Treasury Maintains a Formal Process to Advance U.S. Policies at  
the International Monetary Fund (07-FEB-03, GAO-03-401R).	 
                                                                 
Over the past 50 years, Congress has shown increasing interest in
legislating U.S. policies concerning the International Monetary  
Fund (IMF or the Fund). In 2001, we reported that the United	 
States had 60 legislative mandates prescribing U.S. policy goals 
at the Fund. These mandates covered a wide range of policies,	 
including human rights, international trade, and weapons	 
proliferation. Because the Fund is an international organization,
it is generally exempt from U.S. law. However, Congress can seek 
to influence IMF policy by directing the Secretary of the	 
Treasury to instruct the U.S. Executive Director of the Board of 
the Fund to pursue specific policies or vote in a particular way 
as part of his duties. In 2000, Congress directed us to assess	 
the Department of the Treasury's efforts in advancing U.S.	 
legislative mandates at the Fund. The Consolidated Appropriations
Act for Fiscal Year 2000 requires us to report annually on the	 
extent to which IMF practices are consistent with U.S. policies  
as set forth in federal law. In January 2001, we reported that	 
the Treasury instituted a formal process in 1999 to		 
systematically promote congressionally mandated policies at the  
Fund. We also found that while Treasury had some influence over  
Fund policies, it was difficult to attribute the adoption of a	 
policy within the Fund solely to the efforts of any one member	 
because the Fund generally makes decisions on the basis of	 
consensus. In this report, we provide an update on (1) the status
of the U.S. Treasury's process for advancing congressional	 
mandates at the Fund and (2) the number of U.S. legislative	 
mandates concerning the Fund.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-401R					        
    ACCNO:   A06067						        
  TITLE:     Treasury Maintains a Formal Process to Advance U.S.      
Policies at the International Monetary Fund			 
     DATE:   02/07/2003 
  SUBJECT:   International organizations			 
	     Legislation					 
	     Monetary policies					 
	     International Monetary Fund			 

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GAO-03-401R

GAO- 03- 401R International Monetary Fund

February 7, 2003 Congressional Committees

Subject: Treasury Maintains a Formal Process to Advance U. S. Policies at
the International Monetary Fund Over the past 50 years, Congress has shown
increasing interest in legislating U. S.

policies concerning the International Monetary Fund (IMF or the Fund). In
2001, we reported that the United States had 60 legislative mandates
prescribing U. S. policy goals at the Fund. 1 These mandates covered a
wide range of policies, including human rights, international trade, and
weapons proliferation. Because the Fund is an international organization,
it is generally exempt from U. S. law. However, Congress can seek to
influence IMF policy by directing the Secretary of the Treasury to
instruct the U. S. Executive Director of the Board of the Fund to pursue
specific policies or vote in a particular way as part of his duties. 2 In
2000, Congress directed us to assess the Department of the Treasury*s
efforts in

advancing U. S. legislative mandates at the Fund. The Consolidated
Appropriations Act for Fiscal Year 2000 3 requires us to report annually
on the extent to which IMF practices are consistent with U. S. policies as
set forth in federal law. In January 2001, we reported that the Treasury
instituted a formal process in 1999 to systematically promote
congressionally mandated policies at the Fund. We also found that while
Treasury had some influence over Fund policies, it was difficult to
attribute the adoption of a policy within the Fund solely to the efforts
of any one member because the Fund generally makes decisions on the basis
of consensus. In this report, we provide an update on (1) the status of
the U. S. Treasury*s process for advancing congressional mandates at the
Fund and (2) the number of U. S. legislative mandates concerning the Fund.

1 See U. S. General Accounting Office, International Monetary Fund:
Efforts to Advance U. S. Policies at the Fund, GAO- 01- 214 (Washington,
D. C.: Jan. 29, 2001). 2 The Executive Board oversees the day- to- day
business of the Fund. The Board comprises 24 executive directors who are
appointed or elected by member countries or by groups of member

countries. The President appoints, with the advice and consent of the
Senate, the U. S. Executive Director to represent the United States on the
Board. 3 P. L. 106- 113 sec. 504 (e). United States General Accounting
Office Washington, DC 20548

GAO- 03- 401R International Monetary Fund Page 2

Results in Brief

The U. S. Treasury continues to maintain a formal process for advancing U.
S. policies at the Fund. A task force facilitates coordination between the
Treasury and the U. S. Executive Director and identifies early
opportunities to influence decisions of Fund members. Since our January
2001 report, the task force has continued to meet on a biweekly basis to
identify opportunities to advance legislative mandates at the Fund. In
addition, beginning in March 2001, the task force enhanced its efforts to
monitor and promote mandates by focusing attention on countries that are
not yet on the IMF Board*s calendar but that may likely require Fund
assistance in the future.

We have identified 67 legislative mandates that prescribe U. S. policy
goals at the IMF, an increase of 7 mandates since our January 2001 report.
These additional mandates address policy issues such as international
terrorism, rule of law and land reform concerning Zimbabwe, and
humanitarian efforts concerning Sudan. Terrorism is a

topic that is covered in prior mandates as well. The Treasury continues to
notify the U. S. Executive Director about new mandates through instruction
letters.

Background

The Department of the Treasury has the lead role within the executive
branch for formulating U. S. policy toward the Fund. The U. S. Executive
Director, who is appointed by the President, represents the United States
at the Fund and pursues U. S. policy objectives through its membership in
the Fund*s Executive Board. Treasury*s Office of International Affairs,
along with the Office of the U. S. Executive Director of the IMF,
formulate, evaluate, and implement Treasury policy concerning U. S.
participation in the IMF, including the policies set forth in legislative
mandates.

