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Congressional Committee Averts Full IMF Funding

© Bryan Johnson

[ Editor's Note: This is the 15th article on the IMF to appear in Political Economy. This series of article has been tracking the progress of the IMF funding request. For previous articles on the IMF, see Bretton Woods Revisited: IMF; Congress Gears Up For IMF Funding Debate; Congress Deals IMF Major Setback; IMF Skepticism Grows in Congress; New IMF Strategy Emerges in Congress; Congress Tackles IMF Tax Subsidy Issue; American Farmers Fall In Love With IMF; Congress Requests More Information on IMF ; Congress Moves Closer to IMF Funding ; Russia Likely to be next IMF Recipient ; A Checklist of IMF Reforms ; and IMF Dealt Second Major Setback; GAO: IMF Not in Liquidity Crisis>; and Congress Moves to Approve Funds for IMF>- Editor - BTJ .]

On Thursday, the House Appropriations Committee of the U.S. Congress passed legislation providing some funds for the International Monetary Fund. While the U.S. Senate passed legislation last week providing some $18 billion in new U.S. funds for the IMF, the House bill provides only partial funding. Indeed, this is essentially the same bill that the House foreign operations sub-committee marked up several weeks ago. However, it was assumed then, that the House Appropriations chairman, Bob Livingston (R-LA) would move to restore the entire $18 billion when the bill was taken up in full committee.

Indeed, Livingston made an attempt to do so before the August Congressional recess. However, as reported earlier, that attempt failed (see: IMF Dealt Second Major Setback Still, as late as Wednesday, there were indications that the House Appropriations chairman would cave into pressure and support a bill that provides the full $18 billion.

So much so, that on Wednesday, Senate Appropriations Chairman, Ted Stevens (R-AL), a supporter of the IMF, told reporters that he was assured by key House Republicans that the House will pass full IMF funding. However, those assurances unraveled late Wednesday night when news about Russian Yeltsin advisor Anotoly Chubais' comments about how he helped Russia, "con the IMF" out of $20 billion in the last IMF Russia bailout hit Washington.

Apparently, Russian newspapers quoted Chubais saying that he had, "conned the IMF" to obtain an IMF loan for Russia earlier this summer. This resulted in a barrage of Dear Colleague letters from IMF proponents in the House to undecided members urging them not to support full funding for the IMF. Most notably, House Majority Leader Dick Armey (R-TX) sent a letter stating, "I commend the committee for drawing the right conclusions from the failure of the Russian bailout and voting to restrain an expansionary IMF...The Russian experience of the last several weeks is the strongest evidence yet that the IMF is a destabilizing force in international financial affairs. By spreading the idea that Russia was `too big to fail,' the IMF helped ensure that the Russian failure would be far bigger than it needed to be..."It certainly didn't help matters when a top Russian official openly boasted that he helped swindle the IMF - and, by extension, the taxpayers from member countries - out of $20 billion."

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