[Congressional Record Volume 168, Number 158 (Thursday, September 29, 2022)]
[Senate]
[Page S5608]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 6083. Mr. MURPHY submitted an amendment intended to be proposed to
amendment SA 5499 submitted by Mr. Reed (for himself and Mr. Inhofe)
and intended to be proposed to the bill H.R. 7900, to authorize
appropriations for fiscal year 2023 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:
At the end of subtitle F of title XII, add the following:
SEC. 1276. REVIEW OF LOAN SURCHARGE POLICY OF INTERNATIONAL
MONETARY FUND.
(a) Findings.--Congress finds as follows:
(1) The International Monetary Fund (in this section
referred to as the ``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) According to a 2021 report by the European Network on
Debt and Development, surcharges increase the average cost of
borrowing from the IMF by over 64 percent for surcharged
countries. Surcharges increased Ukraine's borrowing costs on
its IMF lending program by nearly 27 percent, Jordan's by 72
percent, and Egypt's by over 104 percent.
(4) As a result of the invasion by the Russian Federation,
the World Bank predicts that Ukraine will experience an
economic contraction of 45 percent in 2022. Yet Ukraine is
expected to pay the IMF an estimated $483,000,000 in
surcharges from 2021 through 2027.
(5) The Ukraine Comprehensive Debt Payment Relief Act of
2022 (H.R. 7081), which requires the Department of Treasury
to make efforts to secure debt relief for Ukraine, was passed
by the House of Representatives on May 11, 2022, with
overwhelming bipartisan support, by a vote of 362 Yeas to 56
Nays.
(6) As a result of the war in Ukraine and other factors,
the World Bank predicted that global growth rates will slow
to 2.9 percent in 2022, down nearly half from 2021. External
public debt of developing economies is at record levels, and
the World Bank, the IMF, and the United Nations have all
warned of coming defaults and a potential global debt crisis.
As food and energy prices rise, the World Food Program has
estimated that 750,000 people are at immediate risk of
starvation or death, and 323,000,000 people may experience
acute food insecurity before the end of the year.
(7) Since 2020, the number of countries paying surcharges
to the IMF has increased from 9 to 16. A December 2021 IMF
policy paper notes that under the IMF's model-based World
Economic Outlook scenario ``the number of surcharge-paying
members would increase to 38 in FY 2024 and FY 2025'' and
that under the Fund's ``adverse scenario, the number of
surcharge-paying members and the amount of surcharge income
would increase even more sharply''.
(8) 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''.
(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 to use the voice and vote of the United States
to--
(1) initiate an immediate review by the IMF of the
surcharge policy of the IMF 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) should 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, and health for the 5-
year period beginning at the start of the COVID-19 pandemic.
(2) Evaluation of the policy's direct impact on--
(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, and pandemic;
(D) promoting fiscally responsible policy reforms;
(E) disincentivizing borrowers from seeking opaque and
potentially predatory bilateral loans; and
(F) improving the ability of borrowers to repay private
creditors and access the private credit market.
(3) 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 IMF should maintain, reform,
temporarily suspend, or eliminate the use of surcharges.
(d) Consultations.--The review referred to in subsection
(b) must incorporate extensive consultation with relevant
experts, particularly those from countries that are currently
paying or have recently paid surcharges. Those experts should
include government officials responsible for overseeing
economic development, social services, and defense, United
Nations officials, economic research institutes, academics,
and civil society organizations.
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