The legislative mandates that set forth U. S. policy toward the Fund cover
a wide range of policies, including issues considered core to the Fund*s
mission, such as exchange rate policy, as well as emerging issues such as
environmental policy. Mandates in this report are put into two broad
categories: *policy* and *directed vote* mandates. Policy mandates seek to
foster or urge a certain policy at the IMF by directing Treasury to
instruct the U. S. Executive Director to use his *voice* and/ or *vote* on
behalf of the United States at the Executive Board to bring about a policy
change at the Fund. For example, the U. S. Executive Director is directed
to urge the IMF to encourage the adoption of internationally recognized
worker rights by borrowing countries. Directed vote mandates instruct the
United States to *oppose* or *vote against* loans or other IMF assistance.
For example, the U. S. Executive Director is directed to oppose financial
assistance for a country that is not compliant with the military spending
and audits mandate, as shown in enclosure I. Treasury Has a Systematic
Process for Promoting IMF Mandates

Treasury continues to have a systematic process in place to advance U. S.
legislative mandates at the Fund. As we reported in our January 2001
report, 4 Treasury created

4 GAO- 01- 214.

GAO- 03- 401R International Monetary Fund Page 3 the Task Force on
Implementation of U. S. Policy and Reforms in the IMF in March

1999 to strengthen the process by which the United States pursues its
objectives in the IMF. In particular, the task force was to increase
awareness among Treasury staff about the mandates and identify early
opportunities to provide input to the U. S. Executive Director to
influence decisions regarding IMF members* programs and economic reviews.
Treasury also continues to make available to all relevant staff annual
updates of its comprehensive legislative mandates manual, which contains
all mandates applicable to U. S. participation in the Fund.

The task force comprises staff- level representatives from the regional
and functional offices within Treasury*s Office of International Affairs,
Treasury*s Office of the General Counsel, and the U. S. Executive
Director*s office. Task force members continue to meet biweekly to discuss
how Treasury and the U. S. Executive Director can best apply legislative
mandates given a country*s economic circumstances. 5 At the task force
meetings, members discuss opportunities to advance mandates of potential
relevance for specific countries. The aim of the discussion is to identify
the best opportunities to make a credible and convincing case for pursuing
a mandate at a given time. Once agreement is reached on how to advance a
mandate, Treasury country officers collaborate with U. S. Executive
Director staff and functional specialists to draft a policy position for
the U. S. Executive Director. The policy position can take the form of
input for a written statement or talking points for an oral statement to
the Executive Board. The U. S. Executive Director pursues U. S.
objectives, including the legislative mandates, through various channels
at the Fund. For example, the U. S. Executive Director regularly makes
oral or written statements to the Board to make Board members aware of U.
S. policy objectives regarding requests from countries for new programs,
Fund reviews of existing programs, and

regular Fund reviews of all members* economic policies. Since our January
2001 report, Treasury has worked to enhance its efforts to monitor and
promote the mandates at the Fund. Prior task force meetings tended to
focus on countries that were scheduled for discussion by the IMF Board in
upcoming weeks. In March 2001, the task force implemented an agenda that
also assesses countries that may need a program over the next several
months. The task force prepares a summary of the issues regarding the
mandates for targeted countries, which it updates and circulates every 2
weeks to complement the IMF Executive Board calendar and to focus
attention on countries not yet on the Board*s calendar.

U. S. Legislative Mandates Concerning the IMF Have Increased

U. S. legislative mandates concerning the IMF have increased since our
January 2001 report. We identified 67 legislative mandates as of January
15, 2003, through our own legal analysis supplemented by documentation
obtained from Treasury, 7 more mandates than identified in our January
2001 report. These additional mandates

5 Although the task force helps facilitate coordination between Treasury
officials and the U. S. Executive Director, it is not the final arbiter
for determining the U. S. policy position toward the IMF on any given
issue. The task force is not a review or approval mechanism to give
Treasury sanction to pursue individual mandates.

GAO- 03- 401R International Monetary Fund Page 4 address policy issues
such as international terrorism, rule of law and land reform concerning
Zimbabwe, and humanitarian efforts concerning Sudan. Terrorism is a

topic that is covered in prior mandates as well. Treasury continues to
provide annual notification letters concerning new mandates to the U. S.
Executive Director*s office. These notification letters instruct the U. S.
Executive Director to take appropriate actions with respect to IMF
mandates.

Enclosure I identifies the 67 mandates and includes brief descriptions of
the broad policy objectives they address as well as some of the actions
they require on the part of the U. S. Treasury and the U. S. Executive
Director. The mandates date from 1945 to 2002, with the majority enacted
in the last decade. Some mandates address multiple policy issues,
sometimes overlapping one another. Enclosure II identifies some policies
that are addressed in multiple mandates. 6 For example, 9 mandates pertain
to trade issues and 7 mandates pertain to debt issues.

Agency Comments and Our Evaluation

We received written comments on a draft of this report from the Department
of the Treasury, which are reprinted in enclosure III. Treasury agreed
with the facts presented in this report. Treasury reiterates its position
that the extensive legislative mandates could potentially undermine its
effectiveness and influence at the Fund. In addition to their written
comments, Treasury officials provided technical comments, which we
incorporated in this report where appropriate.

Scope and Methodology

To assess the current process that Treasury has in place to advance
congressional mandates at the IMF, we reviewed the minutes of the biweekly
task force meetings from November 2000 to December 2002, which summarized
major issues relating to the mandates. To determine the current number of
mandates pertaining to the IMF, we analyzed Treasury*s compilation of
legislative mandates pertaining to the international financial
institutions as well as documents obtained through our own legal research.
In addition, we reviewed the instruction letters from Treasury to the U.
S. Executive Director concerning new mandates for February 2001 and March
2002. We used two criteria as the basis for identifying the relevant laws
for this review. These criteria were defined as (1) any current law that
explicitly directs the U. S. Executive Director to the IMF to use his vote
at the IMF to achieve a policy goal and (2) any current law that seeks to
have the U. S. Executive Director use his voice at the IMF to promote a U.
S. policy or make a policy change. To address both objectives, we also
interviewed officials in Treasury*s Office of International Monetary
Policy and the Office of the General Counsel.

We conducted this review from November 2002 to January 2003 in accordance
with generally accepted government auditing standards.

