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 The inability to proceed with giving emerging markets a more
powerful voice at the IMF and shoring up the lender's resources
appeared the most contentious issue for officials from the Group of
20 leading economies and the representatives for all IMF member
nations who met with them.
In a final communiqué, G20 finance ministers and central bankers
said they were "deeply disappointed" with the delay.
"I take this opportunity to urge the United States to implement
these reforms as a matter of urgency," Australian Treasurer Joe
Hockey told reporters on the sidelines of the IMF-World Bank spring
meetings.
The reforms would double the Fund's resources and hand more IMF
voting power to countries like the so-called BRICS — Brazil, Russia,
India, China and South Africa.
The U.S. Congress has refused to sign off on the overhaul, which was
agreed to in 2010, and the failure overshadowed even the crisis in
Ukraine and the spillover effects of ultra easy monetary policies in
advanced economies in the discussions.
Some Republicans have complained the changes would cost too much at
a time Washington was running big budget deficits. The reforms also
ran afoul of a growing isolationist trend among the party's
influential Tea Party wing.
If Washington does not ratify the reforms this year, the G20
advanced and emerging economies said they would ask the IMF to
develop possible next steps.
A source said Brazil had pushed for a harder line. It wanted to
require the Fund to begin work now to determine options to be
implemented if the United States failed to act, a notion that was
floated in an early draft of the communiqué.
"The end of the year for me is the final limit," Guido Mantega, the
Brazilian finance minister, said later through a translator. "Four
years waiting for me is just too much."
U.S. ELECTIONS LOOM
There are a handful of ad hoc measures officials can take to achieve
at least some of the governance overhaul for the global lender
without formal U.S. approval. But Singaporean Finance Minister
Tharman Shanmugaratnam, who is head of the IMF's policy committee,
said it was too early to talk about alternatives.
"We have every reason to think the 2010 reforms will be passed by
the U.S.," he said, adding that a failure to pass them would affect
the Fund's credibility and effectiveness because, for now, it was
relying on borrowed resources.
Earlier on Friday, Russian Finance Minister Anton Siluanov said
developing nations may demand changes to the IMF's emergency
borrowing mechanism if the United States does not approve the
overhaul.
Still, giving the Americans until year-end puts the deadline beyond
U.S. midterm elections in November, and some officials said the U.S.
Congress would find it easier acting then.
U.S. Treasury Secretary Jack Lew said the Obama administration would
do its best to push IMF quota reforms through the U.S. Congress this
year. "We will keep taking steps to get this done," he said at a
news conference.
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UKRAINE, RUSSIA; MONETARY POLICY
The G20, which is careful to focus on economics and not politics,
said it was monitoring the crisis in Ukraine for any risks to
economic and financial stability.
Ukraine's economy was thrown into chaos after popular protests in
Kiev ousted pro-Russian president Viktor Yanukovich, and Russia
seized Ukraine's Crimea and annexed it, causing the worst standoff
between Moscow and the West since the Cold War.
Despite the simmering international standoff, Australia's Hockey
said there were "no tensions at all" on the issue and "goodwill" in
the G20 meeting room.
"There was just recognition in the general discussion about
geopolitical risks around the globe; there wasn't a specific
discussion of Ukraine," said Hockey, who coordinated the meetings
under Australia's G20 presidency.
Russia, a G20 member, was not specifically mentioned in the
communiqué. The G20 source said there were no discussions of
sanctions on the country, which has already been hit with U.S. and
European Union sanctions.
German Finance Minister Wolfgang Schaeuble said top finance
officials from the Group of Seven developed nations, who met on
Thursday, were resolved to work together to defuse the crisis, and
that Russia must be a part of the solution.
"We were all agreed that we must solve this problem together," he
told reporters, adding that Russia must be part of the solution. "We
don't want to make this difficult for Russia," he said.
Hockey said he expected Russia would attend G20 leaders summit in
November.
The G20 communiqué did not explicitly mention monetary policy, and
it dropped a reference from the group's February statement that
stressed central banks should be careful in withdrawing stimulus.
Nevertheless, the nations pledged to provide "clear and timely
communication" of their actions, with an eye on the global fallout
as policies are "recalibrated."
The gradual withdrawal of the U.S. Federal Reserve's aggressive
monetary accommodation has rocked the currencies of emerging
economies like India and Argentina, as investors en masse have
sought out higher-yielding markets.
(Reporting by Reuters' G20/IMF team; writing by Jonathan Spicer;
editing by Paul Simao, Tim Ahmann and Dan Burns)
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