[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3287 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3287

 To authorize United States participation in a quota increase and the 
New Arrangements to Borrow of the International Monetary Fund, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 26, 1998

 Mr. Frank of Massachusetts (for himself, Mr. Bonior, Ms. Waters, Ms. 
   Pelosi, and Mr. Torres) introduced the following bill; which was 
      referred to the Committee on Banking and Financial Services

_______________________________________________________________________

                                 A BILL


 
 To authorize United States participation in a quota increase and the 
New Arrangements to Borrow of the International Monetary Fund, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``International Monetary Fund Reform 
and Authorization Act of 1998''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) the International Monetary Fund (IMF) was conceived at 
        Bretton Woods, New Hampshire, to promote a sound and open world 
        economy and a stable international financial system;
            (2) the IMF was founded fifty years ago with its core 
        mission focused on providing advice on macroeconomic and 
        exchange rate policy and highly conditional financial 
        assistance, including appropriate economic and governance 
        reforms, to countries facing balance of payments or liquidity 
        problems;
            (3) the IMF has advanced beyond its core mission and now 
        concerns itself with structural redesign of industrial policy 
        and labor market interventions, both of which have profound 
        social and political ramifications;
            (4) the IMF has intervened in the private credit markets in 
        situations of extreme uncertainty and crisis to restore 
        investor and lender confidence which has a consequence of 
        potentially relieving such lenders and investors of the 
        negative consequences of imprudent lending and investment 
        decisions;
            (5) the expanded conditionality which accompanies IMF 
        funding has profound domestic consequences in the United 
        States;
            (6) the United States, as the leading power of the post-
        cold-war world, has a greater interest than any other country 
        in a strengthened IMF that multilateralizes the financial 
        support for ongoing economic reforms in countries important to 
        United States interests and that can respond to threats to the 
        international financial system;
            (7) the United States is the only country with veto power 
        over major IMF decisions;
            (8) to sustain its capabilities, the IMF needs to sustain 
        its strength relative to a rapidly expanding global economy 
        characterized by exponential growth of global capital markets;
            (9) the United States financial commitment to the IMF 
        leverages several times as much from other countries, and its 
        general resource financing is not scored as a budgetary outlay;
            (10) the ongoing currency and banking crisis in the Far 
        East has affected United States financial markets and may 
        result in a decline in United States economic growth by as much 
        as one and one-half percent, and the United States has a vested 
        economic and national security interest in utilizing the IMF 
        and other multilateral mechanisms to help stabilize certain 
        Asian economies;
            (11) the United States also has an interest in not 
        contributing to ``moral hazard'', the belief by private 
        investors and lenders that public credit will be used to bail 
        them out of the consequences of imprudent credit decisions;
            (12) in establishing the terms for its financial support, 
        the United States must strike a balance between contributing to 
        the stability of the Asian economies and ensuring that the 
        private creditors who contributed to the crisis by their 
        imprudent lending also make a significant contribution to the 
        resolution of such crisis; and
            (13) with respect to some East Asian countries--
                    (A) the IMF has often imposed a fiscal austerity 
                strategy designed for countries in other parts of the 
                world that follow excessively expansionary fiscal and 
                monetary policies, despite the fact that in the East 
                Asian countries, by the IMF's own account, such 
                policies did not contribute to the financial 
                difficulties faced by such countries;
                    (B) the rationale for such strategy has been the 
                purported need to attract foreign capital and divert 
                production to export rather than the domestic market;
                    (C) in the absence of a solution to the short term 
                debt overhang problem which requires a rollover of such 
                short term maturities by the private creditors as an 
                integral part of the IMF program, no interest rate is 
                high enough to attract such capital;
                    (D) a high interest, fiscal austerity program, 
                combined with industrial restructuring and labor market 
                flexibility measures where they are also a part of an 
                IMF program, may excessively depress the local economy, 
                creating potentially explosive social and political 
                problems;
                    (E) such a strategy also creates excessive pressure 
                to export and reduce imports, eroding support in the 
                United States for a more open international trading and 
                investment regime, as export markets collapse and a 
                flood of imports puts downward pressure on U.S. wages 
                and employment; and
                    (F) there is a consequent need for both the IMF and 
                the United States Treasury to fashion programs and 
                policies that are adapted to local conditions and 
                integrate private creditor contributions.

