Republican Congress commits additional $56.7 billion credit line to International Monetary Fund in omnibus

Dec. 23, 2015, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement blasting the $56.7 billion increase in the U.S. quota subscription to the International Monetary Fund that was included in the omnibus spending bill for the remainder of fiscal year 2016:

“Now we learn that the omnibus gave an additional $56.7 billion to the International Monetary Fund, doubling our so-called quota subscription to $115.2 billion at today’s exchange rate. It also puts a 2022 sunset on the now $95.8 billion New Arrangements to Borrow and a few extra conditions for accessing it — not that they need it now with the doubled quota. Meaning, the grand total commitment to the International Monetary Fund now rises to $211 billion for the foreseeable future.

“It is particularly troubling that ending the New Arrangements to Borrow was once a priority for House Republican Conference Chairwoman Cathy McMorris-Rodgers, and now with her in leadership, our nation is trapped into a funding commitment that swamps that promise. This is just one more gigantic proof point that the GOP establishment cannot be trusted with the public treasury.”

Attachments:

https://www.congress.gov/bill/114th-congress/house-bill/2029/text/eah

TITLE IX—Other Matters

MULTILATERAL ASSISTANCE

International Monetary Programs

For an increase in the United States quota in the International Monetary Fund, the dollar equivalent of 40,871,800,000 Special Drawing Rights, to remain available until expended: Provided, That notwithstanding the provisos under the heading “International Assistance Programs—International Monetary Programs—United States Quota, International Monetary Fund” in the Supplemental Appropriations Act, 2009 (Public Law 111–32), the costs of the amounts provided under this heading in this Act and in Public Law 111–32 shall be estimated on a present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays: Provided further, That for purposes of the previous proviso, the discount rate for purposes of the present value calculation shall be the appropriate interest rate on marketable Treasury securities, adjusted for market risk: Provided further, That such amount is designated by the Congress as an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended: Provided further, That such amount shall be available only if the President designates such amount, and the related amount to be rescinded under the heading “Loans to the International Monetary Fund Direct Loan Program Account”, as an emergency requirement pursuant to section 251(b)(2)(A)(i) and transmits such designation to the Congress.

Loans To The International Monetary Fund direct loan program account (including rescission of funds)

Of the amounts provided under the heading “International Assistance Programs—International Monetary Programs—Loans to International Monetary Fund” in the Supplemental Appropriations Act, 2009 (Public Law 111–32), the dollar equivalent of 40,871,800,000 Special Drawing Rights is hereby permanently rescinded as of the date when the rollback of the United States credit arrangement in the New Arrangements to Borrow of the International Monetary Fund is effective, but no earlier than when the increase of the United States quota authorized in section 72 of the Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) becomes effective: Provided, That notwithstanding the second through fourth provisos under the heading “International Assistance Programs—International Monetary Programs—Loans to International Monetary Fund” in Public Law 111–32, the costs of the amounts under this heading in this Act and in Public Law 111–32 shall be estimated on a present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays: Provided further, That for purposes of the previous proviso, the discount rate for purposes of the present value calculation shall be the appropriate interest rate on marketable Treasury securities, adjusted for market risk: Provided further, That such amount is designated by the Congress as an emergency requirement pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended: Provided further, That such amount shall be rescinded only if the President designates such amount as an emergency requirement pursuant to section 251(b)(2)(A)(i) and transmits such designation to the Congress.

GENERAL PROVISIONS

Limitations On And Expiration Of Authority With Respect To New Arrangements To Borrow

SEC. 9001.

Section 17 of the Bretton Woods Agreements Act (22 U.S.C. 286e–2) is amended—

(1) in subsection (a) by adding at the end the following:

“(5) The authority to make loans under this section shall expire on December 16, 2022.”;

(2) in subsection (b), in paragraphs (1) and (2), by inserting before the end period the following: “, only to the extent that amounts available for such loans are not rescinded by an Act of Congress”;

(3) by adding the following subsection (e), which shall be effective from the first day of the next period of renewal of the NAB decision after enactment of this Act:

“(e) New Requirement for Activation of the New Arrangements to Borrow

“(1) The Secretary of the Treasury shall include in the certification and report required by paragraphs (a)(1), (a)(2), (b)(1), and (b)(2) of this section prior to activation an additional certification and report that—

“(A) the one-year forward commitment capacity of the IMF (excluding borrowed resources) is expected to fall below 100,000,000,000 Special Drawing Rights during the period of the NAB activation; and

“(B) activation of the NAB is in the United States strategic economic interest with the reasons and analysis for that determination.

