Wednesday, June 20, 2012

The world ponies up to the IMF

The IMF released this table at the end of the G20 yesterday showing pledges received over the past few months by countries around the world to increase IMF resources:

That's quite a list. 37 countries including 15 of the G20 have now contributed to the IMF fund seeking to build resources at a time of great Eurozone financial uncertainty. A bunch of nations made their contributions at this G20 meeting. As we know, Canada has not contributed and that position was not widely followed among the leading nations of the world.

We also know that the Harper government has made great political hay out of our not contributing. They have made an insular me-first appeal that encourages resentment toward European nations. They have made it seem as if Canadian taxpayers would be hit with a bill, as if this would be a tax increase. This is how they have framed it for domestic political purposes.

That positioning by the government was recently debunked:
This is completely misleading. Funds are not given to the IMF; funds are lent to the IMF. More importantly, the funds that would be lent to the IMF would not come from Canadian taxpayers. The funds would come from foreign exchange reserves held at the Bank of Canada. As of May 23, 2012 Canada had foreign exchange reserves of $68.7 billion. Of this, $36 billion was in U.S. dollars; $19.7 billion in other currencies; $8.7 billion in Special Drawing Rights (SDRs); and $4.1 billion in a reserve position in the IMF.

Were Canada to contribute to the G20fund the ”contribution” would involve a transfer of SDRs from the exchange reserves to the IMF in exchange for a commitment that the funds would be repaid. There would be no use of taxpayers’ money and there would be no budgetary impact.
Nevertheless, it's probably fair to say that the Harper messaging has predominated and the above understanding has not made any headway.

So who is right? Us or the vast majority of the G20 and western industrialized nations? Is it as Harper says, that it's about policies that the EU must put in place and that they have all the resources they need? Guess we will find out in coming months. In the meantime, it's an awfully long list of nations that disagree with the position that Canada took.