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105th Congress                                                   Report
 2d Session             HOUSE OF REPRESENTATIVES                105-454
_______________________________________________________________________


 
    INTERNATIONAL MONETARY FUND REFORM AND AUTHORIZATION ACT OF 1998

                                _______
                                

 March 18, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


   Mr. Leach, from the Committee on Banking and Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3114]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Banking and Financial Services, to whom was 
referred the bill (H.R. 3114) to authorize United States 
participation in a quota increase and the New Arrangements to 
Borrow of the International Monetary Fund, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``International Monetary Fund Reform and 
Authorization Act of 1998''.

SEC. 2. FINDINGS.

  The Congress finds that--
          (1) the International Monetary Fund (IMF) was conceived at 
        Bretton Woods, New Hampshire, to promote a sound and open world 
        economy and a stable international financial system;
          (2) while the international financial system has evolved 
        significantly since the IMF was founded fifty years ago, its 
        core mission remains focused on providing advice on 
        macroeconomic and exchange rate policy and highly conditional 
        financial assistance, including appropriate economic and 
        governance reforms, to countries facing balance of payments or 
        liquidity problems;
          (3) the IMF includes elements in structural adjustment 
        programs that affect industrial and labor policies, which have 
        profound social and political ramifications;
          (4) the IMF has intervened in financial markets in situations 
        of extreme uncertainty and crisis to restore investor and 
        lender confidence, which may result in partially relieving such 
        lenders and investors of the negative consequences of imprudent 
        lending and investment decisions;
          (5) the expanded conditionality which accompanies IMF funding 
        has profound domestic consequences in the United States;
          (6) the United States, as the leading power of the post-cold-
        war world, has a greater interest than any other country in a 
        strengthened IMF that multilateralizes the financial support 
        for ongoing economic reforms in countries important to United 
        States interests and that can respond to threats to the 
        international financial system so that the United States does 
        not end up serving as the world's lender of last resort;
          (7) the United States is the only country with veto power 
        over major IMF decisions;
          (8) to sustain its capabilities, the IMF needs to sustain its 
        strength relative to a rapidly expanding global economy 
        characterized by exponential growth of global capital markets;
          (9) the United States financial commitment to the IMF 
        leverages several times as much from other countries, and its 
        general resource financing is not scored as a budgetary outlay;
          (10) the ongoing currency and banking crisis in the Far East 
        has affected United States financial markets and may result in 
        a decline in United States economic growth by as much as one 
        and one-half percent, and the United States has a vested 
        economic and national security interest in utilizing the IMF 
        and other multilateral mechanisms to help stabilize certain 
        Asian economies;
          (11) neither the IMF nor the international financial system 
        predicted or was adequately prepared for the domestic financial 
        instability that has developed in East Asia, particularly the 
        excessive short-term borrowing the private sector institutions, 
        and therefore significant reforms of the IMF and the 
        international financial system are needed to ensure that the 
        world is better prepared to prevent and cope with similar 
        crises;
          (12) the United States also has an interest in not 
        contributing to ``moral hazard'', the belief by private 
        investors and lenders that public credit will be used to bail 
        them out of the consequences of imprudent credit decisions;
          (13) in establishing the terms for its financial support, the 
        IMF must strike a balance between contributing to the stability 
        of the Asian economies and ensuring that the private creditors 
        who contributed to the crisis by their imprudent lending also 
        make a significant contribution to the resolution of such 
        crisis; and
          (14) with respect to some East Asian countries, some 
        observers believe that--
                  (A) the IMF has often imposed tight monetary and 
                fiscal policies designed for countries in other parts 
                of the world that follow excessively expansionary 
                fiscal and monetary policies, despite the fact that, by 
                the IMF's own account, the monetary and fiscal policies 
                of the East Asian countries have not contributed to the 
                financial difficulties faced by such countries;
                  (B) the rationale for such strategy has been the need 
                to attract foreign capital and provide the means to 
                earn foreign exchange;
                  (C) in the absence of solutions to the short term 
                debt overhang problem which requires a rollover of such 
                short term maturities by private creditors, and to the 
                unfettered flow of capital into and out of markets 
                without regard to maturities or purpose, as an integral 
                part of the IMF program, no interest rate is high 
                enough to attract such capital;
                  (D) a tight monetary and fiscal austerity program, 
                combined with industrial restructuring and labor market 
                flexibility measures where they are also a part of an 
                IMF program, may excessively depress the local economy, 
                creating potentially explosive social and political 
                problems;
                  (E) such a strategy could also create excessive 
                pressure to export and reduce imports, eroding support 
                in the United States for a more open international 
                trading and investment regime, as export markets 
                collapse and a flood of imports puts downward pressure 
                on U.S. wages and employment; and
                  (F) there is a consequent need for the IMF, other 
                international financial institutions, the United 
                States, and other countries, as appropriate, to fashion 
                programs and policies that are adapted to local 
                conditions and integrate private creditor 
                contributions.

                  TITLE I--INTERNATIONAL MONETARY FUND

SEC. 101. PARTICIPATION IN QUOTA INCREASE.

  (a) In General.--The Bretton Woods Agreements Act (22 U.S.C. 286-
286mm) is amended by adding at the end the following:

``SEC. 61. QUOTA INCREASE.

  ``(a) In General.--The United States Governor of the Fund may consent 
to an increase in the quota of the United States in the Fund equivalent 
to 10,622,500,000 Special Drawing Rights.
  ``(b) Subject to Appropriations.--The authority provided by 
subsection (a) shall be effective only to such extent or in such 
amounts as are provided in advance in appropriations Acts.''.
  (b) Effectiveness Subject to Certification.--The amendment made by 
subsection (a) shall not take effect until the Secretary of the 
Treasury certifies to the Committee on Banking and Financial Services 
of the House of Representatives and the Committee on Foreign Relations 
of the Senate that the investors and banks make a significant 
contribution in conjunction with a financing package that, in the 
context of an international financial crisis, might include taxpayer 
supported official financing.

                  TITLE II--NEW ARRANGEMENTS TO BORROW

SEC. 201. NEW ARRANGEMENTS TO BORROW.

  (a) In General.--Section 17 of the Bretton Woods Agreements Act (22 
U.S.C. 286e-2 et seq.) is amended--
          (1) in subsection (a)--
                  (A) by striking ``and February 24, 1983'' and 
                inserting ``February 24, 1983, and January 27, 1997''; 
                and
                  (B) by striking ``4,250,000,000'' and inserting 
                ``6,712,000,000'';
          (2) in subsection (b), by striking ``4,250,000,000'' and 
        inserting ``6,712,000,000''; and
          (3) in subsection (d)--
                  (A) by inserting ``or the Decision of January 27, 
                1997,'' after ``February 24, 1983,''; and
                  (B) by inserting ``or the New Arrangements to Borrow, 
                as applicable'' before the period at the end.
  (b) Effectiveness Subject to Certification.--The amendments made by 
subsection (a) shall not take effect until the Secretary of the 
Treasury certifies to the Committee on Banking and Financial Services 
of the House of Representatives and the Committee on Foreign Relations 
of the Senate that the investors and banks make a significant 
contribution in conjunction with a financing package that, in the 
context of an international financial crisis, might include taxpayer 
supported official financing.