6 Within enclosures I and II, mandates shown in bold represent mandates
that were added since our last report in January 2001. Some of these
mandates simply replace older mandates that had expired, while other
mandates cover new topics.

GAO- 03- 401R International Monetary Fund Page 5

- - - - -

We are sending copies of this report to other interested congressional
committees; the Secretary of the Treasury, the Managing Director of the
International Monetary Fund, and other interested parties. Copies will be
made available to others on request. In addition, this report will be
available at no charge on our Web site at http:// www. gao. gov.

If you have any questions about this report, please contact Joseph A.
Christoff at 202- 512- 8979 and Stephanie J. May at 202- 512- 6293. We can
also be reached by E- mail at christoffj@ gao. gov and mays@ gao. gov,
respectively. Thomas Melito, Barbara Shields, Mary Moutsos, Mark Speight,
Lynn Cothern, and Janey Cohen made contributions to this report.

Joseph A. Christoff Director, International Affairs and Trade

Stephanie J. May Managing Associate General Counsel General Counsel

Enclosures * 3

Page 6 GAO- 03- 401R International Monetary Fund List of Congressional
Committees The Honorable Richard Lugar Chairman

The Honorable Joseph R. Biden, Jr. Ranking Minority Member Committee on
Foreign Relations United States Senate

The Honorable Ted Stevens Chairman The Honorable Robert C. Byrd Ranking
Minority Member Committee on Appropriations United States Senate

The Honorable Mitch McConnell Chairman The Honorable Patrick J. Leahy
Ranking Minority Member Subcommittee on Foreign Operations,

Export Financing, and Related Programs Committee on Appropriations United
States Senate

The Honorale Michael G. Oxley Chairman The Honorable Barney Frank Ranking
Minority Member Committee on Financial Services House of Representatives

The Honorable Bill Young Chairman The Honorable David R. Obey Ranking
Minority Member Committee on Appropriations House of Representatives

Enclosure I GAO- 03- 401R International Monetary Fund Page 7

U. S. Legislative Mandates a Concerning the International Monetary Fund

Law and date of enactment b Subject matter Required actions

Directed vote

22 U. S. C. 262d Oct. 3, 1977

Human rights, international terrorism, religious freedom, and others,
including nuclear material

acquisition The Department of the Treasury shall instruct the U. S.
Executive Director (USED) to oppose loans to countries

whose governments engage in a pattern of gross violations of
internationally recognized human rights or provide refuge to individuals
committing acts of international terrorism by hijacking aircraft, unless
such assistance is directed to serve basic human needs. Severe violations
of religious freedom should be considered in determining if the country
has engaged in gross violations of internationally

recognized human rights. Further, Treasury is to instruct the USED to
consider a list of concerns when carrying out its duties, including
whether recipient countries are seeking to acquire unsafeguarded special
nuclear material.

Yes 22 U. S. C. 262e Oct. 3, 1977 Salaries and

benefits of IMF employees

The President shall direct the USED to take all appropriate actions to
keep the compensation for International Monetary Fund (IMF) employees at a
level comparable to the

compensation provided employees of both private business and the U. S.
government in comparable positions. No

22 U. S. C. 262h Oct. 15, 1986 (also repeated in P. L. 107- 115, sec. 514,

Jan. 10, 2002) Trade, mining, and surplus

commodities Treasury shall instruct the USED to use his voice and vote

on behalf of the United States to oppose any IMF assistance for the
production or extraction of any commodity or mineral for export, if it is
in surplus on world markets and if the assistance would cause substantial
injury to the U. S. producers of the same, similar, or competing

commodity. Yes

22 U. S. C. 262k Aug. 15, 1985 Impact of country adjustment programs on
industries and commodity markets

Treasury shall instruct the USED to consider, when reviewing loans,
credits, or other uses of IMF resources, the effect that country
adjustment programs would have on individual industries* sectors and
international commodity markets including specific criteria to be
considered as a basis for a vote against certain mining and related
project proposals.

No 22 U. S. C. 262k- 1 Sept. 30, 1996 Military spending

and audits Treasury shall instruct the USED to use his voice and vote to
oppose any loan, other than for basic humanitarian

needs, to any country that the Secretary of the Treasury determines does
not have in place a functioning system for reporting to civilian
authorities audits of receipts and

expenditures that fund activities of the armed and security forces and
that has not provided to the IMF information about the audit process
requested by the institution.

Yes 22 U. S. C. 262k- 2 Sept. 30, 1996 Female genital mutilation Treasury
shall instruct the USED to use his voice and vote

to oppose any loan, other than for basic humanitarian needs, for any
government that the Secretary of the Treasury determines has a known
history of practicing female genital mutilation and has not taken steps to

implement educational programs designed to prevent this practice.

Yes 22 U. S. C. 262n- 3 Oct. 21, 1998 Trade barriers

and agricultural commodities Treasury shall instruct the USED to use
aggressively his

voice and vote to vigorously promote policies to encourage the opening of
markets for agricultural commodities and products by requiring recipient
countries to make efforts to reduce trade barriers.

No 22 U. S. C. 262o- 1 Aug. 23, 1994 Military spending

and good governance

Treasury shall instruct the USED to consider, when deciding whether to
support a country*s loan program, the extent to which IMF borrowing
countries have demonstrated a

No

Enclosure I GAO- 03- 401R International Monetary Fund Page 8

Law and date of enactment b Subject matter Required actions

Directed vote

commitment to (1) providing accurate and complete data on military
spending; (2) establishing good and publicly accountable governance,
including to end excessive military involvement in the economy; and (3) to
make substantial reductions in excessive military spending and forces. The
USED shall promote a policy that seeks to channel funding toward growth
and development priorities and away from

unproductive expenditures, including military spending. 22 U. S. C. 262o-
2 Oct. 21, 1998 Transparency,

debt, private sector, trade, crisis lending, exchange rates, labor, the
environment, military spending, sound banking, social safety nets,

good governance, corruption, the poor, and ethnic and social strife
Treasury shall instruct the USED to use aggressively his

voice and vote to enhance the general effectiveness of the IMF with
respect to numerous issues, including exchange rate stability, trade
liberalization, antitrust reform, core labor standards, social safety
nets, sound banking principles,

private sector burden- sharing, disclosure of market information, debt,
crises lending, good governance, procurement reform, corruption and
bribery, drug- related money laundering, excessive military spending,
ethnic and social strife, environmental protection, transparency, and
microenterprise lending, especially to the world*s poorest, heavily
indebted countries.

