FreedomWorks Deplores IMF Funding

Washington, DC – Due to its promised share of the G-20’s $500 billion increase in the IMF’s New Arrangements to Borrow (NAB), The Obama administration is seeking $108 billion in new resources for the International Monetary Fund (IMF). Under such legislation, so the story goes, the IMF would then be able to expand its ability to lend to troubled economies.

By granting new resources at the request of the administration, the U.S. Congress would be granting unprecedented power to the IMF. Given the current status of the global financial system, this marks a rather troubling departure from the traditional role the IMF has played since its formal inception in 1944.

In addition to the $500 billion NAB supplement, the G-20 also agreed to $250 billion in Special Drawing Rights (SDRs) to member countries as well as a new, unrestricted Flexible Credit Line (FCL) for member states that pre-qualify with “good” economic policies. Under the combination of the FCL and SDRs, the IMF creeps eerily closer to what amounts to an international central bank with unconditional lending powers, yet it is without any regulatory authority. As a result, while the IMF can lend to well-intended beneficiaries like Poland and Hungary, it is also free to dish out even more—due to its system of quotas—to malevolent states like Iran and Venezuela.

FreedomWorks encourages all members of Congress to deny the passage of any bill that grants such unnecessary influence to an obsolete international institution at the expense of the American taxpayer. The IMF no longer serves the purposes it was initially intended, and in its new role, questions regarding the political and financial legitimacy of the institution should be raised.

FreedomWorks President Matt Kibbe attacked such a new role for the IMF: “Should such legislation pass, it would effectively remake the IMF. This is not your grandfather’s IMF. The IMF was already revamped after crisis of the ’70s, but what is now being supported by the administration is more than asinine, it borders on illegality. That an honest, taxpaying American must send his hard-earned dollars to finance a nuclear-aspiring rogue state such as Iran or big government thugs like Hugo Chavez is difficult to imagine.”