WASHINGTON - President Barack Obama on Monday proposed a $100 billion U.S. loan to the International Monetary Fund to boost the IMF's resources and urged a bigger stake in the IMF for emerging powers.
In a letter to U.S. congressional leaders, Obama said the U.S. funding does not represent a budgetary expenditure or any increase in the deficit since it effectively represents an exchange of assets.
The $100 billion is part of commitments made by Group of 20 countries at a London summit on April 2, which agreed to triple IMF resources to a total of $750 billion to help the IMF respond to crises in emerging market economies as a result of the global financial crisis and economic downturn.
The U.S. funding will boost the IMF's so-called New Arrangements to Borrow, or NAB, a facility which allows member countries to provide credit to the IMF to deal with crises that may threaten the stability of the global financial system.
Obama said the NAB was woefully inadequate to deal with the severe economic and financial crisis.
The deteriorating conditions threaten to worsen the recessions in these countries and could cause currencies to collapse, Obama wrote.
Together, these factors, particularly if they become more acute, will further lower global growth and, as we saw during the Asian financial crisis, they will cause U.S. growth, jobs, and exports to fall even more sharply, he added.
He said an enlargement of the NAB facility of up to $500 billion would allow for increased participation by emerging market economies, in particular China and India.
Chinese officials have already indicated that Beijing plans to contribute $40 billion to the IMF through a bond issued to its central bank by the Fund.
Obama said countries were looking to the U.S. to deliver on its G20 commitment, indicating that other governments could follow the U.S. lead and contribute to the IMF.