Washington, 4 March 1989 (RFE/RL) -- Senior U.S. financial officials have repeated their call for congressional approval of Washington's share of the increase in membership quotas in the International Monetary Fund (IMF).
Federal Reserve (Central Bank) Chairman Alan Greenspan, Treasury Secretary Robert Rubin and Deputy Treasury Secretary Larry Summers said the U.S. share of the 45 percent quota increase of around $14.5 billion is a small price to pay for global financial stability.
In addition to the quota, or membership fee increase, the U.S. has promised to contribute another nearly $4 billion for the special lending facility assembled by richer nations as an emergency resource for the fund. The New Agreements to Borrow (NAB) is an increase over the old General Agreements to Borrow (GAB) with additional nations joining the pool.
But there is opposition in the U.S. Congress to approving the promised funding. North Carolina Republican Senator Lauch Faircloth told the officials at a Senate Appropriations Subcommittee hearing Tuesday that he opposes the IMF because it has "wavered and vacillated around the world," allowing errant countries to do what they want while getting IMF loans.
Subcommittee chairman, Senator Mitch McConnell (R-Kentucky), agreed, saying he thought IMF Managing Director Michel Camdessus, in his recent meeting with Russian President Boris Yeltsin, had dramatically eased the conditions of the IMF's long-term loan and lengthened the program by a year to make it easier. Bennett charged that this was done even after Russia had not met the conditions of the loan.
Summers, the administration's lead official dealing with the fund, strongly disagreed with McConnell's characterization of what happened in Moscow.
"The Russians had not met the conditions for the disbursement of a tranche," said Summers, adding that only the IMF Board of Executive Directors can decide to release a drawing.
Further, he said, the authorization for release of the next tranche in the Russian loan program won't come until an IMF staff team thoroughly reviews the situation beginning later this month.
What Camdessus did tell Russian officials, said Summers, is that assuming the country comes back into compliance, he was prepared to have Russia in the IMF program into 1999. "He didn't indicated that any money that was owed could be deferred in its repayment," said Summers, "he only held open the prospect of an IMF program being continued into 1999."
Russia's experienced was also cited in the fund's handling of the current Asian financial crisis. In response to senators' concerns that the IMF might disburse the next payment planned for Indonesia this month even though it has not been following the reforms, Summers said the IMF has cut off funds before.
"In Russia, at several points in the last four years, the IMF has cut Russia off and has said that until they came back on track, there would be no further disbursements."
He said that while Russia still has a number of problems to deal with, the fact is that "in a way it looked extraordinarily unlikely three years ago,(but) Russia has now achieved a stable currency."
IMF conditionality, he said, has been "quite effective" in keeping Russia working on its reforms.