                      TITLE III--POLICY PROVISIONS

SEC. 301. ADVOCACY OF POLICIES TO ENHANCE THE GENERAL EFFECTIVENESS OF 
                    THE INTERNATIONAL MONETARY FUND.

  (a) In General.--Title XV of the International Financial Institutions 
Act (22 U.S.C. 262o-262o-1) is amended by adding at the end the 
following:

``SEC. 1503. ADVOCACY OF POLICIES TO ENHANCE THE GENERAL EFFECTIVENESS 
                    OF THE INTERNATIONAL MONETARY FUND.

  ``(a) In General.--The Secretary of the Treasury shall instruct the 
United States Executive Director of the International Monetary Fund to 
use aggressively the voice and vote of the Executive Director to do the 
following:
          ``(1) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund in structuring 
        programs and assistance so as to promote policies and actions 
        that will contribute to exchange rate stability and avoid 
        competitive devaluations that will further destabilize the 
        international financial and trading systems.
          ``(2) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund in promoting 
        market-oriented reform, trade liberalization, economic growth, 
        democratic governance, and social stability through--
                  ``(A) appropriate liberalization of pricing, trade, 
                investment, and exchange rate regimes of countries to 
                open countries to the competitive forces of the global 
                economy;
                  ``(B) opening domestic markets to fair and open 
                internal competition among domestic enterprises by 
                eliminating inappropriate favoritism for small or large 
                businesses, eliminating elite monopolies, creating and 
                effectively implementing anti-trust and anti-monopoly 
                laws to protect free competition, and establishing fair 
                and accessible legal procedures for dispute settlement 
                among domestic enterprises;
                  ``(C) privatizing industry in a fair and equitable 
                manner that provides economic opportunities to a broad 
                spectrum of the population, eliminating government and 
                elite monopolies, closing loss-making enterprises, and 
                reducing government control over the factors of 
                production;
                  ``(D) economic deregulation by eliminating 
                inefficient and overly burdensome regulations and 
                strengthening the legal framework supporting private 
                contract and intellectual property rights;
                  ``(E) establishing or strengthening key elements of a 
                social safety net to cushion the effects on workers of 
                unemployment and dislocation; and
                  ``(F) encouraging the opening of markets for 
                agricultural commodities and products by requiring 
                recipient countries to make efforts to reduce trade 
                barriers.
          ``(3) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund, in concert 
        with appropriate international authorities and other 
        international financial institutions (as defined in section 
        1701(c)(2)), in strengthening financial systems in developing 
        countries, and encouraging the adoption of sound banking 
        principles and practices, including the development of laws and 
        regulations that will help to ensure that domestic financial 
        institutions meet strong standards regarding capital reserves, 
        regulatory oversight, and transparency.
          ``(4) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund, in concert 
        with appropriate international authorities and other 
        international financial institutions (as defined in section 
        1701(c)(2)), in facilitating the development and implementation 
        of internationally acceptable domestic bankruptcy laws and 
        regulations in developing countries, including the provision of 
        technical assistance as appropriate.
          ``(5) Vigorously promote policies that aim at appropriate 
        burden-sharing by the private sector so that investors and 
        creditors bear more fully the consequences of their decisions, 
        and accordingly advocate policies which include--
                  ``(A) strengthening crisis prevention and early 
                warning signals through improved and more effective 
                surveillance of the national economic policies and 
                financial market development of countries (including 
                monitoring of the structure and volume of capital flows 
                to identify problematic imbalances in the inflow of 
                short and medium term investment capital, potentially 
                destabilizing inflows of offshore lending and foreign 
                investment, or problems with the maturity profiles of 
                capital to provide warnings of imminent economic 
                instability), and fuller disclosure of such information 
                to market participants;
                  ``(B) accelerating work on strengthening financial 
                systems in emerging market economies so as to reduce 
                the risk of financial crises;
                  ``(C) consideration of provisions in debt contracts 
                that would foster dialogue and consultation between a 
                sovereign debtor and its private creditors, and among 
                those creditors;
                  ``(D) consideration of extending the scope of the 
                International Monetary Fund's policy on lending to 
                members in arrears and of other policies so as to 
                foster the dialogue and consultation referred to in 
                subparagraph (C);
                  ``(E) intensified consideration of mechanisms to 
                facilitate orderly workout mechanisms for countries 
                experiencing debt or liquidity crises;
                  ``(F) consideration of establishing ad hoc or formal 
                linkages between the provision of official financing to 
                countries experiencing a financial crisis and the 
                willingness of market participants to meaningfully 
                participate in any stabilization effort led by the 
                International Monetary Fund;
                  ``(G) using the International Monetary Fund to 
                facilitate discussions between debtors and private 
                creditors to help ensure that financial difficulties 
                are resolved without inappropriate resort to public 
                resources;
                  ``(H) the International Monetary Fund accompanying 
                the provision of funding to countries experiencing a 
                financial crisis resulting from imprudent borrowing 
                with efforts to achieve a significant contribution by 
                the private creditors, investors, and banks which had 
                extended such credits; and
                  ``(I) in the context of International Monetary Fund 
                responses to international financial crises, vigorously 
                promote consideration of appropriate ways in which 
                debtors and private creditors, in consultation with 
                central banks, can be encouraged voluntarily to take 
                steps to achieve resolution of outstanding debts, and 
                to do so in a manner that provides for an appropriate 
                degree of burden-sharing.
          ``(6) Vigorously promote policies that would make the 
        International Monetary Fund a more effective mechanism, in 
        concert with appropriate international authorities and other 
        international financial institutions (as defined in section 
        1701(c)(2)), for promoting good governance principles within 
        recipient countries by fostering structural reforms, including 
        procurement reform, that reduce opportunities for corruption 
        and bribery, and drug-related money laundering.
          ``(7) Vigorously promote the design of International Monetary 
        Fund programs and assistance so that governments that draw on 
        the International Monetary Fund channel public funds away from 
        unproductive purposes, including large `show case' projects and 
        excessive military spending, and toward investment in human and 
        physical capital as well as social programs to protect the 
        neediest and promote social equity.
          ``(8) Work with the International Monetary Fund to foster 
        economic prescriptions that are appropriate to the individual 
        economic circumstances of each recipient country, recognizing 
        that inappropriate stabilization programs may only serve to 
        further destabilize the economy and create unnecessary 
        economic, social, and political dislocation.
          ``(9) Structure International Monetary Fund programs and 
        assistance so that the maintenance and improvement of core 
        labor standards are routinely incorporated as an integral goal 
        in the policy dialogue with recipient countries, so that--
                  ``(A) recipient governments commit to affording 
                workers the right to exercise internationally 
                recognized core worker rights, including the right of 
                free association and collective bargaining through 
                unions of their own choosing;
                  ``(B) measures designed to facilitate labor market 
                flexibility are consistent with such core worker 
                rights;
                  ``(C) the staff of the International Monetary Fund 
                adequately takes into account the views of the 
                International Labor Organization, particularly with 
                respect to the effect of labor market flexibility 
                measures on core worker rights in such countries; and
                  ``(D) the staff of the International Monetary Fund 
                surveys the labor market policies and practices of 
                recipient countries and recommends policy initiatives 
                that will help to ensure the maintenance or improvement 
                of core labor standards.
          ``(10) Vigorously promote the adoption and enforcement of 
        laws promoting respect for internationally recognized worker 
        rights (as defined in section 507(4) of the Trade Act of 1974 
        (19 U.S.C. 2467(4))).
          ``(11) Vigorously promote International Monetary Fund 
        programs and assistance that are structured to the maximum 
        extent feasible to discourage practices which may promote 
        ethnic or social strife in a recipient country.
          ``(12) Vigorously promote recognition by the International 
        Monetary Fund that macroeconomic developments and policies can 
        affect and be affected by environmental conditions and 
        policies, including by working independently and with the 
        multilateral development banks to encourage countries to 
        correct market failures and pursue macroeconomic stability 
        while promoting policies for sustainable development and 
        environmental protection.
          ``(13) Facilitate greater International Monetary Fund 
        transparency, including by enhancing accessibility of the 
        International Monetary Fund and its staff, fostering a more 
        open release policy toward working papers, past evaluations, 
        and other International Monetary Fund documents, seeking to 
        publish all Letters of Intent to the International Monetary 
        Fund and Policy Framework Papers, and establishing a more open 
        release policy regarding Article IV consultations.
          ``(14) Facilitate greater International Monetary Fund 
        accountability and enhance International Monetary Fund self-
        evaluation by vigorously promoting review of the effectiveness 
        of the Office of Internal Audit and Inspection and the 
        Executive Board's external evaluation pilot program and, if 
        necessary, the establishment of an operations evaluation 
        department modeled on the experience of the International Bank 
        for Reconstruction and Development, guided by such key 
        principles as usefulness, credibility, transparency, and 
        independence.
          ``(15) Vigorously promote coordination with the International 
        Bank for Reconstruction and Development and other international 
        financial institutions (as defined in section 1701(c)(2)) in 
        promoting structural reforms which facilitate the provision of 
        credit to small businesses, including microenterprise lending, 
        especially in the world's poorest, heavily indebted countries.
          ``(16) Vigorously promote, in the context of the 
        International Monetary Fund's policy dialogue with its member 
        countries, measures to protect the rights and land of 
        indigenous peoples, including the Penan of Borneo, Malaysia, 
        the Dayaks of East Kalimantan, Indonesia, and the indigenous 
        communities of Irian Jaya, Indonesia.
          ``(17) Vigorously promote policies such that the 
        International Monetary Fund, in considering loan programs and 
        assistance, takes into account the extent to which the 
        recipient government has demonstrated a commitment to--
                  ``(A) providing accurate and complete data on the 
                annual expenditures and receipts of the armed forces;
                  ``(B) establishing good and publicly accountable 
                governance, including an end to excessive military 
                involvement in the economy; and
                  ``(C) making substantial reductions in excessive 
                military spending and forces, including domestic 
                security forces.
          ``(18) Structure International Monetary Fund debt relief 
        programs so that the programs do not impose unfair conditions 
        on heavily indebted poor countries, increase the amount of debt 
        relief available to poor countries, and decrease the time 
        required to qualify for debt relief.
  ``(b) Coordination With Other Executive Departments.--To the extent 
that it would assist in achieving the goals described in subsection 
(a), the Secretary of the Treasury shall pursue the goals in 
coordination with the Secretary of State, the Secretary of Labor, the 
Secretary of Commerce, the Administrator of the Environmental 
Protection Agency, the Administrator of the Agency for International 
Development, and the United States Trade Representative.''.
  (b) Advisory Committee on IMF Policy.--Section 1701 of such Act (22 
U.S.C. 262p-5) is amended by adding at the end the following:
  ``(e) Advisory Committee on IMF Policy.--
          ``(1) In general.--The Secretary of the Treasury shall 
        establish an International Monetary Fund Advisory Committee (in 
        this subsection referred to as the `Advisory Committee').
          ``(2) Membership.--The Advisory Committee shall consist of 8 
        members appointed by the Secretary of the Treasury, after 
        appropriate consultations with the relevant organizations, as 
        follows:
                  ``(A) 2 members shall be representatives from 
                organized labor.
                  ``(B) 2 members shall be representatives from banking 
                and financial services.
                  ``(C) 2 members shall be representatives from 
                industry and agriculture.
                  ``(D) 2 members shall be representatives from 
                nongovernmental environmental and human rights 
                organizations.
          ``(3) Duties.--Not less frequently than every 6 months, the 
        Advisory Committee shall meet with the Secretary of the 
        Treasury or the Deputy Secretary of the Treasury to review, and 
        provide advice on, the extent to which individual country 
        International Monetary Fund programs meet the policy goals set 
        forth in this Act regarding the International Monetary Fund.
          ``(4) Inapplicability of termination provision of the federal 
        advisory committee act.--Section 14(a)(2) of the Federal 
        Advisory Committee Act shall not apply to the Advisory 
        Committee.''.