                  TITLE I--INTERNATIONAL MONETARY FUND

SEC. 101. PARTICIPATION IN QUOTA INCREASE.

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

``SEC. 61. 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 10,622,500,000 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.''.

                  TITLE II--NEW ARRANGEMENTS TO BORROW

SEC. 201. NEW ARRANGEMENTS TO BORROW.

    Section 17 of the Bretton Woods Agreements Act (22 U.S.C. 286e-2 et 
seq.) is amended--
            (1) in subsection (a)--
                    (A) by striking ``and February 24, 1983'' and 
                inserting ``February 24, 1983, and January 27, 1997''; 
                and
                    (B) by striking ``4,250,000,000'' and inserting 
                ``6,712,000,000'';
            (2) in subsection (b), by striking ``4,250,000,000'' and 
        inserting ``6,712,000,000''; and
            (3) in subsection (d)--
                    (A) by inserting ``or the Decision of January 27, 
                1997,'' after ``February 24, 1983,''; and
                    (B) by inserting ``or the New Arrangements to 
                Borrow, as applicable'' before the period at the end.

                      TITLE III--POLICY PROVISIONS

SEC. 301. ADVOCACY OF CERTAIN POLICIES.

    (a) In General.--Title XVI of the International Financial 
Institutions Act (22 U.S.C. 262p-262p-5) is amended--
            (1) by redesignating section 1622 as section 1624;
            (2) by redesignating section 1621 (as added by section 327 
        of the Antiterrorism and Effective Death Penalty Act of 1996; 
        22 U.S.C. 262p-4q) as section 1622, and by relocating such 
        section so that it appears after section 1621 (as added by 
        section 526(e) of Foreign Operations, Export Financing, and 
Related Programs Supplemental Appropriations Act, 1994; 22 U.S.C. 262p-
4p); and
            (3) by inserting after section 1622 (as so redesignated by 
        paragraph (2) of this subsection) the following:

``SEC. 1623. ADVOCACY OF CERTAIN POLICIES.

