Was George Osborne’s decision to provide $15bn (£10bn) to the International Monetary Fund designed to prevent him having to go to Parliament to vote it through?
The Chancellor is adamant that it wasn’t. I asked him precisely that question when I spoke to him here in Washington. He said the following:
I think the $15bn is a significant loan, I think it is proportionate to what other countries are doing… if I felt it needed to be more, then I would be very happy to go to Parliament and seek authority.
But is the contribution really proportionate to what other countries are doing? Treasury sources insist that if you include all the potential non-euro IMF donors (standard IMF methodology, they say) Britain’s contribution is about average. However, that calculation is skewed drastically by the fact that the US (by far the biggest donor) is not giving any new money at all.
Compare Britain’s contribution to the other non-euro members who have actually put their hands in their pockets and you’re left with a pretty stark picture: Britain’s $15bn is comfortably the least generous of all the new IMF commitments.
The average non-euro donor country gave around 1.4% of their annual economic output. Britain’s $15bn represents a mere 0.2% of its annual output. To prove the point, here are all the major non-euro contributions to the IMF’s new $430bn pot, and alongside them is what that represents as a percentage of that country’s GDP (the best way to compare like-for-like).
Japan – $60bn – 1%
South Korea – $15bn – 1.4%
Saudi Arabia – $15bn – 2.6%
United Kingdom – $15bn – 0.2%
Sweden – at least $10bn – 1.9%
Switzerland – $10bn – 1.6%
Norway – $9.3bn – 1.9%
Poland – $8bn – 1.6%
Australia – $7bn – 0.5%
Denmark’s Nationalbank – $7bn – 2.1%
Singapore – $4bn – 1.5%
Czech Republic – $2bn – 0.9%
Now, one can quibble with a few things here: these figures are in relation to GDP rather than each country’s IMF quota (though the difference won’t be enormous). The Treasury will say it’s unfair to disregard those countries that didn’t contribute when calculating the overall proportion. Moreover, here in Washington the Fund is grateful to have received any money at all from Britain – the Chancellor could easily have refused to have provided anything.
But the fact remains that compared to those who put forward new contributions, Britain has been strikingly stingy.
If Mr Osborne had increased Britain’s contribution in line with the other non-euro members who stumped up, it would have meant providing about $35bn (about £23bn) rather than $15bn (£10bn). That would have meant putting the new contribution to a Parliamentary vote, since it’s above the £10bn headroom the Government gave itself the last time it upped its IMF loans.
Which brings us back again to the prickly question: why did the Chancellor choose such a low figure? Was it because if he had given in line with the other countries who provided new cash, he would have had to put the contribution to a Parliamentary vote and avoid another rebellion?