Italy, Canada and Japan. The French, in particular, are often resentful of U.S. shows of power and have taken delight in wrecking Clinton administration proposals -- particularly in holding up the world trade talks for years and torpedoing a 1994 U.S. proposal for a new round of trade negotiations.
The IMF negotiations, which convened in Mr. Gingrich's office minutes after House approval of a presidential impeachment inquiry, are part of broader talks between Congress and the White House over spending in the new fiscal year.
Government funding expires midnight tonight, and GOP leaders are expected to send Mr. Clinton a bill that would avoid an interruption in services over the weekend. Some leaders cited concern about shuttering the popular Van Gogh exhibit at the National Gallery of Art. "Have you been there? It's excellent," said House Republican Gerald Solomon of New York.
Congress is inching closer to recessing for the year, and the pace of legislation and lobbying is quickening alongside budget negotiations. Lobbyist Beryl Anthony, a former congressman, is pressing lawmakers to soften a proposed tax increase that would hit First Chicago NBD Corp.'s First National Bank of Chicago unit, a client, congressional aides said. The Senate Thursday sent Mr. Clinton a $93.5 billion bill funding the departments of Housing and Urban Development and Veterans Affairs, while GOP leaders tried to break free a bill that would ensure several thousand legal immigrants won't lose Medicaid and Supplemental Security Income benefits later this year.
Lawmakers also were moving to soften cuts in payments to Medicare home health agencies enacted last year. The agencies say the reductions are draconian and have forced some outfits to shut down.
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