SEC. 302. AVAILABILITY OF INTERNATIONAL MONETARY FUND LETTERS OF INTENT 
                    REGARDING AGREEMENTS REQUIRED IN ORDER TO RECEIVE 
                    ASSISTANCE.

  Title XV of the International Financial Institutions Act (22 U.S.C. 
262o-262o-1) is further amended by adding at the end the following:

``SEC. 1504. AVAILABILITY OF INTERNATIONAL MONETARY FUND LETTERS OF 
                    INTENT REGARDING AGREEMENTS REQUIRED IN ORDER TO 
                    RECEIVE ASSISTANCE.

  ``Within 3 business days after the United States Executive Director 
at the International Monetary Fund receives a letter of intent from a 
country regarding structural adjustment or an economic, social, or 
other agreement required by the Fund in order to receive assistance 
from the Fund, the Executive Director shall provide to the Secretary of 
the Treasury a copy of the letter and any related memorandum of 
understanding. Within 7 days after receiving the copy, the Secretary of 
the Treasury shall make the copy available to the public (by electronic 
or other readily and publicly accessible means) except to the extent 
that the Secretary determines that doing so would--
          ``(1) endanger the national security of the country or of the 
        United States;
          ``(2) disrupt markets; or
          ``(3) be contrary to the obligations of the United States as 
        a member of the International Monetary Fund.''.

SEC. 303. ENFORCEMENT OF INDONESIAN COMPLIANCE WITH REFORMS REQUIRED BY 
                    THE INTERNATIONAL MONETARY FUND.

  The Secretary of the Treasury shall certify to the Committee on 
Banking and Financial Services of the House of Representatives and the 
Committee on Foreign Relations of the Senate that the United States 
Executive Director at the International Monetary Fund will oppose 
further disbursements of funds to Indonesia unless the Indonesian 
government complies with the terms of its International Monetary Fund 
reform package.

SEC. 304. SENSE OF THE CONGRESS ON THE TREATMENT OF MUCHTAR PAKPAHAN.

  It is the sense of the Congress that the Government of Indonesia 
should immediately release Muchtar Pakpahan from prison and have all 
criminal charges against him dismissed.

SEC. 305. SENSE OF THE CONGRESS ON THE ROLE OF JAPAN IN RESTORING 
                    REGIONAL AND GLOBAL ECONOMIC GROWTH.

  (a) Finding.--The Congress finds that deteriorating economic 
conditions and ongoing financial market turbulence in Asia makes it 
more important than ever that Japan play a leadership role in helping 
to restore confidence and serve as a crucial engine of regional and 
world economic growth.
  (b) Sense of the Congress.--It is the sense of the Congress that 
Japan should assume a greater regional leadership role, which would 
coincide with Japan's goal of promoting strong domestic demand-led 
growth and avoiding a significant increase in its external surplus with 
the United States and the countries of the Asia-Pacific region.