No 22 U. S. C. 262p- 4n Nov. 5, 1990 Equal

employment opportunities at the IMF

Treasury shall instruct the USED to use his voice and vote to urge the IMF
to adopt policies and procedures that ensure that the IMF does not
discriminate against any person on the basis of race, ethnicity, gender,
color, or religious affiliation in any determination related to
employment.

No 22 U. S. C. 262p- 4o Aug. 23, 1994 Respect for

indigenous peoples

Treasury shall direct the USED to use his voice and vote to bring about
the creation and full implementation of policies designed to promote
respect for and full protection of the territorial rights, traditional
economies, cultural integrity, traditional knowledge, and human rights of
indigenous peoples.

No 22 U. S. C. 262p- 4p Aug. 23, 1994 Internationally

recognized worker rights Treasury shall direct the USED to use his voice
and vote to

urge the IMF to adopt policies to encourage borrowing countries to
guarantee certain internationally recognized worker rights and to include
the status of such rights as an

integral part of the policy dialogue with each country. In addition, the
USED shall urge the IMF to establish formal procedures to screen projects
and programs for any negative impact in a borrowing country with respect
to those rights.

No 22 U. S. C. 262p- 4q Apr. 24, 1996 State support of

international terrorism

Treasury shall instruct the USED to use his voice and vote to oppose any
loan for a country for which the Secretary of State has made a
determination that it is a terrorist state.

Yes 22 U. S. C. 262p- 6 Nov. 29, 1999 Debt relief Treasury should urge the
IMF to complete a debt

sustainability analysis by December 31, 2000, and determine eligibility
for debt relief for as many countries under the modified Heavily Indebted
Poor Countries Initiative as possible. Treasury should also instruct the
USED to ensure that an external assessment of the Heavily Indebted Poor
Countries Initiative takes place by December 31, 2001.

No

Enclosure I GAO- 03- 401R International Monetary Fund Page 9

Law and date of enactment b Subject matter Required actions

Directed vote

22 U. S. C. 262p- 7 Nov. 29, 1999 Extended

Structural Adjustment Facility reform Treasury shall instruct the USED to
use his voice and vote

to promote the IMF*s establishment of poverty reduction policies and
procedures to support countries* efforts under programs developed and
jointly administered by the World Bank and the IMF containing those
components listed in the mandate.

No 22 U. S. C. 262r- 5 Oct. 21, 1998 GAO audits of

the IMF Treasury shall instruct the USED to facilitate timely access by
the GAO to IMF documents and information needed by

GAO to perform financial reviews of the IMF that will facilitate the
conduct of U. S. policy with respect to the IMF.

No 22 U. S. C. 262t Dec. 19, 1989 Personnel

practices at the IMF It shall be U. S. policy that no initiatives,
discussions, or

recommendations concerning the placement or removal of any personnel
employed by the IMF shall be based on the political philosophy or activity
of that individual.

No 22 U. S. C. 286e- 8 Oct. 10, 1978 Treatment of

creditors in debt rescheduling

Treasury shall instruct the USED to seek to assure that no decision by the
IMF departs from U. S. policy regarding the comparability of treatment of
public and private creditors in cases of debt rescheduling where official
U. S. credits are

involved. No

22 U. S. C. 286e- 9 Oct. 10, 1978 Investment,

employment, and basic human needs

Treasury shall instruct the USED to encourage IMF staff to formulate
economic stabilization programs that foster a broader base of productive
investment and employment, especially in those productive activities that
are designed to meet basic human needs.

No 22 U. S. C. 286e- 11 Oct. 10, 1978 Countries

harboring international terrorists

Treasury shall instruct the USED to work in opposition to financing for
countries either harboring international terrorists or failing to take
measures to prevent acts of international terrorism.

No 22 U. S. C. 286k July 31, 1945 International

trade and economic stability

In considering the policies of the United States in foreign lending, the
USED shall give careful consideration to progress made in reaching
agreement among nations to reduce restrictions on international trade and
promote international economic stability.

No 22 U. S. C. 286s Oct. 7, 1980 Basic human

needs and economic adjustment programs

The USED shall recommend and work for changes in IMF guidelines to ensure
the effectiveness of economic adjustment programs by considering the
effect the program will have on issues such as jobs and investment. The
USED shall also work toward improved coordination among the

IMF, the World Bank, and other appropriate institutions in this area. No

22 U. S. C. 286u July 31, 1945 Dollar- Special

Drawing Rights substitution account

Treasury shall encourage IMF member countries to negotiate a dollar-
Special Drawing Rights substitution account in which equitable burden-
sharing would exist among participants in the account.

No 22 U. S. C. 286v Oct. 7, 1980 Membership for

Taiwan in the IMF

The USED shall notify the IMF that it is U. S. policy that Taiwan be
granted appropriate membership in the IMF. No

22 U. S. C. 286w Oct. 7, 1980 Denial of

membership for the Palestinian Liberation

Organization The USED shall notify the IMF that it is U. S. policy that
the

Palestinian Liberation Organization not be given membership or other
status at the IMF.

No

Enclosure I GAO- 03- 401R International Monetary Fund Page 10

Law and date of enactment b Subject matter Required actions

Directed vote

22 U. S. C. 286x Oct. 7, 1980 Assistance to private sector of El Salvador,
Nicaragua, and other nations

The USED shall promote the use of IMF programs to assist the private
sector in any nation, though particularly El Salvador and Nicaragua, in
creating an environment that will stabilize a nation*s economy.

