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US backlash against more funds for IMF

In the wake of the 2008 financial crisis, the Obama administration helped negotiate a plan to give emerging economic powers increased say at the International Monetary Fund, while also having them contribute more to an enlarged pot of money for the fund.

world Updated: Mar 07, 2012 23:52 IST

In the wake of the 2008 financial crisis, the Obama administration helped negotiate a plan to give emerging economic powers increased say at the International Monetary Fund, while also having them contribute more to an enlarged pot of money for the fund.

But a brewing election year fight with congressional Republicans has put that plan in doubt and could restrict the IMF's finances at a time when agency officials say they need a substantial boost to protect the world economy.

The dispute centers on Republican opposition to increasing the United States' financial contributions to the agency, reflecting anger over IMF rescue programs in Europe that some GOP lawmakers argue have become too expensive and have put US taxpayers at risk.

The cost to the United States of the European rescue programs is debatable. Some of the money provided to the IMF is in the form of loans on which the United States earns interest.

Still, opposition is growing to a permanent increase in US government support for the IMF, as well as to a $100 billion credit line the United States provided in 2009 as part of an international move to help the IMF respond to the global financial crisis. The IMF has been dipping into that credit line for emergency loans to Portugal and elsewhere, and opponents have taken note.

The Washington Post