World finance chiefs give US till year-end to ratify IMF reforms

Russian Monetary policy chief Ksenia Yudaeva, German Finance Minister Wolfgang Schaeuble and Jens Weidmann, president of Germany's Bundesbank, pose for the International Monetary and Financial Committee (IMFC) family photo at the IMF/World Bank Sprin
Russian Monetary policy chief Ksenia Yudaeva, German Finance Minister Wolfgang Schaeuble and Jens Weidmann, president of Germany's Bundesbank, pose for the International Monetary and Financial Committee (IMFC) family photo at the IMF/World Bank Spring meetings on April 11, 2014 in Washington. -- PHOTO: AFP

WASHINGTON (REUTERS) - Finance chiefs from around the globe on Friday gave the United States until year-end to ratify long-delayed reforms to the International Monetary Fund (IMF) and threatened to move forward without it if it fails to do so.

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 (G20) leading economies and the representatives for all IMF member nations who met with them.

In a final communique, 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 US 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 communique.

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 US approval. But Singapore's

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 believe that the US will act responsibly, in its own interests...in the global order, and will act responsibly as the leading shareholder of the IMF and as a member of the international community," he said.

"(It's) too early to talk about alternatives now. We have every reason to think the 2010 reform will be passed by the US."

Earlier on Friday, Russia's finance minister 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 US midterm elections in November, and some officials said the US Congress would find it easier acting then.

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, Mr 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 Mr Hockey, who coordinated the meetings under Australia's G20 presidency.

Russia, another G20 member, was not specifically mentioned in the communique. The G20 source said there were no discussions of sanctions on the country, which has already been hit with US 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.

Mr Hockey said he expected Russia would attend G20 leaders summit in November.

The G20 communique 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".

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