No 22 U. S. C. 286y Nov. 30, 1998 Exchange rate

stability The USED shall work for adoption of policies in the IMF to
promote exchange rate stability. Also, in determining a vote

of assistance to any IMF borrower, the USED shall take into account
whether the borrower*s policies are consistent with certain IMF
requirements. No

22 U. S. C. 286z Nov. 30, 1983 Transparency Treasury shall instruct the
USED to initiate discussions at the IMF and propose and vote for adoption
of procedures to increase both the sharing of information among IMF
members and the public dissemination of certain IMF information concerning
international borrowing and lending. No

22 U. S. C. 286aa Nov. 30, 1983 Denial of lending

to communist dictatorships

Treasury shall instruct the USED to actively oppose any facility involving
use of IMF credit by any communist dictatorship unless certain conditions
are met. Yes

22 U. S. C. 286bb Nov. 30, 1983 Elimination of

predatory agricultural export subsidies

Treasury shall instruct the USED to propose and work for the adoption of
an IMF policy encouraging members to eliminate all predatory agricultural
export subsidies that might result in the reduction of other member
countries* exports.

No 22 U. S. C. 286cc Nov. 30, 1983 Trade, bank

solvency, and external debt servicing

The USED shall recommend and shall work for changes in IMF guidelines and
policies that encourage countries to formulate economic adjustment
programs that deal with their balance- of- payment difficulties and
external debt owed to private banks. The USED shall also oppose and vote

against fund assistance for a country whose annual external debt services
exceed 85 percent of its annual export earnings, unless Treasury can
document why an exception should be given.

Yes 22 U. S. C. 286dd Nov. 30, 1983 Bank bailouts

and debt rescheduling

Treasury shall instruct the USED to oppose and vote against any IMF
drawing by a member country that would be used to repay loans imprudently
made by banking institutions to a member country, and to ensure that the
IMF encourages borrowing countries and banking institutions to renegotiate
a rescheduling of debt that is consistent with safe and sound banking
practices and the country*s ability to pay.

Yes 22 U. S. C. 286ee Nov. 30, 1983 International

lending and external indebtedness

Treasury shall instruct the USED to propose that the IMF adopt policies
with respect to international lending, including a policy to examine the
trend and volume of external indebtedness of private and public borrowers
in Article IV

consultations. No

22 U. S. C. 286ff Nov. 30, 1983 IMF interest

rates Treasury shall instruct the USED to propose and work for the
adoption of IMF policies regarding the rate of

remuneration paid on use of members* quota subscriptions and the rate of
charges on IMF drawings to bring those in line with market rates.

No

Enclosure I GAO- 03- 401R International Monetary Fund Page 11

Law and date of enactment b Subject matter Required actions

Directed vote

22 U. S. C. 286gg Nov. 30, 1983 Elimination of

trade and investment restrictions

Treasury shall instruct the USED to consult with the IMF to reduce
obstacles to and restrictions upon international trade and investment in
goods and services, eliminate unfair trade and investment practices, and
promote mutually advantageous economic relations. The USED shall also work
to have the IMF obtain agreement with countries to eliminate certain
unfair trade and investment practices and shall take a country*s progress
into account in formulating its position on requests for loans for
periodic financial disbursements.

No 22 U. S. C. 286kk Dec. 19, 1989 Impact of IMF

programs on the poor and the environment

Treasury shall instruct the USED to seek policy changes at the IMF that
will result in a review of policy prescriptions implemented by the IMF to
determine both if IMF objectives were met and the social and environmental
impacts of such prescriptions, and the establishment of procedures to

ensure that policy options that reduce the potential adverse impact on the
poor or the environment are included in future economic reform programs.
No

22 U. S. C. 286ll Oct. 24, 1992 IMF policy concerning transparency,

the poor, and the environment

Treasury shall instruct the USED to promote regularly and vigorously in
program and quota increase discussions a variety of policy proposals
including a proposal designed to alleviate poverty, promote policy audits
in the areas of

poverty and the environment, and allow public access to certain IMF
information.

No 22 U. S. C. 286mm Oct. 24, 1992 Measures to

reduce military spending The USED shall use his voice and vote to urge the
IMF to

continue to develop an economic methodology to measure the level of
military spending by every developing country. The USED shall also urge
the IMF to provide annual reports that estimate the level of military
spending by each developing country and urge the IMF to include in every
Article IV consultation with such countries an analysis on this issue.

No 22 U. S. C. 286nn Nov. 29, 1999 Debt reduction Treasury is authorized
to instruct the USED to vote to

approve the sale of gold such that proceeds can be used toward debt
reduction for the Heavily Indebted Poor Countries Initiative.

No 50 U. S. C. 1701 note (P. L. 103- 160, sec. 1511, Nov. 30, 1993 & P. L.
104- 208, sec. 540, Feb. 12, 1996) Serbia or

Montenegro Treasury shall instruct the USED to use the voice and vote of
the United States to oppose any IMF assistance to the

governments of Serbia and Montenegro, except for basic human needs or
unless a proper waiver or certification is made.

Yes 22 U. S. C. 2225 Dec. 30, 1974 Integration of

women Treasury is requested to instruct the USED to encourage and promote
the integration of women into the national economies of IMF member
countries and into professional positions within the IMF organization. In
addition, Treasury is to take any progress or lack of progress into
account when making contributions to the IMF.

No 22 U. S. C. 2370a Apr. 30, 1994 Expropriation of U. S. property
Treasury shall instruct the USED to vote against any use of

IMF funds for the benefit of any country that has, after 1956,
nationalized or expropriated U. S. property without compensation or
adequate arbitration, unless the funds are directed to programs that serve
the basic human needs of

the citizens of that country, or the President waives this prohibition on
the basis of U. S. national interests.

