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White House defends push in Ukraine aid

Disagreement over the IMF quota has meant that Washington is yet to ratify changes to the organization agreed in 2010

Published: Updated:

The White House on Friday defended its decision to attach an IMF reform bid to a $1 billion aid bill for Ukraine, which has angered some Republicans and slowed the measure's passage in Congress.

The bill has cleared a Senate committee but will not come up in the Senate until after next week's recess, and its prospects in the House of Representatives remain uncertain.

The International Monetary Fund provision relates to an effort to expand the fund's lending framework by boosting the U.S. share of funding, a move that will also provide a greater voice to developing economies.

"Passing IMF quota reform, which has been long delayed, is vital to ensuring that the IMF can lend resources in the scale that Ukraine needs to regain its financial footing," said White House spokesman Jay Carney.

"We support legislation that includes IMF quota reform because it's the right thing to do generally and because it provides additional means for the IMF... to give support to Ukraine."

Some Republicans have accused the White House of using the wide support for aiding Ukraine as a way of forcing through the reforms to the IMF on which there is less of a consensus.

Disagreement over the IMF quota has meant that Washington is yet to ratify changes to the organization agreed in 2010.

But a U.S. official said that the delay in passing the legislation would not significantly postpone U.S. support for Ukraine.

"Given our preparations for structuring the loan guarantee are already underway, a one- to two-week delay in the approval of the loan guarantee by Congress would not have a meaningful impact on timing," the official said.

Republican House Speaker John Boehner said on Thursday that the IMF quota reform was a separate issue from aid to Ukraine and could cause problems for the legislation in his chamber.

"This IMF money isn't necessary for dealing with this Ukraine crisis that we see today," Boehner said.

The House has already passed a loan-guarantee bill, with no IMF element.

The package would greenlight $1 billion in US loan guarantees to Kiev and imposes sanctions on figures involved in the crackdown on anti-government protesters and in Russia's incursion into Crimea.

It also commits $50 million for democracy-building efforts and $100 million to enhance U.S. security cooperation with Ukraine.

The United States is by far the IMF's largest stakeholder and its refusal to approve the reforms have essentially blocked them.

Treasury Secretary Jacob Lew argues that the quota reform would increase Ukraine's access to certain loans by 60 percent.

The measure would dramatically boost the U.S. quota by shifting $63 billion from an existing credit line.

Some Republicans however argue that the changes to the organization of the IMF would do little to address what they see as a surfeit of European members on the fund's board.