[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7902 Introduced in House (IH)]

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118th CONGRESS
  2d Session
                                H. R. 7902

 To support a review of surcharge policy at the International Monetary 
                                 Fund.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 9, 2024

 Mr. Garcia of Illinois (for himself, Mrs. Beatty, Ms. Pettersen, Mr. 
Cleaver, Mr. Vargas, Ms. Williams of Georgia, Ms. Tlaib, Ms. Pressley, 
 and Ms. Jayapal) introduced the following bill; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To support a review of surcharge policy at the International Monetary 
                                 Fund.

    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 ``Stop Onerous Surcharges Act''.

SEC. 2. UNITED STATES SUPPORT FOR A REVIEW OF SURCHARGE POLICY AT THE 
              INTERNATIONAL MONETARY FUND.

    (a) Findings.--The Congress finds the following:
            (1) The International Monetary Fund (IMF) imposes a 
        surcharge, in addition to standard interest and service fees, 
        of 200 basis points on outstanding credit provided through its 
        General Resources Account that exceeds 187.5 percent of the IMF 
        country quota, and an additional 100 basis points if that 
        credit has been outstanding for over 36 or 51 months, depending 
        on the facility.
            (2) According to the IMF, ``These level and time-based 
        surcharges are intended to help mitigate credit risk by 
        providing members with incentives to limit their demand for 
        Fund assistance and encourage timely repurchases while at the 
        same time generating income for the Fund to accumulate 
        precautionary balances.''.
            (3) Surcharges substantially increase the cost of borrowing 
        from the IMF, constituting, on average, an estimated 39 percent 
        of conventional charges paid by affected countries in the past 
        5 years. Over the next 5 years, surcharges will make up an 
        estimated 39 percent of Ecuador's nonprincipal payments on its 
        IMF lending program, and 24 percent of Egypt's.
            (4) Despite Russia's illegal invasion, Ukraine remains one 
        of the countries most heavily burdened by surcharges. From 2024 
        to 2028, Ukraine is expected to pay the IMF approximately 
        $1,500,000,000 in surcharges alone.
            (5) The James M. Inhofe National Defense Authorization Act 
        for Fiscal Year 2023 (Public Law 117-263), which became law on 
        December 23, 2022, included language derived from the Ukraine 
        Comprehensive Debt Payment Relief Act of 2022. The Ukraine 
        Comprehensive Debt Payment Relief Act of 2022 requires the 
        Department of Treasury to make efforts to secure debt relief 
        for Ukraine, and was passed by the House of Representatives on 
        May 11, 2022, with overwhelming bipartisan support.
            (6) As a result of the war in Ukraine and other factors, in 
        January 2024, the World Bank forecast that the world would 
        experience the worst 5-year period of growth in 30 years. The 
        external public debt of developing economies is at record 
        levels, and the World Bank, IMF, and United Nations have all 
        warned of coming defaults and a potential global debt crisis. 
        Due to conflict, economic conditions, and environmental 
        factors, the World Food Program estimates that 783,000,000 
        people are facing extreme hunger, and more than 333,000,000 
        people are facing acute levels of food insecurity.
            (7) Official data shows that the number of countries paying 
        surcharges to the IMF has nearly tripled since 2019, and many 
        more countries are estimated to have debt burdens near the 
        threshold.
            (8) In a 2022 statement, dozens of former heads of state 
        and government from across the political spectrum, including 
        United States allies such as the United Kingdom and Ukraine, 
        have called for the immediate suspension of IMF surcharges.
            (9) An April 2022 brief from the United Nations Global 
        Crisis Response Group on Food, Energy, and Finance on the 
        impacts of the war in Ukraine on developing countries called 
        for the immediate suspension of surcharge payments for a 
        minimum of 2 years, because ``[s]urcharges do not make sense 
        during a global crisis since the need for more financing does 
        not stem from national conditions but from the global economy 
        shock''.
            (10) In October 2023, International Monetary and Financial 
        Committee Chair Nadia Calvino stated that the Fund ``will 
        consider a review of surcharge policies''.
            (11) According to Deputy Under Secretary for International 
        Finance Brent Neiman, ``China became the world's largest 
        official creditor in 2017, surpassing the claims of the World 
        Bank, IMF, and all Paris Club official creditors combined.''. 
        By dramatically increasing the cost of borrowing from the IMF, 
        surcharges may incentivize developing nations to seek financing 
        from alternative sources like China.
    (b) Review of Surcharge Policy at the International Monetary 
Fund.--The Secretary of the Treasury shall instruct the United States 
Executive Director at the International Monetary Fund (IMF) to use the 
voice and vote of the United States to--
            (1) initiate an immediate review by the IMF of its 
        surcharge policy, to be completed, and its results and 
        underlying data published, within 365 days; and
            (2) suspend and waive surcharge payments during the 
        pendency of the review.
    (c) Components of the Review of Surcharge Policy.--The review 
referred to in subsection (b) shall include the following:
            (1) A borrower-by-borrower analysis of surcharges in terms 
        of cost and as a percentage of national spending on debt 
        service on IMF loans, food security, health, and education for 
        the 5-year period beginning January 1, 2018.
            (2) Evaluation of the policy's effectiveness at achieving 
        its goals of--
                    (A) disincentivizing large and prolonged reliance 
                on IMF credit;
                    (B) mitigating the credit risks taken by the IMF;
                    (C) improving borrower balance of payments and debt 
                sustainability, particularly during periods of 
                contraction, unrest, public health emergency, high 
                interest rates, and high global prices of commodities; 
                and
                    (D) promoting fiscally responsible policy reforms.
            (3) Evaluation of the policy's potential unintended 
        consequences of--
                    (A) incentivizing borrowers to seek opaque and 
                potentially predatory bilateral loans; and
                    (B) hindering the ability of borrowers to repay 
                private creditors and access the private credit market.
            (4) Recommendations for--
                    (A) identifying alternative sources of funding for 
                the IMF's precautionary balances that prioritize stable 
                funding sources and equitable burden-sharing among IMF 
                members; and
                    (B) determining whether the Fund should maintain, 
                reform, temporarily suspend, or eliminate the use of 
                surcharges.
            (5) Extensive consultation with relevant experts, 
        particularly those from countries that are currently paying or 
        have recently paid surcharges. These experts should include 
        government officials responsible for overseeing economic 
        development, fiscal policy, health care and other social 
        services, and defense, as well as experts in global financial 
        policy, global risk analysts, academics, and civil society 
        representatives.
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