Newspaper article The Christian Science Monitor

IMF Quotas Tangled in Election Politics

Newspaper article The Christian Science Monitor

IMF Quotas Tangled in Election Politics

Article excerpt

`THE Bush administration is dominated by a short-run political mentality and putting in danger the foreign policy successes of the last few years," says John Sewell, president of the Overseas Development Council, a Washington think tank.

This charge is similar to that made this week by former President Richard Nixon. Mr. Nixon wrote of the "pathetically inadequate response" of the United States to the opportunities and dangers arising from the crisis in the former Soviet Union.

Mr. Sewell is concerned with the failure of the administration to fully back its own legislation increasing the "quotas" of the International Monetary Fund. That quota increase would enable the IMF to make loans to Russia and the other former Soviet republics to help them through their economic transition to a sounder economy - provided that those republics carry out various fiscal, monetary, and social reforms.

The IMF has always been tough in the conditions it has attached on loans to various nations with international payments difficulties. Riots in Egypt and elsewhere attest to that hard-nosed effort to prevent its loan money being wasted. In recent times, those conditions can include social matters. If Russia is to get a loan, it likely will require its government to implement an adequate safety net for, say, pensioners that have been hard hit by high inflation. In Venezuela, the IMF has been pushing for a more equal distribution of income by insisting that the taxation system enforce adequate taxes on the well-to-do. In many Latin American countries, the rich are experts at dodging taxes.

So we have a new phenomena - the IMF as a social reformer.

The governors of the IMF, with US backing, adopted a resolution in June 1990 providing for a 50 percent increase in the total of members' quotas from 90.1 billion special drawing rights (a type of international credit) to 135.2 billion SDRs (about $190 billion). These national quotas provide funds to the IMF for making loans to nations in financial trouble.

Under the plan, the US would need to ante up another $12.2 billion. With this money and that provided by others among the 156 IMF members, the fund could lend as much as $14 billion to Russia and the other republics. …

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