Yes

Enclosure I GAO- 03- 401R International Monetary Fund Page 12

Law and date of enactment b Subject matter Required actions

Directed vote

22 U. S. C. 2799aa- 1 Apr. 30, 1994 Nuclear

transfers and illegal exports

The U. S. government shall oppose the extension of any IMF loan or
financial or technical assistance to any country that the President
determines either delivers nuclear reprocessing equipment, material, or
technology to any country or receives such equipment, materials, or
technology from another country, or is a nonnuclear state that exports
from the United States illegally any material, equipment, or technology
that would contribute significantly to its ability to manufacture a
nuclear explosive device and will be used for such a device.

Yes 22 U. S. C. 5605 Dec. 4, 1991 Sanctions

against use of chemical and biological weapons

The United States shall oppose, in accordance with 22 U. S. C. 262d, the
extension of any loan or financial or technical assistance to any country
that the President determines uses chemical or biological weapons either
in violation of international law or against its own nationals. The
President may waive application of this section under certain conditions.
Yes

22 U. S. C. 6034 Mar. 12, 1996 Opposition to

Cuban membership

Treasury shall instruct the USED to use the voice and vote of the United
States to oppose admission of Cuba as a member of the IMF until the
President submits a determination that a democratically elected government
is in power in Cuba. Yes

22 U. S. C. 6302 Apr. 30, 1994 Nuclear

nonproliferation Treasury shall instruct the USED to use the voice and
vote of the United States to oppose any use of IMF funds to

promote the acquisition of unsafeguarded special nuclear material or the
development, stockpiling, or use of any nuclear explosive device by any
non- nuclear- weapon state. The President may waive application of this
section with

respect to India and Pakistan under certain conditions. (See P. L. 106-
79, Sec. 9001.) Yes

22 U. S. C. 6445 Oct. 27, 1998 Religious

freedom The President shall instruct the USED to oppose and vote against
loans primarily benefiting a foreign government,

agency, instrumentality, or official determined by the President to be a
violator of religious freedoms.

Yes 22 U. S. C. 6713 Oct. 21, 1998 U. S. liability,

confidential business information, and chemical weapons

The United States shall oppose any IMF loan or financial or technical
assistance to either a foreign government or any foreign person, officer,
or employee of the Organization for the Prohibition of Chemical Weapons
whose actions taken in the implementation of the Chemical Weapons
Convention make the United States liable, or who knowingly divulge U. S.
confidential business information, or in the case of a government,
encourage or assist a person in making such disclosures.

Yes P. L. 104- 208, sec. 570, Sept. 30, 1996 Burma and

human rights and democratic government

Treasury shall instruct the USED to vote against any utilization of IMF
funds for Burma until such time as the President certifies to Congress
that Burma has made measurable and sustainable progress in improving human
rights practices and implementing a democratic government in Burma, or the
President waives the sanction by certifying to Congress that the sanction
is contrary to U. S. national

interests. Yes

P. L. 106- 113, sec 504, Nov. 29, 1999 IMF Operational

Budget Treasury shall instruct the USED to use the voice and vote and
influence of the U. S. to urge vigorously the IMF both to

publish the operational budgets of the IMF on a quarterly basis, not later
than one year after the end of the period covered by the budget, and to
continue to forgo reimbursements of the expenses incurred by the IMF in

Yes

Enclosure I GAO- 03- 401R International Monetary Fund Page 13

Law and date of enactment b Subject matter Required actions

Directed vote

administering the Enhanced Structural Adjustment Facility, until the
Heavily Indebted Poor Countries initiative is terminated.

P. L. 106- 386, sec. 110, Oct. 28, 2000 Combat

trafficking in persons

The President will instruct the USED to vote against, and to use his best
efforts to deny, any loan or other use of IMF funds for the subsequent
fiscal year to a country that fails to comply or is not making significant
efforts to bring itself into compliance with the minimum standards for the
elimination of trafficking in persons. If certain requirements are met,
this mandate does not apply to humanitarian assistance, trade- related
assistance, or development assistance and can be waived by the President
if the continuation of assistance is in the national interest.

Yes P. L. 106- 429, sec. 545, Nov. 6, 2000 Purchase of

American- made equipment and products Treasury shall report to Congress
annually on the efforts of

the USED in complying with the sense of Congress that, to the greatest
extent practicable, all agriculture commodities, equipment and products
purchased with funds made available in the Foreign Operations, Export
Financing, and Related Programs Appropriations Act, 2001, should be
American made.

No P. L. 107- 115, sec. 530, Jan. 10, 2002 Compensation

for the USED No funds appropriated by the Foreign Operations, Export
Financing, and Related Programs Act, 2002, may be made

as payment to the IMF while the USED is compensated by the IMF at a rate
that, together with the compensation the USED receives from the United
States, is in excess of the rate provided for an individual occupying a
position at level IV of the Executive Schedule under 5 U. S. C. 5315.

No P. L. 106- 429, sec. 537, Nov. 6, 2000 Clean coal technology Treasury,
through the USED, should, as appropriate,

vigorously promote the use of U. S. clean coal technology in environmental
and energy infrastructure programs, projects, and activities, such as in
reconstruction assistance for the Balkans.

No P. L. 107- 115, sec. 581, Jan. 10, 2002 Countries

providing sanctuary to indicted war criminals

Treasury shall instruct the USED to vote against any extension of IMF
grants or financial or technical assistance to any country whose
authorities have failed, as determined by the Secretary of State, to take
necessary and significant steps to apprehend and transfer persons indicted
by the International Criminal Tribunal for the former Yugoslavia. This
section does not apply to humanitarian assistance and assistance for
democratization.

Yes P. L. 107- 115, sec. 563, Jan. 10, 2002 Cambodia Treasury should
instruct the USED to use the voice and

vote of the United States to oppose loans to the central government of
Cambodia, except loans to support basic human needs.

Yes P. L. 107- 115, sec. 584, Jan. 10, 2002 Serbia After March 31, 2002,
Treasury should instruct the USED to

support loans and assistance to the Yugoslavian government subject to
certain conditions, including that the Yugoslavian government is taking
steps consistent with the Dayton Peace Accord to end financial, political,
security, and other support that served to maintain separate Republika
Srpska institutions. With respect to such loans, 22 U. S. C. 262k- 1,
which requires transparency of military budgets, shall not apply.

