Bill to Boost IMF Funds Clears Its First Hurdle

WASHINGTON — President Clinton’s controversial bill to increase the resources of the International Monetary Fund cleared its first--and easiest--congressional hurdle Thursday, but strategists said the measure still faces an uphill fight on the House floor and in the Senate.

In a first-round victory for the administration, the House Banking and Financial Services Committee overwhelmingly approved a compromise version of the bill that essentially would pay lip service to Democrats’ concerns about improving worker rights in countries that receive IMF loans.

The vote was 40 to 9, a far larger majority than had been expected. All committee Democrats voted for the bill. Eight Republicans and Rep. Bernard Sanders of Vermont, Congress’ only independent, opposed the measure.

The bipartisan bill, one of Clinton’s top legislative priorities for this year, now goes to the House Appropriations Committee, which is expected to attach it to a must-pass spending bill later this month. But conservatives may seek to hold the legislation hostage in a battle over antiabortion provisions in another bill, one approving foreign aid for 1999.

Clinton has cited the IMF legislation as crucial, both to help deal with the Asian financial crisis and to maintain U.S. economic leadership around the world. The IMF, with 182 countries as members, is coordinating the global rescue effort for Asia.

The bill would provide $18 billion in lines of credit to the IMF as the U.S. share of a $90-billion increase in the IMF’s overall financial resources.

The transaction would not affect the U.S. budget deficit. The money is not actually used until the IMF decides to tap the U.S. credits, and the organization pays market interest rates on the funds it uses.

Although the IMF does not need the increase immediately, officials say it might--and quickly--if the Asian crisis worsens. The IMF also wants to assure the financial markets that it has enough resources on hand if it needs them.

Besides the money, the measure would establish an advisory panel of representatives from labor, agriculture and private charities to consult with the Treasury Department on U.S. policy toward the IMF.

It also would require the U.S. representative to the IMF to push aggressively for policies that pressure borrower countries to foster labor rights and force banks to shoulder more of the burden when their loans to developing countries turn sour.

The legislation was carefully crafted by the banking committee’s chairman, Rep. James A. Leach (R-Iowa), and ranking Democrat, Rep. John J. LaFalce of New York, after consultations with administration officials and panel liberals.

The committee action came as the IMF and Indonesia continued to wrangle over that country’s efforts to overhaul its domestic economy, and amid increasing concern that the IMF won’t agree to provide more money unless Jakarta makes more of the reforms that it has promised.

IMF officials disclosed Thursday that the organization’s hierarchy has already postponed a March 15 target date for Indonesia to receive a second $3-billion installment of its $10.1-billion loan package--if only because of procedural delays.

Although the IMF has not decided whether to disburse the second $3 billion, officials said the turnover in the Indonesian government as a result of elections last Sunday has made it difficult to nail down future policy objectives.

While Indonesian President Suharto was reelected to another five-year term, he has not named a Cabinet, and the IMF’s rules require that the government adopt new short-term goals before any new loan installment is approved.

On Thursday, the value of Indonesia’s currency, the rupiah, plunged about 10% in the foreign exchange market amid concern that the IMF would suspend the loan rather than authorize the second installment. The value of the rupiah continued to fall early today to more than 11,000 to the U.S. dollar.