“(2) Prior to submitting any certification and report required by paragraphs (a)(1), (a)(2), (b)(1), and (b)(2) of this section, the Secretary of the Treasury shall consult with the appropriate congressional committees.”; and

(4) by adding at the end the following:

“(f) In this section, the term ‘appropriate congressional committees’ means the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives.”.

Acceptance Of Amendments To Articles Of Agreement; Quota Increase

SEC. 9002.

The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is amended by adding at the end the following:

“SEC. 71. Acceptance of amendments to the articles of agreement of the fund.

“ The United States Governor of the Fund may accept the amendments to the Articles of Agreement of the Fund as proposed in resolution 66–2 of the Board of Governors of the Fund.

“SEC. 72. Quota increase.

“(a) In general.—The United States Governor of the Fund may consent to an increase in the quota of the United States in the Fund equivalent to 40,871,800,000 Special Drawing Rights.

“(b) Subject to appropriations.—The authority provided by subsection (a) shall be effective only to such extent or in such amounts as are provided in advance in appropriations Acts.”.

Report On Methodology Used For Congressional Budget Office Cost Estimates

SEC. 9003.

(a) Report.—Not later than 180 days after the date of enactment of this Act, the Director of the Congressional Budget Office shall submit a report to the appropriate congressional committees on the methodology used and rationale for incorporating market risk in cost estimates for the International Monetary Fund: Provided, That for the purposes of this subsection, the term “appropriate congressional committees” means—

(1) the Committees on Appropriations, Budget, Banking, Housing and Urban Affairs, and Foreign Relations of the Senate; and

(2) the Committees on Appropriations, Budget, and Financial Services of the House of Representatives.

(b) Requirements.—The report submitted pursuant to subsection (a) shall include matters relevant to the evaluation of the budgetary effects of the participation of the United States in the International Monetary Fund, including the risks associated with—

(1) the current participation of the United States in the International Monetary Fund, including the market risk of the Fund;

(2) countries borrowing from the Fund;

(3) the various loan instruments and assistance activities of the Fund; and

(4) past participation of the United States in the International Monetary Fund, including the historical net cost to the government of previous quota increases.

(c) Review.—Following the submission of the report required by subsection (a), the Committees on Appropriations and Budget of the Senate and the Committees on Appropriations and Budget of the House of Representatives shall review the Congressional Budget Office’s market risk scoring methodology and consider options for modifying the budgetary treatment of new appropriations to the International Monetary Fund: Provided, That in conducting such review, such committees should consult with other interested parties, including the Office of Management and Budget and the Congressional Budget Office.

Required Consultations With Congress In Advance Of Consideration Of Exceptional Access Lending

SEC. 9004.

(a) In general.—The United States Executive Director of the International Monetary Fund (the Fund) (or any designee of the Executive Director) may not vote for the approval of an exceptional access loan to be provided by the Fund to a country unless, not later than 7 days before voting to approve that loan (subject to subsection (c)), the Secretary of the Treasury submits to the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives—

(1) a report on the exceptional access program under which the loan is to be provided, including a description of the size and tenor of the program; and

(2) a debt sustainability analysis and related documentation justifying the need for the loan.

(b) Elements.—A debt sustainability analysis under subsection (a)(2) with respect to an exceptional access loan shall include the following:

(1) any assumptions for growth of the gross domestic product of the country that may receive the loan;

(2) an estimate of whether the public debt of that country is sustainable in the medium term, consistent with the exceptional access lending rules of the Fund;

(3) an estimate of the prospects of that country for regaining access to private capital markets; and

(4) an evaluation of the probability of the success of providing the exceptional access loan.

(c) Extraordinary circumstances.—The Secretary may submit the report and analysis required by subsection (a) to the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives not later than 2 business days after a decision by the Executive Board of the Fund to approve an exceptional access loan only if the Secretary—

(1) determines and certifies that—

(A) an emergency exists in the country that applied for the loan and that country requires immediate assistance to avoid disrupting orderly financial markets; or

(B) other extraordinary circumstances exist that warrant delaying the submission of the report and analysis; and

(2) submits with the report and analysis a detailed explanation of the emergency or extraordinary circumstances and the reasons for the delay.

