[Congressional Record Volume 146, Number 20 (Tuesday, February 29, 2000)]
[Extensions of Remarks]
[Page E196]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         IMF REFORM ACT OF 2000

                                 ______
                                 

                            HON. JIM SAXTON

                             of new jersey

                    in the house of representatives

                       Tuesday, February 29, 2000

  Mr. SAXTON. Mr. Speaker, today I am introducing legislation to 
fundamentally change the way the International Monetary Fund (IMF) 
operates. The bill is an outcome of a 2-year JEC research program that 
has included eight Joint Economic Committee (JEC) studies and reports 
and 5 hearings on the IMF and its operations. The bill, entitled the 
``IMF Reform Act of 2000,'' expands on my IMF Transparency and 
Efficiency Act of 1998, a version of which became law in that year.
  The legislation I am introducing today builds on previous efforts to 
provide more transparency and efficiency in IMF operations. The IMF is 
far too secretive and its use of pervasive interest rate subsidies is 
economically indefensible. IMF finances must become transparent, and 
its policy of extremely low interest rates, currently under 5 percent, 
for countries such as Russia and Indonesia must be ended. Such 
uncreditworthy countries should not be able to borrow at interest rates 
below the cost of funds of IMF donors such as the United States.
  My bill would mandate IMF financial transparency and IMF lending at 
market interest rates, and would also reduce the maturity of loans to 
less than one year. IMF lending would be restricted to crisis lending 
only. Furthermore, IMF lending safeguards are needed to end the IMF 
traditional ``see no evil, hear no evil'' approach to potential 
corruption. The IMF's continued lending to countries that have 
falsified loan documents or other information is very hard to justify 
to taxpayers. Strict accounting controls and safeguards should be 
instituted to prevent misuse, and if insufficient further lending 
should be halted.
  This bill would also improve transparency by requiring a 
reorganization of the public financial statements of the Fund. As a 
former IMF research director recently observed, ``the Fund's jerry-
built structure of financial provisions has meant that almost nobody 
outside and, indeed, few inside, the Fund understand how the 
organization works, because relatively simple economic relations are 
buried under increasingly opaque layers of language. This is the very 
point I have made for over two years in pressing for greater 
transparency in IMF finances, and it is good to see agreement on this 
point.
  Over the last two years our research at the JEC has uncovered a 
number of fascinating facts about how the IMF is financed, IMF 
subsidies, and IMF lending practices. I look forward to a substantive 
and vigorous debate on IMF reform based on this research and facts. 
There will be other points of view and other legislative ideas, but I 
am convinced that this bill includes the right basic ingredients of IMF 
reform. As usual, I plan to use every opportunity to advance these 
ideas into law, as with the IMF reforms enacted into law in 1998 and 
1999.

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