                           TITLE IV--REPORTS

SEC. 401. SEMIANNUAL REPORTS ON FINANCIAL STABILIZATION PROGRAMS LED BY 
                    THE INTERNATIONAL MONETARY FUND IN CONNECTION WITH 
                    FINANCING FROM THE EXCHANGE STABILIZATION FUND.

  Title XVII of the International Financial Institutions Act (22 U.S.C. 
262r-262r-2) is amended by adding at the end the following:

``SEC. 1704. REPORTS ON FINANCIAL STABILIZATION PROGRAMS LED BY THE 
                    INTERNATIONAL MONETARY FUND IN CONNECTION WITH 
                    FINANCING FROM THE EXCHANGE STABILIZATION FUND.

  ``(a) In General.--The Secretary of the Treasury, in consultation 
with the Secretary of Commerce and other appropriate Federal agencies, 
shall prepare reports on the implementation of financial stabilization 
programs (and any material terms and conditions thereof) led by the 
International Monetary Fund in countries in connection with which the 
United States has made a commitment to provide, or has provided 
financing from the stabilization fund established under section 5302 of 
title 31, United States Code. The reports shall include the following:
          ``(1) A description of the condition of the economies of 
        countries requiring the financial stabilization programs, 
        including the monetary, fiscal, and exchange rate policies of 
        the countries.
          ``(2) A description of the degree to which the countries 
        requiring the financial stabilization programs have fully 
        implemented financial sector restructuring and reform measures 
        required by the International Monetary Fund, including--
                  ``(A) ensuring full respect for the commercial 
                orientation of commercial bank lending;
                  ``(B) ensuring that governments will not intervene in 
                bank management and lending decisions (except in regard 
                to prudential supervision);
                  ``(C) the passage of appropriate financial reform 
                legislation;
                  ``(D) strengthening the domestic financial system, 
                through financial sector restructuring, as well as 
                improved transparency and supervision; and
                  ``(E) the opening of domestic capital markets.
          ``(3) A description of the degree to which the countries 
        requiring the financial stabilization programs have fully 
        implemented reforms required by the International Monetary Fund 
        that are directed at corporate governance and corporate 
        structure, including--
                  ``(A) making nontransparent conglomerate practices 
                more transparent through the application of 
                internationally accepted accounting practices, 
                independent external audits, full disclosure, and 
                provision of consolidated statements; and
                  ``(B) ensuring that no government subsidized support 
                or tax privileges will be provided to bail out 
                individual corporations, particularly in the 
                semiconductor, steel, and paper industries.
          ``(4) A description of the implementation of reform measures 
        required by the International Monetary Fund to deregulate and 
        privatize economic activity by ending domestic monopolies, 
        undertaking trade liberalization, and opening up restricted 
        areas of the economy to foreign investment and competition.
          ``(5) A detailed description of the trade policies of the 
        countries, including any unfair trade practices or adverse 
        effects of the trade policies on the United States.
          ``(6) A description of the extent to which the financial 
        stabilization programs have resulted in appropriate burden-
        sharing among private sector creditors, including rescheduling 
        of outstanding loans by lengthening maturities, agreements on 
        debt reduction, and the extension of new credit.
          ``(7) A description of the extent to which the economic 
        adjustment policies of the International Monetary Fund and the 
        policies of the government of the country adequately balance 
        the need for financial stabilization, economic growth, 
        environmental protection, social stability, and equity for all 
        elements of the society.
          ``(8) Whether International Monetary Fund involvement in 
        labor market flexibility measures has had a negative effect on 
        core worker rights, particularly the rights of free association 
        and collective bargaining.
          ``(9) A description of any pattern of abuses of core worker 
        rights in recipient countries.
          ``(10) The amount, rate of interest, and disbursement and 
        repayment schedules of any funds disbursed from the 
        stabilization fund established under section 5302 of title 31, 
        United States Code, in the form of loans, credits, guarantees, 
        or swaps, in support of the financial stabilization programs.
          ``(11) The amount, rate of interest, and disbursement and 
        repayment schedules of any funds disbursed by the International 
        Monetary Fund to the countries in support of the financial 
        stabilization programs.
  ``(b) Timing.--Not later than October 1, 1998, and semiannually 
thereafter, the Secretary of the Treasury shall submit to the 
Committees on Banking and Financial Services and International 
Relations of the House of Representatives and the Committees on Foreign 
Relations, and Banking, Housing, and Urban Affairs of the Senate a 
report on the matters described in subsection (a).''.

SEC. 402. REPORTS ON REFORMING THE ARCHITECTURE OF THE INTERNATIONAL 
                    FINANCIAL SYSTEM.

  (a) Findings.--The Congress finds that, in order to ensure that the 
International Monetary Fund does not become the global lender of last 
resort to private sector corporations and financial institutions, and 
in order to help prevent future threats to the international financial 
system, the Secretary of the Treasury and the Chairman of the Board of 
Governors of the Federal Reserve System, working with their 
counterparts in other countries and with international organizations as 
appropriate, should--
          (1) seek to establish a broad set of international 
        transparency principles on accounting and disclosure policies 
        and practices covering, in particular, private sector financial 
        organizations;
          (2) promote improvements in the provision by both borrowers 
        and lenders of timely and comprehensive aggregate information 
        on cross-border financial stocks and flows;
          (3) seek an international accord establishing uniform minimum 
        standards with respect to robust banking and supervisory 
        systems, which individual countries should be required to meet 
        as a condition for the establishment of subsidiaries, branches, 
        or other offices of banking institutions from their countries 
        in the jurisdictions of the countries participating in the 
        accord;
          (4) immediately initiate with appropriate representatives of 
        the countries that are members of the International Monetary 
        Fund discussions aimed at securing national treatment for 
        United States investors in such countries; and
          (5) seek to establish internationally acceptable bankruptcy 
        standards and should work particularly to have International 
        Monetary Fund recipient countries adopt such standards.
  (b) Reports.--
          (1) In general.--The Secretary of the Treasury shall prepare 
        3 reports on progress made toward achieving the objectives 
        outlined in subsection (a), which shall describe the steps 
        taken by the United States, other members of the world 
        community, and the international financial institutions to 
        strengthen safeguards in the global financial system, including 
        measures to promote more efficient functioning of global 
        markets, by--
                  (A) helping to develop effective legal and regulatory 
                frameworks, including appropriate bankruptcy and 
                foreclosure mechanisms;
                  (B) increasing transparency and disclosure by both 
                the private and public sectors;
                  (C) strengthening prudential standards, both globally 
                and in individual economies;
                  (D) improving domestic policy management;
                  (E) strengthening the role of the international 
                financial institutions in financial crisis prevention 
                and management; and
                  (F) ensuring appropriate burden sharing by the 
                private sector, particularly commercial banks and 
                financial institutions, in the resolution of crises.
          (2) Timing.--The Secretary of the Treasury shall submit to 
        the Committees on Banking and Financial Services and 
        International Relations of the House of Representatives and the 
        Committees on Foreign Relations and Banking, Housing, and Urban 
        Affairs of the Senate 2 interim reports on the matters 
        described in paragraph (1), the first of which is due by 
        October 1, 1998, and the second of which is due on April 1, 
        1999, and a final report on such matters, which is due on 
        October 1, 1999.