Yes

Enclosure I GAO- 03- 401R International Monetary Fund Page 14

Law and date of enactment b Subject matter Required actions

Directed vote

P. L. 107- 115, sec. 582, Jan. 10, 2002 User fees Treasury shall instruct
the USED to oppose any loan that

would require user fees or service charges on poor people for primary
education or primary healthcare, including prevention and treatment
efforts for Human Immunodeficiency Virus/ Acquired Immune Deficiency
Syndrome, malaria, tuberculosis, and infant, child and maternal well-
being, in connection with the IMF*s lending program.

Yes 22 U. S. C. 286oo Nov. 6, 2000 Short- and

medium- term financing, misreporting,

and premium pricing

It is the policy of the United States to work to implement reforms in the
IMF to achieve the following goals: primarily using short- term balance-
of- payments financing, limiting the use of medium- term financing,
introducing premium pricing

for lending that is greater than 200 percent of a member*s quota in the
IMF, and redressing cases of misreporting of information in the context of
IMF programs.

No P. L. 107- 56, sec. 360, Oct. 26, 2001 Terrorism The Secretary of the
Treasury may instruct the USED to

aggressively use the voice and vote of the U. S. to require an auditing of
IMF disbursements to ensure that no funds are paid to persons who commit,
threaten to commit, or support terrorism. In addition, if the President
determines that a country has committed to take actions that contribute to
efforts of the U. S. to respond to, deter, or prevent acts of
international terrorism, Treasury may instruct the USED to support any
loan or other use of IMF funds for such country.

No P. L. 107- 99, sec. 4, Dec. 21, 2001 Zimbabwe If the President
certifies to the appropriate congressional

committees that certain condition have been met in Zimbabwe, including the
restoration of the rule of law and a commitment to equitable, legal, and
transparent land reform, then the Treasury should direct the USED to

propose to undertake financial and technical support for Zimbabwe,
especially support that is intended to promote Zimbabwe*s economic
recovery and development, the stabilization of the Zimbabwean dollar, and
the viability of Zimbabwe*s democratic institutions. Until the President
makes a certification, however, and except as may be required to meet
basic human needs or for good governance, the Treasury shall instruct the
USED to oppose and vote against any IMF loan, credit, or guarantee to the
government of Zimbabwe or any cancellation or

reduction of indebtedness owed by the government of Zimbabwe to the IMF.

Yes P. L. 107- 115, sec. 523, Jan. 10, 2002 Cuba, Iraq,

Libya, Iran, Syria, North Korea, and China None of the funds appropriated
or otherwise made available

pursuant to this Act shall be obligated to finance indirectly any
assistance or reparation to Cuba, Iraq, Libya, Iran, Syria, North Korea,
or the People*s Republic of China, unless the President certifies that the
withholding of these funds is contrary to the national interest of the
United States.

No P. L. 107- 115, sec. 560, Jan. 10, 2002 Zimbabwe Treasury shall
instruct the USED to vote against any

extension of any IMF loans to the government of Zimbabwe, except to meet
basic human needs or to promote democracy, unless the Secretary of State
determines and certifies to the Committees on Appropriations that the rule
of law has been restored in Zimbabwe, including respect for ownership and
title to property, freedom of speech and association.

Yes

Enclosure I GAO- 03- 401R International Monetary Fund Page 15

Law and date of enactment b Subject matter Required actions

Directed vote

P. L. 107- 115, sec. 578, Jan. 10, 2002 Procurement

and Financial Management Reform

Of the funds made available in the Foreign Operations, Export Financing,
and Related Programs Appropriations Act, 2002, 10 percent of the U. S.
portion or payment to the IMF shall be withheld by Treasury until it can
certify to the Committees on Appropriations that the institution is
meeting certain conditions, such as that the IMF is implementing
procedures for annual independent external audits of

central bank financial statements for countries making use of IMF
resources under new arrangements or agreements with the Fund. No

P. L. 107- 245, sec. 6, Oct. 10, 2002 Sudan After April 10, 2003, and
every 6 months thereafter, if the

President certifies that the government of Sudan has not engaged in good
faith negotiations to achieve a permanent and just peace agreement, or has
unreasonably interfered with humanitarian efforts in Sudan, then the
Treasury shall instruct the USED to continue to vote against, and actively
oppose, any extension of any IMF loan, credit or guarantee to the
government of Sudan.

Yes P. L. 107- 228, sec. 616, Sept. 30, 2002 Tibet Treasury shall instruct
the USED to use the voice and vote

of the US to support projects in Tibet, so long as the projects are
designed in accordance with certain enumerated principles, such as that
the project fosters selfsufficiency and self- reliance of Tibetans.

No P. L. 107- 228, sec. 633, Sept. 30, 2002 East Timor Treasury shall
instruct the USED to use the voice, vote, and

influence of the United States to support economic and democratic
development in East Timor.

No Source: GAO. Notes: The information shown in this enclosure is based on
a GAO analysis of legislative mandates concerning the IMF. Mandates shown
in bold represent mandates that were added since our last report in
January 2001. Some of these mandates simply replace older mandates that
had expired, while other mandates cover new topics.

As of February 4, 2003, mandates contained in FY 2002 Appropriations Acts
remain in effect through February 7, 2003, under a continuing resolution
(P. L. 108- 04, Making Further Continuing Appropriations for the Fiscal
Year 2003, and For Other Purposes).

a Treasury puts mandates in three broad categories: *policy,* *directed
vote,* and *reporting* mandates. Policy mandates direct the United States
to foster or urge a certain policy at the IMF. Directed vote mandates
instruct the United States to *oppose* or *vote against* loans or other
IMF assistance. Reporting mandates are outside the scope of this report.

b This column reports the original date of enactment. However, many of
these mandates were amended subsequent to this date.

