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Congress Deals IMF Major Setback

© Bryan Johnson

[ Editor's Note: Last week's article addressed the growing skepticism among policymakers in the U.S. Congress over providing some $18 billion in new funds for the International Monetary Fund. Shortly after publication, the U.S. House of Representatives provided the IMF with a major legislative defeat. This article analyzes that defeat. Also, see my earlier article on the Bretton Woods system and the International Monetary Fund.

The U.S. Congress stripped the $18 billion Clinton Administration request for the International Monetary Fund (IMF) from an emergency spending bill on April 23, marking the first major legislative defeat since Congress began considering the funding last year. Called a "supplemental" spending bill, the legislation would have provided some $18 billion in new funding for the IMF, something the Clinton Administration has called a "high priority" for this legislative session.

The U.S. reaction to funding the IMF is important because much of the IMF's future is riding on America's reaction to this funding issue. For example, the IMF is not just requesting $18 billion from the U.S., but is asking for a 45 percent increase in donations from all 182 members of the IMF. Many countries are watching the U.S. to see how much the IMF's largest donor is dedicated to the 50 year old institution. Some IMF watchers already are claiming that if the U.S. votes down the funding request, other countries will follow suit - leading eventually to diminishing IMF influence and membership.

Indeed, the IMF has its critics in the U.S. (see: Bretton Woods Revisited: The IMF which details criticism from the right and the left). Recent attempts to pass legislation funding the IMF bear this out:

The U.S. Senate recently passed a supplemental spending bill that includes funding for the U.S. peacekeeping missions in Bosnia and the Middle East, disaster relief for storm victims here in the U.S., and the IMF. However, the House broke these funding requests into two separate supplemental bills. The first including funding for Bosnia, the Middle East, and disaster relief. The second includes funding for the IMF and $500 million to help pay U.S. arrears to the United Nations (U.N.). In order for any bill to reach the President for signature, it must pass both houses of Congress in identical form (any differences are worked out in a conference committee between House and Senate members, before returning to the floor for final passage in both houses).

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