SEC. 403. ANNUAL REPORT AND TESTIMONY ON THE STATE OF THE INTERNATIONAL 
                    FINANCIAL SYSTEM, IMF REFORM, AND COMPLIANCE WITH 
                    IMF AGREEMENTS.

  Title XVII of the International Financial Institutions Act (22 U.S.C. 
262r-262r-2) is further amended by adding at the end the following:

``SEC. 1705. ANNUAL REPORT AND TESTIMONY ON THE STATE OF THE 
                    INTERNATIONAL FINANCIAL SYSTEM, IMF REFORM, AND 
                    COMPLIANCE WITH IMF AGREEMENTS.

  ``(a) Reports.--Not later than October 1 of each year, the Secretary 
of the Treasury shall submit to the Committee on Banking and Financial 
Services of the House of Representatives and the Committee on Foreign 
Relations of the Senate a written report on the progress (if any) made 
by the United States Executive Director at the International Monetary 
Fund in influencing the International Monetary Fund to adopt the 
policies and reform its internal procedures in the manner described in 
section 1503.
  ``(b) Testimony.--After submitting the report required by subsection 
(a) but not later than October 31 of each year, the Secretary of the 
Treasury shall appear before the Committee on Banking and Financial 
Services of the House of Representatives and the Committee on Foreign 
Relations of the Senate and present testimony on--
          ``(1) any progress made in reforming the International 
        Monetary Fund;
          ``(2) the status of efforts to reform the international 
        financial system; and
          ``(3) the compliance of countries which have received 
        assistance from the International Monetary Fund with agreements 
        made as a condition of receiving the assistance.''.

SEC. 404. AUDITS OF THE INTERNATIONAL MONETARY FUND.

  Title XVII of the International Financial Institutions Act (22 U.S.C. 
262r-262r-2) is further amended by adding at the end the following:

``SEC. 1706. AUDITS OF THE INTERNATIONAL MONETARY FUND.

  ``(a) Access to Materials.--Not later than 30 days after the date of 
the enactment of this section, the Secretary of the Treasury shall 
certify to the Committee on Banking and Financial Services of the House 
of Representatives and the Committee on Foreign Relations of the Senate 
that the Secretary has instructed the United States Executive Director 
at the International Monetary Fund to facilitate timely access by the 
General Accounting Office to information and documents of the 
International Monetary Fund needed by the Office to perform financial 
reviews of the International Monetary Fund that will facilitate the 
conduct of United States policy with respect to the Fund.
  ``(b) Reports.--Not later than June 30, 1999, and annually 
thereafter, the Comptroller General of the United States shall prepare 
and submit to the committees specified in subsection (a) a report on 
the financial operations of the Fund during the preceding year, which 
shall include--
          ``(1) the current financial condition of the International 
        Monetary Fund;
          ``(2) the amount, rate of interest, disbursement schedule, 
        and repayment schedule for any loans that were initiated or 
        outstanding during the preceding calendar year, and with 
        respect to disbursement schedules, the report shall identify 
        and discuss in detail any conditions required to be fulfilled 
        by a borrower country before a disbursement is made;
          ``(3) a detailed description of whether the trade policies of 
        borrower countries permit free and open trade by the United 
        States and other foreign countries in the borrower countries;
          ``(4) a detailed description of the export policies of 
        borrower countries and whether the policies may result in 
        increased export of their products, goods, or services to the 
        United States which may have significant adverse effects on, or 
        result in unfair trade practices against or affecting United 
        States companies, farmers, or communities;
          ``(5) a detailed description of any conditions of 
        International Monetary Fund loans which have not been met by 
        borrower countries, including a discussion of the reasons why 
        such conditions were not met, and the actions taken by the 
        International Monetary Fund due to the borrower country's 
        noncompliance;
          ``(6) an identification of any borrower country and loan on 
        which any loan terms or conditions were renegotiated in the 
        preceding calendar year, including a discussion of the reasons 
        for the renegotiation and any new loan terms and conditions; 
        and
          ``(7) a specification of the total number of loans made by 
        the International Monetary Fund from its inception through the 
        end of the period covered by the report, the number and 
        percentage (by number) of such loans that are in default or 
        arrears, and the identity of the countries in default or 
        arrears, and the number of such loans that are outstanding as 
        of the end of period covered by the report and the aggregate 
        amount of the outstanding loans and the average yield (weighted 
        by loan principal) of the historical and outstanding loan 
        portfolios of the International Monetary Fund.''.

                     Explanation of the Legislation

    H.R. 3114 as amended provides for the following: (1) 
authorization for U.S. participation in an International 
Monetary Fund (IMF) quota increase; (2) authorization for U.S. 
participation in the New Arrangements to Borrow (NAB); (3) both 
authorizations are subject to a certification by the Secretary 
of the Treasury that investors and banks make a significant 
contribution in conjunction with an IMF financing package; (4) 
a requirement that the Secretary of the Treasury instruct the 
U.S. Executive Director of the IMF to use aggressively his or 
her voice and vote to vigorously promote certain policies to 
enhance the general effectiveness of the IMF; (5) a requirement 
that the Secretary of the Treasury pursue IMF reform policies 
in coordination with other federal agencies; (6) an eight 
member Advisory Committee on IMF Policy be established to meet 
semi-annually with the Secretary or Deputy Secretary of the 
Treasury; (7) a requirement that the Secretary of the Treasury 
make public all letters of intent from borrowing countries to 
the IMF with certain exceptions; (8) a requirement that the 
Secretary of the Treasury certify that the U.S. Executive 
Director of the IMF will oppose further disbursements of funds 
to Indonesia unless that government complies with the terms of 
its IMF financing; (9) a sense of Congress is expressed with 
respect to both Muchtar Pakpahan, and the role of Japan in 
restoring regional and global economic growth; (10) a 
requirement that the Secretary of the Treasury report semi-
annually on the implementation of IMF financial stabilization 
programs in connection with financing from the Exchange 
Stabilization Fund; (11) a requirement that the Secretary of 
the Treasury prepare three reports on reforming the 
architecture of the international financial system; (12) a 
requirement that the Secretary of the Treasury submit an annual 
report on progress made by the U.S. Executive Director in 
reforming the IMF and to testify annually before Congress 
regarding international financial system reforms, IMF reform, 
and compliance with IMF agreement; and (13) a certification by 
the Secretary of the Treasury be given that the U.S. Executive 
Director to the IMF has been instructed to facilitate timely 
access by the General Accounting Office (GAO) to information 
and documents of the IMF needed by the GAO to perform financial 
audits of the IMF, and that no later than June 30, 1999 and 
annually thereafter that the GAO prepare and submit a report to 
Congress on the financial operations of the IMF.