    ``(a) In General.--The United States Government shall employ its 
best efforts to do the following, and such efforts shall include but 
not be limited to the Secretary of the Treasury instructing the United 
States Executive Director at the International Monetary Fund to use the 
voice and vote of the Executive Director to these ends:
            ``(1) Make the International Monetary Fund a more effective 
        mechanism for promoting market-oriented reform, trade 
        liberalization, economic growth, democratic governance, and 
        social stability through--
                    ``(A) liberalizing the pricing, trade, investments, 
                and exchange rate regimes of countries to open 
                countries to the competitive forces of the global 
                economy;
                    ``(B) privatizing industry to--
                            ``(i) eliminate government monopolies;
                            ``(ii) close loss-making enterprises; and
                            ``(iii) reduce government control over the 
                        factors of production; and
                    ``(C) establishing adequate provisions for a social 
                safety net to cushion the effects on workers of 
                unemployment and dislocation.
            ``(2) Make the International Monetary Fund a more effective 
        mechanism, in concert with appropriate international 
        authorities and the International Bank for Reconstruction and 
        Development, to strengthen financial systems in developing 
        countries and encourage the adoption of sound banking 
        principles and practices.
            ``(3) Assist the International Monetary Fund to avoid 
        becoming a lender of last resort for private investors, 
        including commercial banks, and accordingly advocate policies 
        which include--
                    ``(A) strengthening crisis prevention and early 
                warning signals through improved and more effective 
                surveillance of the national economic policies and 
                financial market developments of countries, and fuller 
                disclosure of such information to market participants;
                    ``(B) recognition that the unregulated flow of 
                capital without regard to maturity structure has 
                contributed to financial instability and crisis, and 
                consideration of measures that discourage inappropriate 
                maturities in private market borrowing;
                    ``(C) accelerating work on strengthening financial 
                systems in emerging market economies so as to reduce 
                the risk of financial crises;
                    ``(D) consideration of provisions in debt contracts 
                that would foster dialogue and consultation between a 
                sovereign debtor and its private creditors, and among 
                those creditors;
                    ``(E) consideration by the Executive Board of the 
                International Monetary Fund of extending the scope of 
                its policy on lending to members in arrears so as to 
                encourage and expedite such a dialogue and 
                consultation;
                    ``(F) intensified consideration of mechanisms to 
                facilitate orderly workout mechanisms for countries 
                experiencing debt or liquidity crises; and
                    ``(G) the International Monetary Fund avoiding the 
                provision of funding to countries experiencing a 
                financial crisis resulting from imprudent borrowing 
                without a significant contribution by the private 
                creditors, investors, and banks which had extended such 
                credits.
            ``(4) Make the International Monetary Fund a more effective 
        mechanism for promoting good governance principles within 
        recipient countries by fostering structural reforms that reduce 
        opportunities for corruption and bribery.
            ``(5) Structure the International Monetary Fund programs 
        and assistance so that governments which draw on the 
        International Monetary Fund channel public funds away from 
        unproductive purposes, including excessive military spending, 
        and toward investment in human and physical capital as well as 
        social programs to protect the neediest and promote social 
        equity.
            ``(6) Structure International Monetary Fund programs and 
        assistance so that--
                    ``(A) recipient governments commit to affording 
                workers the right to exercise internationally 
                recognized core worker rights, including the right of 
                free association and collective bargaining through 
                unions of their own choosing;
                    ``(B) measures designed to facilitate labor market 
                flexibility are consistent with such core worker 
                rights; and
                    ``(C) the staff of the International Monetary Fund 
                adequately takes into account the views of the 
                International Labor Organization, particularly with 
                respect to the importance of labor market flexibility 
                measures in reducing unemployment in recipient 
                countries, and the impact such measures may have on 
                core worker rights in such countries.
            ``(7) Structure International Monetary Fund programs and 
        assistance so as not to exacerbate or precipitate ethnic strife 
        within a recipient country.
            ``(8) Work with the International Monetary Fund to 
        incorporate the recognition that macroeconomic developments and 
        policies can affect and be affected by environmental conditions 
        and policies, including by working independently and with the 
        multilateral development banks to encourage countries to 
        correct market failures and to adopt appropriate environmental 
        policies in support of macroeconomic stability and sustainable 
        development.
            ``(9) Do the maximum possible as a member state to 
        facilitate greater International Monetary Fund transparency, 
        including by enhancing accessibility of the International 
        Monetary Fund and its staff, fostering a more open release 
        policy toward working papers, past evaluations, and other 
        International Monetary Fund documents; seeking to publish all 
        letters of intent to the International Monetary Fund, and 
        establishing a more open release policy regarding Article IV 
        consultations.
            ``(10) Facilitate greater International Monetary Fund 
        accountability and enhance International Monetary Fund self-
        evaluation by establishing an operations evaluation department 
        modeled on the experience of the International Bank for 
        Reconstruction and Development, guided by such key principles 
        as usefulness, credibility, transparency, and independence.
            ``(11) Coordinate with the International Bank for 
        Reconstruction and Development and other international 
        financial institutions (as defined in section 1701(c)(2)) in 
        advancing credit to small businesses, including microenterprise 
        lending.
    ``(b) Coordination With Other Executive Departments.--To the extent 
that it would assist in achieving the goals described in subsection 
(a), the Secretary of the Treasury shall pursue the goals in 
coordination with the Secretary of State, the Secretary of Labor, the 
Secretary of Commerce, the Administrator of the Environmental 
Protection Agency, the Administrator of the Agency for International 
Development, and the United States Trade Representative.
    ``(c) Funding Conditioned on Establishment in the Treasury 
Department of Permanent IMF Advisory Committee.--
            ``(1) In general.--No officer or employee of the Federal 
        Government may, directly or indirectly, provide any Federal 
        funds to or for the benefit of the International Monetary Fund 
        unless the Secretary of the Treasury has established an 
        International Monetary Fund Advisory Committee (in this 
        paragraph referred to as the `Committee') that meets the 
        following requirements:
                    ``(A) Membership.--The Committee shall consist of 
                12 members appointed by the Secretary of the Treasury, 
                after appropriate consultations with the relevant 
                organizations, as follows:
                            ``(i) 3 members shall be representatives 
                        from organized labor.
                            ``(ii) 3 members shall be representatives 
                        from banking.
                            ``(iii) 3 members shall be representatives 
                        from manufacturing and industry.
                            ``(iv) 3 members shall be representatives 
                        from nongovernmental environmental and human 
                        rights organizations.
                    ``(B) Duties.--Not less frequently than every 6 
                months, the Committee shall meet to review individual 
                country International Monetary Fund programs, the 
                conditionality attached or proposed to be attached to 
                such programs, and the actual or proposed position of 
                the United States regarding such programs, as 
                communicated by the United States Executive Director at 
                the International Monetary Fund, for the purpose of 
                advising the Secretary of the Treasury on the extent to 
                which individual country International Monetary Fund 
                programs--
                            ``(i) reflect an appropriate balance among 
                        economic growth, fiscal responsibility, and 
                        social equity;
                            ``(ii) do not, in the interests of 
                        attracting private capital, increase the `moral 
                        hazard' of `bailing out' commercial lenders 
                        from imprudent lending decisions;
                            ``(iii) ensure that labor market 
                        flexibility measures do not undermine 
core worker rights, particularly the right of free association and 
collective bargaining, and address directly any abuse of such rights; 
and
                            ``(iv) do not undermine sustainable 
                        development or environmental protections.
                    ``(C) Chairman.--The Committee may not meet or 
                continue a meeting unless the meeting is chaired by the 
                Secretary of the Treasury, the Deputy Secretary of the 
                Treasury, or an Under Secretary of the Treasury 
                designated by the Secretary.
            ``(2) Inapplicability of termination provision of the 
        federal advisory committee act.--Section 14(a)(2) of the 
        Federal Advisory Committee Act shall not apply to an entity 
        established pursuant to paragraph (1) of this subsection.''.

