I love how this works: Barack Obama pledged $100 billion in foreign aid to help bail out the ailing International Monetary Fund in April. Only after he announced it did he go to Congress and make his case for the money. And yesterday, Obama water-carriers on the Hill cooked up a fuzzy math scheme to make it all work. Voila! $108 billion = 0:
Congressional leaders agreed Tuesday to calculate the cost of a new U.S. contribution to the International Monetary Fund in a relatively inexpensive way, paving the way for possible Congressional approval within weeks.
The Obama administration has pledged a $108 billion contribution to the IMF, as part of a $500 billion global boost to IMF resources. The White House has argued that this is a necessary contribution to global financial stability and would send a signal that there is enough money to help prevent struggling countries from becoming further enmeshed in economic crises. Congressional approval would put pressure on European nations, China, Brazil and others to increase their lending to the IMF.
But the U.S. contribution became entangled in arcane — though politically important — budget math. The White House had argued that the action shouldn’t be characterized as a $108 billion expenditure, which would make it difficult to sell at a time when Congress has recently passed a series of multibillion-dollar spending bills.
The U.S. wouldn’t provide a lump sum, but would essentially make a line of credit available to the IMF, which the fund could draw on when it needed to make loans to other countries. In theory, the U.S. would hope to get the money back. So the White House argued that the budgetary impact should be calculated at zero.
“Would hope to get the money back.” Owww. Getting stomach cramps from laughing so hard.
The WSJ has more on the conjuring here.
In a noteworthy development, at least one potential IMF bailout recipient is having second thoughts about going on global welfare. Check out the debate in Ghana:
President John Evans Atta Mills has proudly told the world that his government is about to receive funds totaling $3.2 billion over the next three years from the International Monetary Fund and the World Bank.
The President says there are no conditionalities attached to the expected funds but the Danquah Institute (DI) says he is not telling the truth because the IMF is demanding a cap on salaries and higher electricity bills, effectively.
DI has also condemned the Finance Minister, who “unlike Hannah Tetteh and President Mills”, delivered a very negative report on the Ghanaian economy at the Commonwealth Investment Seminar at the Lancaster Gate, London, last week, reminding Ghanaians, “We have a Finance Minister who, from his record at the Central Bank in 2000, knows how to destroy more than how to build.
The future of our nation’s economy is too important to be left with a man who’s too busy today trying to justify his abysmal record 9 years ago by lambasting that of his successor,” says the boss of DI.
Speaking to DAILY GUIDE yesterday, Gabby Asare Otchere-Darko of DI asked, “Are we back to the days when we all saw was our salvation in IMF and World Bank? Are we back in the days when the only meaningful place to invest in Ghana was not in business but in Treasury Bills?
Go to the banks today and see how they are running after customers not to come for loans like last year but to come and buy T-bills. We are certainly back in the years when men like Dr. Duffuor and Prof. Mills were in charge of the economy.”
Speaking to the BBC Focus on Africa programme last week, President Mills said Ghana, which had weaned itself from the IMF under President Kufuor, had to go back to them begging because “our coffers were empty,” and that terms of the loans will not worry ordinary Ghanaians.
However, the centre-right think tank does not support this optimism from the Head of State. Gabby Asare Otchere-Darko warns that if we are not careful, the NDC’s revived flirtation with the IMF could leave the “pockets of Ghanaians empty.”