Enclosure II Page 16 GAO- 03- 401R International Monetary Fund Examples of
Broad Policies That Are Addressed in Multiple Laws a Broad policy
objective Law

Administrative and personnel matters 22 U. S. C. 2225 (Dec. 30, 1974) 22
U. S. C 262e (Oct. 3, 1977) 22 U. S. C. 262t (Dec. 19, 1989)

22 U. S. C. 262p- 4n (Nov. 5, 1990)

P. L. 107- 115, Sec. 530 (Jan. 10, 2002) Banking 22 U. S. C. 286cc (Nov.
30, 1983) 22 U. S. C. 286dd (Nov. 30, 1983) 22 U. S. C. 262o- 2 (Oct. 21,
1998)

Debt 22 U. S. C. 286e- 8 (Oct. 10, 1978) 22 U. S. C. 286cc (Nov. 30, 1983)
22 U. S. C. 286dd (Nov. 30, 1983) 22 U. S. C. 286ee (Nov. 30, 1983) 22 U.
S. C. 262o- 2 (Oct. 21, 1998) 22 U. S. C. 286nn (Nov. 29, 1999) 22 U. S.
C. 262p- 6 (Nov. 29, 1999)

Employment 22 U. S. C. 2225 (Dec. 30, 1974) 22 U. S. C. 286e- 9 (Oct. 10,
1978)

Environment 22 U. S. C. 286kk (Dec. 19, 1989) 22 U. S. C. 286ll (Oct. 24,
1992) 22 U. S. C. 262o- 2 (Oct. 21, 1998) P. L. 106- 429, Sec. 537 (Nov.
6, 2000)

Exchange rate stability 22 U. S. C. 286y (Nov. 30, 1998) 22 U. S. C. 262o-
2 (Oct. 21, 1998)

Governance 22 U. S. C. 262o- 1 (Aug. 23, 1994) 22 U. S. C. 262o- 2 (Oct.
21, 1998)

Human rights 22 U. S. C. 262d (Oct. 3, 1977) 22 U. S. C. 262p- 4o (Aug.
23, 1994) P. L. 104- 208, Sec. 570 (Sept. 30, 1996)

Investment 22 U. S. C. 286e- 9 (Oct. 10, 1978) 22 U. S. C. 286s (Oct. 7,
1980) 22 U. S. C. 286gg (Nov. 30, 1983)

Labor 22 U. S. C. 262p- 4p (Aug. 23, 1994) 22 U. S. C. 262o- 2 (Oct. 21,
1998)

Poverty alleviation and education 22 U. S. C. 286kk (Dec. 19, 1989) 22 U.
S. C. 286ll (Oct. 24, 1992) 22 U. S. C. 262o- 2 (Oct. 21, 1998) 22 U. S.
C. 262p- 7 (Nov. 29, 1999)

P. L. 107- 115, sec. 582 (Jan. 10, 2002) Military spending and military
audit 22 U. S. C. 286mm (Oct. 24, 1992) 22 U. S. C. 262o- 1 (Aug. 23,
1994) 22 U. S. C. 262k- 1 (Sept. 30, 1996) 22 U. S. C. 262o- 2 (Oct. 21,
1998)

Nuclear and chemical nonproliferation 22 U. S. C. 2799aa- 1 (Apr. 30,
1994) 22 U. S. C. 6302 (Apr. 30, 1994) 22 U. S. C. 6713 (Oct. 21, 1998) 22
U. S. C. 5605 (Dec. 4, 1991)

Religious freedom 22 U. S. C. 262d (Oct. 3, 1977) 22 U. S. C. 6445 (Oct.
27, 1998)

Terrorism 22 U. S. C. 262d (Oct. 3, 1977) 22 U. S. C. 286e- 11 (Oct. 10,
1978) 22 U. S. C. 262p- 4q (Aug. 24, 1996) P. L. 107- 56, sec. 360 (Oct.
26, 2001)

Enclosure II GAO- 03- 401R International Monetary Fund Page 17

Broad policy objective Law

Trade 22 U. S. C. 286k (July 31, 1945) 22 U. S. C. 286bb (Nov. 30, 1983)
22 U. S. C. 286cc (Nov. 30, 1983) 22 U. S. C. 286gg (Nov. 30, 1983) 22 U.
S. C. 262k (Aug. 15, 1985) 22 U. S. C. 262h (Oct. 15, 1986) (also repeated
in P. L. 107- 115, sec. 514 (Jan. 10, 2002)

22 U. S. C. 262n- 3 (Oct. 21, 1998) 22 U. S. C. 262o- 2 (Oct. 21, 1998) P.
L. 106- 429, sec. 545 (Nov. 6, 2000)

Transparency 22 U. S. C. 286z (Nov. 30, 1983) 22 U. S. C. 286ll (Oct. 24,
1992) 22 U. S. C. 262o- 2 (Oct. 21, 1998) 22 U. S. C. 262r- 5 (Oct. 21,
1998)

Use of IMF resources 22 U. S. C. 286u (July 31, 1945) 22 U. S. C. 286ff
(Nov. 30, 1983) 22 U. S. C. 286oo (Nov. 6, 2000)

Women*s issues 22 U. S. C. 2225 (Dec. 30, 1974) 22 U. S. C. 262k- 2 (Sept.
30, 1996)

Zimbabwe P. L. 107- 99, sec. 4 (Dec. 21, 2001) P. L. 107- 115, sec. 560
(Jan. 10, 2002) Source: GAO. Notes:

The information shown in this enclosure is based on a GAO analysis of
legislative mandates concerning the IMF. Mandates shown in bold represent
mandates that were added since our last report in January 2001. Some of
these mandates simply replace older mandates that had expired, while other
mandates cover new topics.

a Treasury puts mandates in three broad categories: *policy,* *directed
vote,* and *reporting* mandates. Policy mandates direct the United States
to foster or urge a certain policy at the IMF. Directed vote mandates
instruct the United States to *oppose* or *vote against* loans or other
IMF assistance. Reporting mandates are outside the scope of this report.

Enclosure III Page 18 GAO- 03- 401R International Monetary Fund Comments
from the Department of the Treasury

(320168)
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