                     TITLE IV--REPORTS TO CONGRESS

SEC. 401. REPORT TO CONGRESS.

    (a) In General.--The Secretary of the Treasury shall submit a semi-
annual report to Congress on the status of International Monetary Fund 
programs linked to official United States government financing.
    (b) Contents of Report.--With respect to each program, the report 
shall include the following:
            (1) Whether private creditors have agreed to--
                    (A) extend the maturities on outstanding 
                indebtedness; or
                    (B) additional measures such as a provision of new 
                credits.
            (2) Whether private creditor agreements constitute an 
        adequate contribution by such creditors to the resolution of 
        the problem that the International Monetary Fund Program 
        addresses.
            (3) Whether International Monetary Fund involvement in 
        labor market flexibility measures has a negative impact on core 
        worker rights, particularly the rights of free association and 
        collective bargaining.
            (4) A description of any abuses of core worker rights and 
        how the International Monetary Fund addressed such abuses.
            (5) Whether the program adequately balances the need for 
        austerity, economic growth, and social equity.
            (6) Whether the program adequately accounts for and 
        addresses the social and political consequences in a debtor 
        country of the implementation of measures agreed to by the 
        country authorities and the International Monetary Fund, 
        particularly industrial restructuring and labor market 
        flexibility measures.
            (7) What financial measures have been agreed to with a 
        recipient country to ensure that short term capital flows do 
        not continue to cause economic instability.
            (8) What measures are included in the program to ensure 
        sustainable development and address environmental devastation.
            (9) What results have been obtained from a recipient 
        government with respect to institutional reforms.
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