The US urged the International Monetary Fund to help move trading powers away from large trade surpluses, and called on the World Bank to curtail its lending to middle-income countries, the Wall Street Journal reports.
“The IMF must be a more forceful advocate for strong, sustainable, and balanced growth,” US Treasury Secretary Steven Mnuchin told the IMF’s governing committee, which met Saturday in Washington, according to the report.
The IMF must highlight the way that countries “must adjust to reduce imbalances”, Mnuchin was quoted as saying as the annual meeting of the IMF and World Bank drew to a close.
He also called on the World Bank to reduce the amount of lending it does to middle-income countries that have developed significant resources on their own.
World Bank programs should “be tailored to help fully transition these borrowers off donor assistance,” Mnuchin said.
Though Mnuchin didn’t mention China by name, both causes apply to the world’s second largest economy, which is the recipient of the largest volume of World Bank loans and has one of the world’s largest trade surpluses, the Journal noted.
Germany, Singapore, South Korea and Thailand are among countries that the IMF says have the most distorted trade surpluses and could therefore feel more pressure if the IMF steps up its critiques.
The key piece of US leverage in cajoling the IMF and World Bank into action is both organizations’ need to adjust and increase their capital in coming years.
The US is the largest shareholder in both institutions, and is considered to hold an effective veto over increasing their funding and lending capabilities.
The IMF and World Bank are making the case for more funding and to rebalance their voting shares so that countries that have grown rapidly in recent decades have representation that reflects their increased size.
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