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IMF begins work on 'Plan B' as US blocks reforms
[WASHINGTON] The International Monetary Fund said Wednesday it would begin working on alternatives to its stalled, five-year-old reform program after passing another year without the required ratification by the US government.
In a proposal mapped out by the IMF executive board, the global crisis lender will take six months to see what can be salvaged from the 2010 reforms, originally backed by Washington, the IMF's largest shareholder, but now blocked in the US Congress.
The IMF did not say what the so-called "Plan B" could entail. And it appeared hopeful that the 2010 package, which doubled IMF funding and increased in a small way the voting power of emerging economies like China, could be completed.
But the 24 member executive board said in a statement to the broader board of governors of the Fund that it "deeply regrets" that the 2010 reforms remain blocked, adding that this has caused it to miss deadlines in work on a subsequent, more sweeping quota review.
The executive board proposed taking until June 30 to come up with new measures "that represent meaningful progress towards the objectives of the 2010 reforms." The United States, as one of the key founders of the IMF and the world's largest economy, controls 16.7 per cent of voting rights in the Fund.
That gives it an effective veto over any major initiative, as reforms require 85 per cent of total voting power to pass.
The Obama administration has repeatedly pressed Congress to pass the reforms, which were adopted by the IMF as it sought more funding when Europe began to plunge into financial crisis and the Fund joined the rescues of Greece, Ireland, and Portugal.
But Republican conservatives have blocked any endorsement of the reforms, and since they captured full control of the US legislature in November's elections, prospects for ratification have worsened.
The executive board stressed in a statement Wednesday that it does not see the alternative measures of Plan B as any replacement for the plan decided five years ago.
"The proposed resolution stresses that such interim steps should not in any way be seen as a substitute for the 2010 reforms, which remain the highest priority," it said.
But it also gave no hint as to how it hoped the 2010 package would be implemented.