By David Lawder and Lesley Wroughton
WASHINGTON (Reuters) - The Obama administration has asked Congress for authority to implement historic voting reforms in the International Monetary Fund that boost the influence of emerging economies like China in the global financial institution, sources said on Tuesday.
But the plan faces an uphill battle for passage in a tense budget environment marked by the launch of $85 billion in automatic spending cuts on Friday that hit both the military and domestic programs hard.
The Treasury Department submitted the request as a provision to be inserted into pending legislation to keep the U.S. government funded through September 30 this year, congressional aides said. The Treasury sought authority to shift $65 billion in U.S. funding from an IMF crisis fund into U.S. quotas, which determine voting power in the Fund.
The United States is the IMF's largest member country and has veto power over decisions. The vote reforms were approved by the IMF in 2010, making China the third-largest voting member in the Fund and revamping the IMF's board to reduce Western Europe's dominance.
The U.S. request would not require any new funds to be appropriated by Congress because it simply shifts money from one IMF account within the budget to another, a Senate Democratic aide said.
The Republican-controlled House of Representatives has already rejected the request to include it in legislation scheduled for a vote on Tuesday that would avoid a March 27 government shutdown. A House Republican aide said House Appropriations Committee Hal Rogers chose to limit such so-called "anomalies" for targeted adjustments to the funding extension bill.
No decision has been made yet by Democrats, who control the Senate, on whether to include the IMF request in the Senate version of the funding bill, expected to be introduced later this month. Approval by the Senate would give it a good chance to be included into the final bill after the two chambers work out differences.
CONCERNS ABOUT U.S. INFLUENCE
A Treasury spokeswoman declined to comment directly on the request, but said: "The United States is committed to implementing the 2010 quota and governance reform. We are actively working with Congress to get quota legislation completed as soon as possible."
Congressional aides said the Treasury is concerned that further delays by Congress in approving the IMF vote reforms could damage U.S. credibility and influence in the global institution, according to aides said. The reforms were already delayed by the administration's reluctance last year to ask Congress for funding approval ahead of the U.S. presidential election in November.
"There is support for this because it fulfills a commitment by the United States and is in the interests of the United States," one Senate Democratic aide said. "But because the IMF is inherently viewed by some in Congress as controversial, the outcome is difficult to predict."
Should the request be rejected, the $65 billion would remain locked in the IMF crisis fund, known as the New Arrangements to Borrow, until the end of the fiscal year. But the administration could renew its request as part of the fiscal 2014 budget process, which is just now getting underway.
In a letter sent to congressional leaders on Tuesday, some 19 former U.S. cabinet officials, legislators and executives declared their support for the quota funding request and urged Congress to "maintain current overall U.S. leadership in the IMF".
The letter from the Bretton Woods Committee to House Speaker John Boehner and Senate Majority Leader Harry Reid highlighted the critical role the IMF plays in advancing U.S. interests around the world and influencing international economic policy.
(Reporting by David Lawder and Lesley Wroughton; Editing by Eric Walsh)