Setting the Record Straight on IMF Funding

Specifically, the shortcomings include:

Insufficient enforcement mechanisms. The Omnibus bill does not require any concrete action or reform on the part of the IMF. A rhetorical commitment to pursue reform is a small sacrifice for $17.9 billion in U.S. taxpayer money for the IMF.

Limited transparency requirements. The transparency provisions would require the IMF to release to the public edited summaries of only three IMF documents and meetings at which they are discussed. Written summaries of meetings are no substitute for full transcripts of the meetings or mandatory public release of the documents themselves. Moreover, the IMF and countries are allowed to edit the summaries for any "sensitive" information it may contain. A proper and effective transparency requirement would require public release of all IMF documents, internal memos, and meeting transcripts with no redacted information.

Interest rate and repayment period reform is insufficient and does not apply to all IMF loans. Unfortunately, the interest rate reform is unlikely to alleviate the destructive impact of IMF subsidized loans. Most IMF loans would remain unaffected and even those covered by the Omnibus language would remain extremely subsidized. In addition, the decreased repayment period will probably have little effect because of the Fund's propensity to rollover debt. Instructions to the U.S. Executive Director to "vigorously promote" a number of policies through voice and vote. Congress has attempted to implement desired reforms in the IMF through the "voice and vote" of the U.S. Executive Director for two decades to little effect. Unfortunately, past voice and vote instruction has lacked any meaningful enforcement measures or consequences if the legislation is ignored. This flaw is not rectified in the Omnibus bill.

WHAT CONGRESS SHOULD DO

While, the conditions passed in the Omnibus bill are desirable and better than any previous reforms required of the IMF by Congress, they fall substantially short of the actions needed to prevent the damage to the global economy caused by IMF meddling. It would be a mistake for Congress and staff members to conclude that their work is done and that they have completed the IMF reform process. Instead, policymakers should build on the Omnibus bill through short, medium and long-term goals.

In the short term, Congress should ensure that the reforms outlined in Omnibus are implemented. Congress should monitor the IMF and demand constant updates on the progress of the reforms from the Secretary of the Treasury and the Chairman of the Federal Reserve.

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