Lew presses Congress to approve IMF reform

US Treasury Secretary Jacob Lew on Thursday urged Congress to approve IMF reforms, the crucial step needed to answer developing countries' cry for greater representation at the global lender.

The International Monetary Fund, as well as multilateral development banks, are "indispensable partners" in creating the most favorable foreign environment for US jobs and businesses, Lew said in prepared testimony for a House of Representatives committee hearing.

"Our investments in these institutions foster a more stable and vibrant global economy, which is critical to a growing US economy. That is why it is so important that Congress acts to approve IMF quota and governance reform," he said.

The Treasury chief, appearing before the House Financial Services Committee, highlighted that approval of the IMF quota and governance reforms proposed in 2010 would "preserve the US veto" at the global lender without increasing the nation's financial commitment to the IMF.

The failure of the United States, the largest stakeholder in the IMF, to approve the reforms has been the major stumbling block for developing countries to achieve a greater say in the Washington-based institution.

Emerging-market economies, including China and Brazil, have complained for years that their relatively small voting rights in the institution insufficiently reflect their real power in the world economy.

Lew's appeal to the Republican-controlled House panel came as Republicans seek deeper cuts in spending to rein in the country's budget deficit.

Lew reminded lawmakers that President Barack Obama's administration already had provided draft legislation to reduce US participation in the New Arrangements to Borrow, the IMF's crisis lending fund, and simultaneously increase the size of the US quota in the IMF.

Once Congress acts, the US quota in the IMF will increase by approximately $63 billion, and the US commitment to the NAB will decrease by an equal amount, he noted.

"Without these reforms, we risk a loss of US influence in the IMF as other countries seek to enhance their stature outside of the IMF's quota-based financial and governance structures," he said.