Washington - AFP
Crucial reforms of the International Monetary Fund were left hanging Wednesday after the US Congress failed to endorse them in the final budget legislation of the year.
The IMF had held out hopes that the reforms, backed by the White House but needing Congress to ratify them, would be accepted in the huge budget bill that was under discussion this week.
But the bill that emerged from tough negotiations between Democrats and Republicans late Tuesday night excluded the reforms.
Already two years late, the reforms to the Fund's membership quota system -- essentially its shareholding -- are needed to both strengthen the global crisis lender's funding and also give emerging economies like China and Russia greater say in it.
Washington officially supported the reforms in 2010 when they were formulated.
As the IMF's largest single shareholder by far, the US ratification is essential to get the necessary endorsement of 85 percent of the membership by voting power.
Fund officials said earlier that they had been encouraged to wait to the end of this year, after the November Congressional elections, for a possible ratification.
In October, IMF Managing Director Christine Lagarde jokingly promised to perform a belly dance in front of Congress if it gave its official approval.
"I will do belly-dancing, if that's what it takes to get the US to ratify," she said.
But continued Republican opposition, both to giving the IMF more funding and also to allowing even a slight watering-down of US influence in the body, again left the reform endorsement out of the final legislation of the year.
The current Congress session ends Thursday.
The IMF declined to comment Wednesday on Congress's lack of action and what the Fund would now do.
Pressure has steadily mounted for changes to the US-Europe-Japan domination of the 70-year-old IMF, to reflect huge shifts in the global economy.
Earlier this year China, Russia, Brazil, India and South Africa moved to set up their own World Bank-rival development bank, and an emergency financing facility to rival the IMF's.
The IMF had said it will be forced to move on alternative options for rebalancing quotas and increasing Fund resources if the US endorsement did not come by year end.
The Fund is now expected to hold a board meeting as early as January to weigh the so-called "Plan B," though what exactly its options are -- given they would also likely need US support -- are not known.