(d) Form of report and analysis.—The report and debt sustainability analysis and related documentation required by subsection (a) may be submitted in classified form.

Repeal Of Systemic Risk Exemption To Limitations To Access Policy Of The International Monetary Fund

SEC. 9005.

(a) Position of the united states.—The Secretary of the Treasury shall direct the United States Executive Director of the International Monetary Fund (the Fund) to use the voice and vote of the United States to urge the Executive Board of the Fund to repeal the systemic risk exemption to the debt sustainability criterion of the Fund’s exceptional access framework, as set forth in paragraph 3(b) of Decision No. 14064-(08/18) of the Fund (relating to access policy and limits in the credit tranches and under the extended Fund facility and overall access to the Fund’s general resources, and exceptional access policy).

(b) Report required.—The quota increase authorized by the amendments made by section 9002 shall not be disbursed until the Secretary of the Treasury reports to the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives that the United States has taken all necessary steps to secure repeal of the systemic risk exemption to the framework described in subsection (a).

Annual Report On Lending, Surveillance, Or Technical Assistance Policies Of The International Monetary Fund

SEC. 9006.

Not later than one year after the date of the enactment of this Act, and annually thereafter until 2025, the Secretary of the Treasury shall submit to the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives a written report that includes—

(1) a description of any changes in the policies of the International Monetary Fund (the Fund) with respect to lending, surveillance, or technical assistance;

(2) an analysis of whether those changes, if any, increase or decrease the risk to United States financial commitments to the Fund;

(3) an analysis of any new or ongoing exceptional access loans of the Fund in place during the year preceding the submission of the report; and

(4) a description of any changes to the exceptional access policies of the Fund.

 

Report On Improving United States Participation In The International Monetary Fund

SEC. 9007.

Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury shall submit to the Committees on Appropriations and Foreign Relations of the Senate and the Committees on Appropriations and Financial Services of the House of Representatives a written report on ways to improve the effectiveness, and mitigate the risks, of United States participation in the International Monetary Fund (the Fund) that includes the following:

(1) An analysis of recent changes to the surveillance products and policies of the Fund and whether those products and policies effectively address the shortcomings of surveillance by the Fund in the periods preceding the global financial crisis that began in 2008 and the European debt crisis that began in 2009.

(2) A discussion of ways to better encourage countries to implement policy recommendations of the Fund, including—

(A) whether the implementation rate of such policy recommendations would increase if the Fund provided regular status reports on whether countries have implemented its policy recommendations; and

(B) whether or not lending by the Fund should be limited to countries that have taken necessary steps to implement such policy recommendations, including an analysis of the potential effectiveness of that limitation.

(3) An analysis of the transparency policy of the Fund, ways that transparency policy can be improved, and whether such improvements would be beneficial.

(4) A detailed analysis of the riskiness of exceptional access loans provided by the Fund, including—

(A) whether the additional interest rate surcharge is working as intended to discourage large and prolonged use of resources of the Fund; and

(B) whether it would be beneficial for the Fund to require collateral when making exceptional access loans, and how requiring collateral would affect the make-up of exceptional access loans and the demand for such loans.

(5) A description of how the classification of loans provided by the Fund would change if Fund quotas were increased under the amendments to the Articles of Agreement of the Fund proposed in resolution 66–2 of the Board of Governors of the Fund, including an assessment of how the quota increase would affect the classification of exceptional access loans outstanding as of the date of the report and whether the quota increase would lead to revisions of the classification of such loans.

(6) A discussion and analysis of lessons learned from the lending arrangements that included the Fund, the European Commission, and the European Central Bank (commonly referred to as the “Troika”) during the European debt crisis.

(7) An analysis of the risks or benefits of increasing the transparency of the technical assistance projects of the Fund, including a discussion of—

(A) the advantages and disadvantages of the current technical assistance disclosure policies of the Fund;

(B) how technical assistance from the Fund could be better used to prevent crises from happening in the future; and

(C) whether and how the Fund coordinates technical assistance projects with other organizations, including the United States Department of the Treasury, to avoid duplication of efforts.

This division may be cited as the “Department of State, Foreign Operations, and Related Programs Appropriations Act, 2016”.

Interview Availability: Please contact Americans for Limited Government at 703-383-0880 ext. 106 or at media@limitgov.org to arrange an interview with ALG experts including ALG President Rick Manning.

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