Japan’s IMF Pledge Makes It No. 1 Fund Contributor

From: Japan’s IMF Pledge Makes It No. 1 Fund Contributor:

Japan’s pledge to lend the International Monetary Fund $60 billion as part of its resource drive makes the Asian country the fund’s top contributor, taking the lead from the U.S.

The U.S. was one of the few countries in the Group of 20 largest economies that said it wouldn’t contribute any cash to bolster the IMF’s lending base. Japan, meanwhile, was one of the first non-European countries to commit money to the IMF.

U.S. commitments to the fund currently total around $172 billion. Japan’s committments, including a promise made earlier this week to loan the IMF $60 billion, pushes Tokyo’s total to $186 billion, giving it a $14 billion edge.

G-20 said Friday that nations plan to inject more than $430 billion into the IMF to help the fund deal with the fallout from a potential deterioration in Europe’s debt crisis.

Although a U.S. official said the U.S. supports the G-20′s decision, Treasury Secretary Timothy Geithner has said Europe has the resources to fix its own problems and the IMF loans should only be viewed as supplementary. Fund watchers say Congress, meanwhile, would never approve of new cash for the IMF. Legislation in the House of Representatives has gathered backing from nearly a quarter of the chamber’s lawmakers for a bill that would repeal a $100 billion loan to the IMF Washington made in 2009.

Eswar Prasad, a Cornell University economist and former senior IMF official, said the exchange of the top-contributor position tells a twin story.

Japan is doing its best through its contributions to reverse the narrative that it is a declining power, Prasad said. “Japan’s psyche was quite wounded when its [gross domestic product] was surpassed by China” almost two years ago, he said.

He said if the political gridlock implies the U.S. can no longer lead in contributing, “it presages a declining influence in the IMF and more broadly in terms of setting the economic global agenda.”

To be sure, the U.S. still is the biggest dues-payer at the fund, and thus has the biggest share of voting power. The IMF’s 188 member countries contribute dues based largely on their economic weight in the world as the fund’s main lending resource. Other contributions are made as bilateral loans to the fund. That is how Japan has now exceeded U.S. commitments.

Japan’s finance minister on Friday touted the nation’s decision to offer a $60 billion contribution to the IMF and urged the fund to reward Tokyo by offering Japanese nationals good posts at the institution.

“I’ve told the IMF that we will not only provide it with money but also make human contributions to the fund so we want it to give us posts matching the levels of our contributions,” Jun Azumi said after the G-20 meeting earlier Friday.

Japan’s Naoyuki Shinohara is currently one of four deputy managing directors at the fund. China last year for the first time had one of its own citizens appointed to the deputy managing director’s post. Japan would at least like to keep Shinohara or another Japanese national in the position.

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