                  Background and Need for Legislation

    The bill as reported authorizes U.S. participation in an 
International Monetary Fund (IMF) quota increase and the New 
Arrangements to Borrow (NAB), subject to a certification by the 
Secretary of the Treasury. It also requires the advocacy of 
certain policies by the United States in the IMF, promotes 
reform of the IMF and the international financial system, and 
requires annual testimony as well as the production of several 
reports by the Secretary of the Treasury.
    The Committee on Banking and Financial Services strongly 
supports continued U.S. participation and leadership in the 
IMF, other international financial institutions and the global 
economy. The Committee concurs with the assessment of Federal 
Reserve Chairman Greenspan, that by ``joining with our major 
trading partners and international financial institutions in 
helping to stabilize the economies of Asia and promoting needed 
structural changes, we are also encouraging the continued 
expansion of world trade and global economic and financial 
stability on which the ongoing increase in our own standard of 
living depends. If we were to cede our role as a world leader, 
or backslide into projectionist policies, we would threaten the 
source of much of our own sustained economic growth.''
    The need for continuing U.S. leadership in the 
international financial system and the global economy has been 
clearly demonstrated during the recent Asian financial crisis. 
America's vital interests are clearly engaged in this region.
    First, U.S. security is closely intertwined with the 
maintenance of peace and stability in the Asia-Pacific, a 
region where we have fought three wars in the last half-
century. Second, Asia's economic vitality is critical to our 
own prosperity. Approximately one-third of U.S. exports go to 
Asia, and in recent years the Asia-Pacific has accounted for 
nearly half of U.S. export growth. Forty percent of U.S. 
agricultural exports go to Asia. If this trend reverses, a loss 
of American jobs and a slowdown in global growth could occur. 
Indeed, some analysts already predict that Asia excluding China 
will grow at less than 1% this year. As a result, economic 
activity will slow in Latin America and U.S. net exports may 
decline by as much as $70 billion or 1% of GDP. If the crisis 
in Asia does not worsen, the U.S. economy may slow down by 
between half a percent and one and half percent of GDP. Third, 
there is a risk that economic and social instability in Asia 
and other developing markets could threaten the model of 
development that all Americans prefer--open, more democratic 
societies coupled with open competitive economies. A failure of 
the U.S. to lead would also create doubts in the region about 
our long-term commitment to remain engaged in Asia.
    The IMF has been central to efforts by the U.S. and other 
countries to stabilize and contain the financial contagion in 
Asia. As the world's largest economy and the greatest 
beneficiary of the open international economic and financial 
system, the U.S. has a major stake in the continued viability 
of the IMF. It is in the U.S. national interest to support a 
strengthened IMF that multilateralizes the financial support 
for on-going economic reforms in countries that are important 
to our interests and that can respond to widespread liquidity 
problems.
    The IMF is the principal monetary institution of the world 
economy. Its membership of 182 countries is virtually 
universal. Conceived in 1944 at Bretton Woods, New Hampshire, 
the IMF is charged with promoting a sound and open world 
economy and a stable international financial system. While the 
world economy and international financial system have evolved 
significantly since the IMF was founded 50 years ago, its core 
mission has remained much the same: to provide advice on 
macroeconomic and exchange rate policy and highly conditional 
financial assistance to countries facing temporary balance of 
payments problems. Its regular activities include oversight of 
the operation of the international monetary system and members' 
economic and financial policies. This oversight function 
involves the Fund in regular consultations with members about 
their economic and financial polices, and surveillance of 
international financial market activity. The IMF also promotes 
strong, market-oriented, macroeconomic reforms through 
financing programs that lay the foundation for sustainable 
economic growth and development.
    To sustain its capabilities, particularly given the turmoil 
in Asian and other developing markets, the IMF needs to sustain 
its strength relative to a rapidly expanding global economy 
characterized by exponential growth in international capital 
markets. In a world of new and potentially serious financial 
risks, the IMF needs sound financial footing. The U.S. also 
needs to be prepared to participate financially in the 
institution and contribute its share if our nation is to 
influence the policy and operations of the institution 
effectively and to institute needed reforms.
    The role of the IMF should be stressed for three reasons. 
First, it has the expertise to shape effective stabilization 
and reform programs. Second, as an apolitical international 
institution, it has the leverage to require a country to accept 
conditions that no single government could require on its own. 
Third, it maximizes burdensharing. Contributions from the U.S. 
are matched on a better than five-to-one ratio, with Germany, 
Japan and other countries providing the majority of resources 
in support of goals supported by the United States. In 
addition, under established statutory and budgetary treatment, 
increases in the U.S. commitments to the general resources of 
the IMF are not scored as budgetary outlays and do not come at 
the expense of other programs in the budget.
    In this context, the Administration has requested 
Congressional support for both the New Arrangements to Borrow 
(NAB), as a standby facility to preserve global stability in 
the event of severe systemic threats and if quota resources are 
insufficient, and a quota increase to provide the IMF adequate 
resources to fund regular operations. These requests are 
explained more fully below.
    For the FY 1998 supplemental budget, the Administration has 
requested authorization for U.S. participation in the New 
Arrangements to Borrow (NAB) and to provide the dollar 
equivalent of Special Drawing Rights (SDR), approximately $3.4 
billion, for this purpose. The NAB is a set of emergency credit 
lines for the IMF to supplement its ordinary (quota) resources 
if necessary to deal with a threat to the international 
monetary system. The Administration's FY 1998 supplemental 
requests an appropriation for budget authority in addition to 
the SDR ($6 billion) previously authorized and appropriated for 
the General Arrangements to Borrow (GAB), first established in 
1962.
    The Committee believes that the growth of international 
capital flows relatives to the size of the IMF makes U.S. 
participation in the NAB in our national interest. Recent 
events have demonstrated that existing credit line arrangements 
under the GAB are not a sufficiently large ``reserve tank'' to 
supplement the regular resources of the IMF. For example, the 
total financial package provided to Mexico during the peso 
crisis was larger than the GAB, whereas the NAB would total 
roughly $46 billion at current exchange rates--roughly the size 
of the Mexican assistance plan and more than 2\1/2\ times the 
IMF's contribution to it. Operationally, the NAB incorporates 
three levels of protection to mitigate against moral hazard 
risk: it can only be used in exceptional circumstances; 
activation requires agreement by participants representing 80% 
of credit arrangements (the U.S. holds a near-veto by virtue of 
its share of just under 20%); and strong conditionality is 
applied when it is activated to finance IMF lending. NAB 
participants have a claim on the IMF, not on the country which 
the IMF is financing. The NAB lenders received interest on the 
amount of their claim, which is denominated in SDR. Interest is 
paid in SDRs, at the prevailing SDR interest rate, which is 
calculated on the basis of the prevailing short-term interest 
rates of the SDR's five component currencies.
    In its FY 1998 supplemental budget request, the 
Administration has also requested authorization for a 45% 
increase in the ordinary (quota) resources of the IMF, and to 
provide the dollar equivalent of 10,622.5 billion SDRs 
(approximately $14.5 billion). The rapid evolution of the 
global financial system and the growth in capital flows to 
rapidly growing emerging markets has helped facilitate 
international trade in goods and services and has helped raise 
standards of living worldwide. But it has also increased the 
risks that financial instability in one country can quickly be 
transmitted to others and magnified the potential size of 
financing gaps when emergencies arise. When there is a need to 
defend the international financial system, the IMF is uniquely 
placed to mobilize substantial assistance quickly and, when 
justified, to provide the largest share of official financing.
    According to the Treasury Department, the IMF does not have 
sufficient funds to deal with a deepening of the Asian crisis 
or its spread to other developing markets. As a result of its 
Asian commitments, the IMF's ordinary financial resources are 
approaching a historically low level. At present, the IMF has 
about $45 billion in uncommitted resources, but only $10-15 
billion is available because an estimated $30-35 billion must 
be held in reserve to accommodate potential withdrawals by 
members. In addition, the IMF has access to roughly $23 billion 
in the GAB, for a total of $33-38 billion of total lending 
capacity. By comparison, in the last six months alone the IMF's 
commitment to financial stabilization in Asia amounted to some 
$35 billion.
    It is important to note the distinction between the quota 
increase and the NAB. The IMF's quota resources serve a 
different purpose than the contingent lines of credit that form 
the NAB. Quota resources form the basis for the IMF's normal 
operations. The IMF must have assurance that it can rely on 
their availability in order to meet projected demand for its 
lending programs and any request from a creditor country to 
encash it claim on the institution. The NAB/GAB are intended to 
provide supplementary resources if the IMF is faced with an 
extraordinary request for assistance but lacks an adequate 
supply of quota resources. It is neither intended nor desirable 
that the GAB/NAB should be used to help finance normal IMF 
programs.
    The Executive Branch and the Congress have, since 1968, 
agreed that transactions with the IMF related to U.S. credit 
line arrangements or the U.S. quota subscription are treated as 
exchanges of monetary assets that are not scored as outlays 
and, therefore, do not increase the deficit. When the U.S. 
provides resources to the IMF, it receives a liquid interest-
bearing claim on the IMF which is backed by its substantial 
reserves, including gold. The U.S. claim is like a deposit in 
the soundest of financial institutions, on which the U.S. is 
paid interest and which it can withdraw on very short notice if 
needed. Since 1980, authorization and appropriations have been 
required when the U.S. advances funds to the IMF under quota 
commitments or credit line arrangements, but the ``no outlay'' 
treatment has remained in place. Over time, these claims do 
give rise to valuation adjustments. Under the five-year 
bipartisan budget agreement reached in 1997, an adjustment to 
the discretionary spending limits is assumed to accommodate 
exchanges of monetary assets and international organization 
arrears.
    The Committee believes there is some confusion about rate 
interest charged on IMF loans under standby or similar credit 
facilities. Under current procedures in use at the Fund, the 
basic rate of charge (interest plus additional costs) 
applicable to members' use of the Fund's ordinary resources is 
determined at the beginning of each financial year. The rate of 
charge has been set as a proportion of the weekly SDR interest 
rate, and change weekly. The SDR interest rate is calculated as 
the weighted average of short-term interest rates in the U.S., 
Germany, France, Japan, and the U.K. (with the 3-month Japanese 
Government Bond yielding an historic low of 1.40%). The current 
SDR interest rate is roughly 4.73%. Because of this averaging 
methodology, the cost of IMF financing is below the rates at 
which most borrowers can obtain from the market. These rates of 
interest may not be appropriate in all circumstances, 
particularly when extraordinary IMF financing is called for.
    Here the Committee would note that the U.S. has 
successfully pushed for a radical change in IMF procedures so 
that interest rates on high levels of financing have been 
raised and includes an explicit risk premium. The Supplemental 
Reserve Facility (SRF), first used in Korea after its 
endorsement in Manila by Asian finance officials and APEC 
leaders in late 1997, combines not only market rates of 
interest--but premium rates some 300 basis points above the 
Fund's normal cost of financing--with shorter maturities. 
Modeled on America's use of the ESF during the Mexican peso 
crisis, the new facility maximizes the incentive for a quick 
return by governments to reliance on private market financing. 
It will be available only in limited circumstances and only in 
association with a strong policy response by the borrowing 
government needed to restore confidence.

