By Raw Story
Published: April 20, 2009
U.S. President Barack Obama Monday asked Congress to back an expansion of an IMF emergency fund by $500 billion in a move designed to expand its reach to big emerging-market nations.
Obama also asked lawmakers to approve a U.S. contribution to the fund to $100 billion, as part of the plan to swell International Monetary Fund reserves agreed at this month’s Group of 20 industrial and developing nations summit in London.
At the G20 summit, “the Germans did not want an EU effort to bail out the banks,” reported the Asia Times. “They wanted the International Monetary Fund (IMF) to bail out a substantial part of the EU financial system instead. The reason was simple: The IMF receives loans from the United States, as well as China and Japan, meaning the Europeans would be joined by others in underwriting the bailout. The United States has signaled it would be willing to contribute $100 billion to the IMF, of which a substantial portion would go to Central Europe. (Of the current loans given by the IMF, roughly 80% have gone to the struggling economies in Central Europe.)”
The president made the request in several letters to Democratic and Republican congressional leaders Monday, pointing out that the fund didn’t require an extra financial outlay from the U.S.
When Washington transfers funds to the IMF under the program, known as an expansion of the New Arrangements to Borrow, or NAB, it would receive interest bearing assets in return, backed up by IMF resources including gold stocks.
“Our proposal to increase U.S. participation in the NAB by up to $100 billion as part of an overall increase of $500 billion was warmly endorsed by the G20 Leaders,” the letters said.
“I am asking for your help to deliver on that commitment by supporting inclusion of the NAB and related IMF proposals in the most timely legislative vehicle that will enable the United States to act quickly,” Obama wrote.
“Rapid progress is essential to the restoration of confidence in the global economy and financial system so that the global economy can emerge from recession to recovery and to sustained growth.
The IMF was the main beneficiary at the Group of 20 London summit where leaders agreed to triple its war chest to $750 billion by adding $500 billion, some of it already pledged.
“Mexico became the first to win approval for the new credit line Friday, gaining access to a record 47 billion dollars,” reported the Economic Times.
“The IMF’s 47-billion-dollar credit line to Mexico was the largest financial arrangement in the 64-year-old institution’s history.”
“Other potential candidates for an IMF credit line are Brazil, Chile, South Korea, the Czech Republic and Singapore,” the Times continued.
“In a letter to U.S. congressional leaders, Obama said the U.S. funding ‘does not represent a budgetary expenditure or any increase in the deficit since it effectively represents an exchange of assets,’” reported Reuters.
Obama made the request in letters to two Democrats: House of Representatives Speaker Nancy Pelosi and Senate Majority Leader Harry Reid; and Republican House Leader John Boehner and Senate Minority Leader Mitch McConnell.
Compiled by Stephen C. Webster.
With AFP.
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