Japan will continue to press the U.S. to accept a 2010 agreement for the International Monetary Fund to implement governance reforms, a deal that will help enhance the voices of emerging economies within the multilateral lender, Finance Minister Jun Azumi said Tuesday.
But Azumi also told reporters that he realizes it is difficult for the U.S. government, the biggest stakeholder in the IMF, followed by Japan, to make any politically sensitive decision ahead of the U.S. presidential election later this year.
“We will try to convince the United States,” Azumi said. Tokyo will host the annual meetings of the 188-member IMF and its sister organization, the World Bank, in October, where the reform issue will be high on the agenda.
But “I understand the political situation in the United States,” while acknowledging he has exchanged views with U.S. Treasury Secretary Timothy Geithner, he added.
Enforcing the reforms will require assent by at least two-thirds of IMF members, accounting for at least 85 percent of total voting power. This means acceptance by major economies is indispensable.
The Diet last year approved the agreement, while the United States has yet to complete its domestic procedures. Germany, the biggest economy in Europe, said Saturday that it expects parliamentary approval by this summer.
“We reaffirm the urgency of making the 2010 quota and governance reforms effective by the 2012 annual meetings, to enhance the fund’s legitimacy and credibility,” the International Monetary and Financial Committee, the policy-setting body of the IMF, said Saturday in a statement after its meeting in Washington.
Emerging economies Brazil, China and India have stepped up calls for swiftly adopting the reforms, showing reluctance on making further commitments to the IMF unless they are given more prominent voices reflecting their growing stature in the economy and their rising financing contributions, known as quotas, to the institution.
In Washington last weekend for the Group of 20 finance chiefs’ meeting, which involved both advanced and major developing economies, Azumi somewhat showed his awareness of those developing members’ frustrations, saying he wanted to “work as a bridge” to send their messages to the IMF.
At the G-20 finance ministers’ and central bank governors’ meeting, the IMF won support to boost its lending power by over $430 billion to brace itself for further financing demands from Europe, as well as from other parts of the world, amid fears of contagion from the sovereign debt crisis in the eurozone.
Tokyo has offered $60 billion in emergency loans to the IMF, the biggest contribution among non-European members.
The group of emerging economies called BRICs — Brazil, Russia, India and China— had been expected to reject calls for such financing demands, given that the resource boost is not directly linked to their influence within the IMF, unlike the 2010 quota and governance reforms.
But at the end of the two-day meeting, the BRICs signaled their intent to endorse the measure, Japanese officials said.