                                Hearings

    On November 13, 1997, the Committee on Banking and 
Financial Services held a hearing on financial instability in 
Asia. Witnesses were as follows: Alan Greenspan, Chairman of 
the Board of Governors of the Federal Reserve System; Lawrence 
H. Summers, Deputy Secretary of the Treasury; John Lipsky, 
Chief Economist and Director of Research, Chase Manhattan Bank; 
Robert D. Hormats, Vice Chairman, Goldman Sachs 
(International); C. Fred Bergsten, Director, Institute for 
International Economics; David Hale, Chief Global Economist, 
Zurich Kemper Investments; and Jerome Levinson, Professor, 
American University College of Law.
    On January 27, 1998, Chairman Leach (for himself, Mr. 
LaFalce, Mrs. Roukema, Mr. Vento, Mr. Hinchey, and Mr. Jackson) 
introduced H.R. 3114, the International Monetary Fund Reform 
and Authorization Act of 1998.
    On January 30, 1998, the Committee on Banking and Financial 
Services held a hearing on financial instability in Asia and 
the role of the International Monetary Fund. Witnesses were as 
follows: Robert E. Rubin, Secretary of the Treasury; Wiilliam 
S. Cohen, Secretary of Defense; Alan Greenspan, Chairman of the 
Board of Governors of the Federal Reserve System; Lawrence H. 
Summers, Deputy Secretary of the Treassury; Paul Wolfowitz, 
Dean, Paul H. Ntize School of Advanced International Studies, 
Johns Hopkins, University; Lawrence Lindesy, Resident Scholar, 
American Enterprise Institute; Lawrence Chimerine, Senior Vice 
President and Chief Economist, Economic Strategy Institute; 
Steven Hanke, Professor of Applied Economics, The Johns Hopkins 
University; Robert Zoellick, Professor of National Security, 
United States Naval Academy; and C. Fred Bergsten, Director, 
Institute for International Economics.
    On February 3, 1998, the Committee on Banking and Financial 
Services held its third hearing on financial instability in 
Asia and the role of the International Monetary Fund. Witnesses 
were as follows: the Hon. Peter J. Visclosky; the Hon. Cliff 
Stearns; the Hon. Michael D. Crapo; the Hon. Ron Paul; the Hon. 
Bernard Sanders; Raymond Bracy, President, Boeing China, the 
Boeing Company; George Becker, International President, United 
Steelworkers of America, AFL-CIO; Steve Appleton, Chairman, 
CEO, and President, Micron Technology, Inc.; Dean Kleckner, 
President, American Farm Bureau Federation; Joseph Russo, 
President, IPSCO Steel, Inc.; Henson Moore, President and CEO, 
American Forest & Paper Association; John D. Cohn, Vice 
President of Global Strategy Development, Rockwell Collins; and 
Don Hilger, Assistant Vice President, Grain Division, Cargill, 
Inc., on behalf of the North American Export Grain Association.

