The International Monetary Fund said on Friday its 189 member countries had agreed to maintain the IMF’s $1-trillion in total lending resources while delaying changes to its shareholding structure to as late as December 2023.
The move ends a deadlock with the United States, which had opposed shareholding changes that would give a bigger voice to China and other large, fast-growing emerging markets in a review process that was due for completion this year.
IMF Managing Director Kristalina Georgieva announced the decision at the Fund’s and World Bank’s annual meetings, saying that the initiative will provide confidence that the IMF can adequately support member countries as they deal with slowing global growth.
The U.S. Treasury, which holds an effective veto over major Fund decisions, had endorsed the move.
At IMF and World Bank meetings in April, U.S. Treasury Secretary Steven Mnuchin said that he opposed increasing overall funding and shareholding quotas, but wanted to maintain the IMF’s lending power.
“In our view, the IMF currently has ample resources to achieve its mission,” he said at the time.
A Treasury spokesman could not immediately be reached for comment on Friday.
The IMF’s steering committee endorsed the decision, which calls for completion of a package to ensure that the fund maintains its lending resources.
The IMF’s $250-billion crisis fund, the New Arrangements to Borrow, first launched in 1998 and massively increased during the financial crisis a decade later, was due to expire in 2022. Bilateral lending arrangements, totalling about $440-billion, were due to expire at the end of 2019.
The agreement struck on Friday will extend the IMF’s current bilateral arrangements until the end of 2020, providing time for governments to approve a longer-term renewal of these as well as the crisis fund.
The move by the IMF will “preserve its role at the centre of the global financial safety net,” Lesetja Kganyago, IMFC chairman and Reserve Bank of South Africa governor, said in a statement.
“The IMFC will continue to work to ensure that the IMF has sufficient resources and that its governance appropriately reflects developments in the global economy and its membership,” Kganyago said.
But the deal puts off a reckoning over how the growing influence in the global economy of China, Brazil and India will be reflected in the governance of the IMF.
The IMF’s bylaws drafted at the end of World War Two require the Fund to be headquartered in the world’s largest economy – which may require a shift in coming decades based on forecasts that China’s GDP will eventually exceed that of the United States.
IMF members last altered quotas in 2010, agreeing to increase China’s and other emerging markets’ voting power and shrinking that of European countries. But the changes were not implemented until 2016, in part due to approval delays by the U.S. Congress.