Treasury Continues Its Formal Process to Promote U.S. Policies at the International Monetary Fund

GAO-04-928R: Jul 12, 2004

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Congress has shown considerable interest in legislating U.S. policies regarding the International Monetary Fund (IMF or the Fund). Currently, the administration is charged with responding to dozens of legislative mandates related to the Fund, including advocacy for certain Fund policies, instructions for U.S. voting positions on Fund assistance to borrower countries, and requirements to report to Congress on various aspects of U.S. participation in the Fund. In 2003, we reported that the United States had 67 legislative mandates prescribing U.S. policy goals at the Fund. These mandates covered a wide range of policies, including combating terrorism, human rights, international trade, and weapons proliferation. As an international organization, the Fund 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 to pursue certain policy considerations or vote in a particular way on IMF programs or assistance to specific countries as part of his duties within the Board of the Fund. 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 Department instituted a formal process in 1999 to systematically promote congressionally mandated policies at the Fund. We also found that while Treasury had 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 February 2003, we provided 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. This report provides a similar update for 2004.

The U.S. Treasury continues to maintain a formal process for advancing U.S. policies at the Fund. A Treasury task force facilitates coordination between Treasury and the U.S. Executive Director and identifies early opportunities to influence decisions of Fund members. Since our February 2003 report, the task force has continued to meet biweekly to identify opportunities to advance legislative mandates at the Fund. The task force has made several efforts to enhance the monitoring and promotion of mandates--for example, by focusing attention on countries not yet on the IMF Board's calendar but that are likely to require Fund assistance. We have identified a total of 67 legislative mandates that prescribe U.S. policy goals at the IMF, the same number as in our February 2003 report. Although the total number remained the same, some mandates have expired since our February 2003 report and others have been added. New mandates address policy issues such as the lifting of economic sanctions on Iraq, human rights in Burma, and development assistance for Tibet. Treasury continues to notify the U.S. Executive Director about new mandates through instruction letters.