President Barack Obama Monday sought the Congress' backing for a proposed USD100 billion U.S. loan for the expansion of an International Monetary Fund (IMF) emergency fund by USD 500 billion, reports say.
The USD100 billion is part of the plan agreed at this month's Group of 20 summit in London to triple IMF resources to a total of $750 billion to help the Fund respond to crises in emerging market economies as a result of the global financial crisis and economic downturn.
Obama made the request Monday in several letters to two Democrats: House of Representatives speaker Nancy Pelosi and Senate Majority leader Harry Reid; and Republican House leader John Boehner and Senate Minority leader Mitch McConnell.
Our proposal to increase U.S. participation in the NAB by up to USD 100 billion as part of an overall increase of 500 billion dollars was warmly endorsed by the G20 Leaders, the letters said.
The president pointed out the funding does not represent a budgetary expenditure or any increase in the deficit since it effectively represents an exchange of assets.
The transfer funds to the IMF under the program, known as an expansion of the New Arrangements to Borrow (NAB) will allow member-countries to provide credit to the IMF to deal with crises that may threaten the stability of the global financial system. In turn the donor nations would receive interest bearing assets in return, backed up by IMF resources including gold stocks.
Obama said countries were looking to the U.S. to deliver on its G-20 commitment, which could spur other governments to contribute to the IMF.
Noting that the NAB was woefully inadequate to deal with the severe economic and financial crisis, Obama said the deteriorating conditions threaten to worsen the recessions in the emerging economies and could cause currencies to collapse.
Asserting that rapid progress is essential to the restoration of confidence in the global economy and financial system so that the global economy can emerge from recession to recovery and to sustained growth, Obama appealed for help to deliver on the U.S. commitment by supporting inclusion of the NAB and related IMF proposals in the most timely legislative vehicle that will enable the United States to act quickly.
He said an enlargement of the NAB facility would allow for increased participation by emerging market economies, in particular China and India. Beijing has already indicated that it plans to contribute USD 40 billion to the IMF through a bond issued to its central bank by the Fund.
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