Tuesday, June 16, 2009

Obama officials lobby lawmakers to approve IMF money

By Susan Cornwell
WASHINGTON (Reuters) - Senior Obama administration officials are lobbying Congress hard to approve $108 billion for the International Monetary Fund ahead of a vote expected this week, according to documents that emerged on Monday.
The U.S. credit for the IMF is attached to a bill funding the Iraq and Afghan wars and is moving to the floor of the House of Representatives, prompting an uproar among Republicans and some Democrats who say they will not vote for IMF funding tagged onto an unrelated bill.
Secretary of State Hillary Clinton and Defense Secretary Robert Gates, along with National Security Adviser Jim Jones, wrote Congress saying the IMF needs the money to confront the global financial crisis, said the Washington-based Center for Economic and Policy Research, which released a copy of the letter.
Their letter noted the IMF had been able to act swiftly to avoid crises in Pakistan and other countries and was supporting U.S. allies like Mexico, Poland and Colombia.
"With adequate funding, the IMF will strengthen our national security by mitigating the economic crisis and inhibiting the growth of terrorist networks," the June 10 letter to congressional leaders of both parties said.
The Treasury Department sent U.S. lawmakers fact sheets to demonstrate why it considers the IMF funding critical, according to the Center.
Failure to pass the IMF legislation would be a major setback for President Obama, who pledged the IMF funds at a meeting of G20 leaders in early April. At that gathering, the G20 committed to tripling IMF resources with a $500 billion boost as more countries hit by the global financial crisis turn to it for emergency loans.
IMF Managing Director Dominique Strauss-Kahn said last week that the IMF had collected nearly all the money pledged to it by the G20 member nations, but he was assuming the U.S. portion would pass.
The U.S. war funding measure will provide a $100 billion credit line to the IMF, increase the U.S. member contribution to the IMF by another $8 billion and authorize the United States to back the IMF's plan to sell 400 tonnes (12.97 million ounces) of gold.
U.S. officials have said the $108 billion package will cost taxpayers $5 billion because it is largely a credit line.
The Center did a study last month disputing this. It estimated the IMF contribution would cost between $16.6 and $26.3 billion, which it calls a conservative estimate that assumed there was no risk of default.
Clay Lowery, former U.S. assistant secretary of Treasury during Bush administration, said while he was not a fan of attaching the IMF legislation to a war funding bill, Republicans should support it.
"I do believe that the substance behind the Obama administration's IMF request is correct," Lowery said in a letter published in the Wall Street Journal on Monday.
"As an assistant secretary of Treasury under a Republican president, I am of the firm belief that Republicans should help the Obama administration show international leadership by supporting the content of the proposal," he wrote.
The Treasury fact sheet sent to lawmakers argued that more loans to the IMF may make money for taxpayers through interest earned on the credit. Continued...
Source: Reuters

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