Yes we are talking about an update on IMF Executive Board and SDR Quota Reforms which are still pending from so-called agreements made in 2010 !!
On December 15, 2010, the Board of Governors, the Fund’s highest decision-making body, approved a package of far-reaching reforms of the Fund’s quotas and governance, completing the 14th General Review of Quotas. Once the reform package is approved by member countries (it includes an amendment to the Articles of Agreement that requires acceptance by three-fifths of the members having 85 percent of the total voting power) and implemented, it will result in an unprecedented 100 percent increase in total quotas and a major realignment of quota shares to better reflect the changing relative weights of the IMF’s member countries in the global economy.
Basically these reforms put more BRIC/Emerging nations on the Executive Board and increase/realign country IMF quotas thus giving China the third largest quota once approved.
As of September 25, 2012, 109 members having 66.58 percent of total voting power had accepted the amendment.
The final changes cannot go through without the support of the US, which holds 17.69 percent of the voting power. But the US Congress must approve the changes, as they require additional funding for the IMF, and it is highly unlikely to do so before the November presidential and congressional elections.
The Obama administration is lobbying for the support of conservative Republicans in Congress to endorse its pledged contribution to the IMF’s $365 billion increase in its “quotas”, or permanent capital resources, ahead of the Fund’s target date of October. The US is slated to roughly double its current quota level of about $65 billion, though the administration has yet to make a formal request to Congress for it.
“There’s a sort of irony that the country that has initially spearheaded the current reform reform package is now de facto blocking its approval,” Domenico Lombardi, a former IMF board member, told AFP. According to Lombardi, the United States was balking at raising China’s voting power mostly because of “increasing frictions,” especially in the trade arena, between the two countries. But according to several people familiar with the situation, the Obama administration has shied away from putting the reforms to a vote in Congress amid the politically charged run-up to the November 6 presidential and congressional election.
So the USA has not yet approved the amendments and hence are holding up the process ! So what are they waiting for ? Is there more to the story ?
As per my previous article ….
when the US congress approves these amendments there is the potential for a large deflationary event to be unleased upon the globe as IMF SDR Quotas come due. It will be the equivalent of a huge one time global tax on nations, to some degree related to country GDP.
Odds are this approval by congress will not be happening by the IMF’s Annual meeting, this Oct 2012 in Japan, as was previously the goal. The economy is just not ready for it.
So what we might instead see, in the near term, is another “allocation” of SDRs to help some of the poorer nations actually pay for their new quotas when they finally come due ??!! Does that make sense ? Create (or in IMF lingo allocate) SDRs so that nations can use or even borrow another nation’s SDRs to pay for their new SDR quotas ? Would that work ?
The games new world order governments might play ?!