A Checklist of IMF Reforms

Require congressional approval to extend loans or obligations from the Exchange Stabilization Fund. As many Members and experts have noted, the Administration has increasingly utilized the Exchange Stabilization Fund (ESF) to supplement international bailouts.10 The ESF was the main source of funding for the $20 billion U.S. supplement the IMF bailout of Mexico in 1995. The Administration also indicated that the ESF would be the source of promised $8 billion in U.S. bilateral assistance to Indonesia and South Korea in the recent Asian crisis. Greater congressional oversight of the ESF would be a valuable supplement to greater restrictions on the IMF by ensuring that another avenue for international bailouts would receive due attention. Several proposals have been forwarded. One would amend the Treasury-Postal Operations Appropriations Bill to require Congressional approval before any financial loans and credit obligations could be made to foreign governments from the Exchange Stabilization Fund (ESF). Others would require congressional approval of any one loan or credit obligation of more than a specific amount or cumulative amounts over a specified time period.11

Require the IMF to establish a firm cap on financial assistance available for any one country. The IMF currently has a guideline, adopted in 1994, that annual access to IMF credit be restricted to 100 percent of a country's quota and that cumulative access be limited to 300 percent of quota. This means that no country is supposed to be able to borrow more from the IMF in any one year than it has contributed through its quota and no country is supposed to ever be able to borrow more than 300 percent of what it has contributed. This rule is not iron-clad, however. In fact, the IMF has been violating the rule often in recent years (see Table 1). Congress should require the IMF to follow its own lending rules.

CONCLUSION

No one knows precisely which amendments will reach the House floor for a vote. But what is certain is that the House already is demonstrating that it is serious about reforming the IMF. Many policymakers feel that Congress eventually will appropriate all of the money to the IMF. The question is, which reforms will have to be attached to that funding in order for it to pass the House floor? Moreover, once the House passes its legislation, it must go to conference

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