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New IMF Strategy Emerges in Congress

© Bryan Johnson

When the U.S. House of Representatives voted to remove the funding language for the International Monetary Fund (IMF) from a supplemental spending bill, it put in grave doubt the ability of Congress to pass legislation granting the Clinton Administration request of $18 billion in new IMF funding. With only a limited number of legislative days left on the calendar, and members scrambling to complete business early to campaign at home in this year's elections, it seems like the IMF may have to wait until next year for U.S. funding. Yet, two new proposals have emerged that may break the stalemate between opponents and proponents of IMF funding.

One such proposal emerged this last week when former Congressman Jack Kemp sent Congressional leadership a letter outlining a compromise. In Kemp's letter, the former legislator calls for $6 billion in funding for the Temporary Emergency Borrowing Authority (TEASBA). This authority would partially fund the IMF for 12 months to permit the IMF to complete the Asian bailout programs. However, Kemp outlined several conditions for the funding:

1) The President request it in writing; 2) The top IMF management team, including French director Michel Camdessus, be replaced; 3) The TEASBA legislation contain specific language outlining U.S. positions on currency stability, economic growth, lower tax rates, and increased purchasing power; 4) The legislation include specific requirements for the IMF to open its books to the public; and 5) The Secretary of the Treasury actively work within the IMF to reform it.

Congressional sources indicate that there are several legislators looking into Kemp's proposal. Other sources indicate that the House Appropriations committee is looking into way to provide only partial IMF payment, perhaps $3.5 billion, while denying the entire $18 billion request.

Regardless, any IMF funding in this Congress will face an uphill battle. One potential barier comes from Congressman Jim Saxton (R-NJ) who has introduce legislation that would prevent most U.S. funds from being transferred to the IMF until it meets and maintains certain conditions.

Called, "The IMF Transparency and Efficiency Act of 1998," (H.R. 3331), Congressman Saxton, along with co-sponsors Richard K. Armey (R-TX), and Tom Campbell (R-CA), has outlined series of hurdles the IMF must navigate before it can receive the bulk of the $18 billion funding request. In a meeting at the Heritage Foundation in Washington, D.C., on May 13, Saxton outlined the requirements. They would:

1) Require the IMF to make available for public scrutiny edited copies of minutes from every meeting of the IMF Board of Governors and Board of Executive Directors within three months of the meeting date;

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