Friday, November 14, 2014

Daily Nation: Republican Win Could Derail IMF Reforms

Here we have a new article  in Daily Nation that quotes  a former IMF official as saying what we have said here. That being that the GOP November election wins make it much less likely that the 2010 IMF reforms will be approved by the US Congress. The article also quotes a Russian official as saying the emerging nations are losing patience. Below are some quotes and then a comment. Readers should always read the full article linked for context.

"International Monetary Fund chief Christine Lagarde might need to get to work perfecting her belly-dance.
The normally reserved head of the global crisis lender promised in October to perform for the US Congress if that would get it to endorse crucial, much-delayed reforms for the Fund.
“I will do belly-dancing if that’s what it takes to get the US to ratify,” she said.
But now the Republican victory in Tuesday’s US elections has likely placed ratification further away, and she will have to work harder to convince the IMF’s largest shareholder."
“The change in the US political landscape is not a good omen for progress on IMF reforms,” said Eswar Prasad, a former IMF official.
my added comments: We have followed this story for nearly a full year here on this blog now. Earlier in the year we noted that a GOP election victory would probably lessen the chances for approval of the IMF reforms. This has now happened.
The BRICS nations have set several "deadlines" for the US to pass these reforms and issued many threats along the way. They have setup what we call "Plan B" to work around the IMF and World Bank. But they never actually leave the IMF or World Bank making the threats somewhat empty. We suspect the latest deadline (the end of 2014) will come and go without any real follow through from the BRICS nations. We believe they will just quit talking about it or set another deadline far into the future.
This Business Insider story goes further in depth on this topic. It actually talks about a "Plan B" by the IMF if the reforms never pass. It also says some think there should be a major push to get the current lame duck Congress to pass the reforms before year end. You can sense the desparation to get this through Congress in this article. We will follow it here to see how it turns out by year end.

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