                   Committee Consideration and Votes

    On Thursday, March 5, 1998, the Committee on Banking and 
Financial Services met in open markup session and ordered H.R. 
3114 reported to the full House for consideration, as amended, 
by a roll call vote of 40 to 9.
    The Committee adopted the following 21 amendments by voice 
vote.
    The Managers' Amendment offered by Mr. Leach and Mr. 
LaFalce further amended the findings and instructions to the 
Secretary of the Treasury under Title III--Policy Provisions, 
and added a new Title IV requiring semi-annual reports by the 
Secretary of the Treasury regarding implementation of IMF 
stabilization programs.
    An amendment to the Managers' amendment by Mr. Bereuter to 
add the words ``internationally acceptable'' to the description 
of domestic bankruptcy laws was adopted by unanimous consent.
    An amendment to the Managers' amendment by Mrs. Roukema 
adding several provisions to the reporting requirements 
contained in Title IV was adopted by unanimous consent.
    An amendment to the Managers' amendment by Mr. Hinchey 
changing from passive to active wording language instructing 
the U.S. Executive Director of the IMF to seek to prevent 
social strife in borrowing countries was adopted by unanimous 
consent.
    An amendment to the Managers' amendment by Mr. Hinchey 
changing from passive to active wording language instructing 
the U.S. Executive Director of the IMF to seek to promote 
sustainable development and environmental protection was 
adopted by unanimous consent.
    An amendment offered by Mr. Castle to provide for reform of 
the architecture of the international financial system by 
requiring 3 reports outlining progress being made toward 
achieving establishing a set of international transparency 
principles and practices, promoting improvements by borrowers 
and lenders of timely and comprehensive aggregate information 
on cross-border financial stocks and flows, and seeking to 
establish an international accord establishing uniform minimum 
standards with respect to banking and supervisory systems. Also 
the amendment requires the Secretary of the Treasury to appear 
before Congress annually to report on the state of the 
international financial system, the progress being made in 
achieving policy goals, and the extent to which countries 
comply with the conditions of IMF assistance.
    Two amendments considered En Bloc offered by Mr. Bereuter 
to the Castle amendment. These amendments added provisions to 
secure national treatment for U.S. investors and establish 
internationally acceptable bankruptcy standards as negotiating 
objectives for the Department of the Treasury and the Federal 
Reserve.
    A substitute amendment by Mr. Leach to an amendment offered 
by Mr. Sanders. The substitute expresses the sense of Congress 
that the Government of Indonesia should immediately release 
Muchtar Pakpahan from prison and have all criminal charges 
against him dismissed.
    An amendment by Ms. Waters providing that the Secretary of 
the Treasury shall certify to the House Banking and Senate 
Foreign Relations Committees that the U.S. Executive Director 
of the IMF will oppose further disbursements of funds to 
Indonesia unless the Indonesian government complies with the 
terms of its IMF reform package.
    An amendment offered by Mr. Vento and Mr. Bentsen requiring 
the Secretary of the Treasury to publicly disclose letters of 
intent and memoranda of understanding reached between the IMF 
and recipient countries within 10 days of the agreement, 
subject to three exceptions.
    An amendment offered by Mr. Lucas and Mr. Sandlin, adding a 
provision requiring the Secretary of the Treasury to instruct 
the U.S. Executive Director of the IMF to encourage the opening 
of markets for agricultural commodities and products. This 
amendment was modified by Mr. Lucas' unanimous consent request 
to insert the word ``commodities.''
    An amendment offered by Mr. Kennedy requiring the Secretary 
of the Treasury to instruct the U.S. Executive Director of the 
IMF to structure IMF programs to as to protect the rights and 
land of indigenous people.
    An amendment offered by Mr. Kennedy requiring the Secretary 
of the Treasury to instruct the U.S. Executive Director of the 
IMF to promote policies at the IMF regarding the consideration 
by the IMF of the budgetary transparency, degree of good 
governance, and military expenditures of borrowing countries.
    An amendment offered by Ms. Waters requiring the Secretary 
of the Treasury to instruct the U.S. Executive Director of the 
IMF to structure IMF debt relief programs so that they do not 
impose unfair conditions on heavily indebted poor countries, 
increase the amount of debt relief available to poor countries, 
and decrease the time required to qualify for debt relief.
    An amendment offered by Mrs. Roukema adding the words ``and 
other appropriate federal agencies'' to reporting requirements 
in Title IV.
    An amendment offered by Mr. Kennedy requiring the Secretary 
of the Treasury to instruct U.S. Executive Director of the IMF 
to promote consideration of appropriate ways in which debtors 
and private creditors, in consultation with central banks, can 
be encouraged voluntarily to provide for an appropriate degree 
of burden sharing.
    A substitute amendment offered by Mr. Leach an amendment 
offered by Mr. Hinchey to express the sense of Congress that 
Japan should promote domestic-demand led growth and avoid a 
significant increase in its external surplus with the U.S. and 
countries of the Asia-Pacific region.
    An amendment offered by Mr. Sanders withholding 
authorization of U.S. contributions to the NAB and the IMF 
quota increase until the Secretary of Treasury certifies that 
the investors and banks make a significant contribution in 
conjunction with a financial package that, in the context of an 
international financial crisis, might include taxpayer 
supported official financing. (After the Sanders motion to 
reconsider was agreed to, the amendment was adopted as a 
substitute for the Sanders/Bachus amendment which passed. See 
the roll call votes below.)
    An amendment offered by Mrs. Kelly requiring that not later 
than 30 days after passage of this Act, the Secretary of the 
Treasury shall certify that the U.S. Executive Director of the 
IMF has been directed to facilitate timely access by GAO to 
information it needs to perform financial reviews of the IMF 
and further requires an annual report to Congress on the 
financial operations of the IMF.
    An amendment by Mr. Bentsen adding to the reporting 
requirements included in Title IV.
    An amendment offered by Mr. Hinchey requiring the Secretary 
of the Treasury to instruct the U.S. Executive Director to use 
the voice and vote to vigorously promote the adoption and 
enforcement of laws promoting respect for internationally 
recognized workers rights.

                             Rollcall Votes

    Clause 2(l)(2)(B) of rule XI of the Rules of the House 
requires the Committee to list the recorded vote on the motion 
to report legislation and amendments thereto. The following are 
the recorded votes on the motion to report H.R. 3114 and on 
amendment offered to the measure, including the names of those 
Members voting for and against.
    An amendment offered by Mr. Sanders and Mr. Bachus to 
withhold authorization of U.S. contributions to the NAB and the 
IMF quota increase from taking effect until the Secretary of 
the Treasury certifies that the IMF has amended its bylaws to 
require funds to any country unless private creditors, 
investors and banks which have extended credit make significant 
prior contribution by debt relief, rollovers and the provision 
of new credit, was approved by a vote of 19-15. (This provision 
was later amended by an amendment offered by Mr. Sanders after 
his motion to reconsider the prior amendment was agreed to.)
        YEAS                          NAYS
Mr. Lazio                           Mr. Leach
Mr. Bachus                          Mrs. Roukema
Mr. Campbell                        Mr. Castle
Mr. Royce                           Mrs. Kelly
Mr. Lucas                           Mr. Cook
Mr. Ehrlich                         Mr. LaFalce
Mr. Barr                            Mr. Frank
Dr. Paul                            Mr. Kanjorski
Dr. Weldon                          Ms. Roybal-Allard
Mr. Jones                           Mr. Bentsen
Mr. Fossella                        Mr. Maloney
Mr. Kennedy                         Ms. Hooley
Ms. Waters                          Mr. Weygand
Mr. Sanders                         Mr. Sandlin
Mr. Barrett, T.                     Mr. Meeks, G.
Mr. Watt
Mr. Hinchey
Mr. Jackson, Jr.
Mr. Sherman

    The following six amendments were defeated by rollcall 
vote. First, an amendment offered by Mr. Sanders which required 
that the effective dates for new funding in the bill not take 
effect until the Treasury Secretary certifies that the IMF, in 
consultation with the International Labor Organization, has put 
in place an enforceable plan for the EU and Japan to absorb a 
reasonable share of the increased imports from South Korea, 
Indonesia, and Thailand resulting from compliance with the 
overall program approved by the IMF for resolution of the 
crisis. The amendment was defeated 5-32.
        YEAS                          NAYS
Mr. Metcalf                         Mr. Leach
Mr. Ney                             Mr. McCollum
Dr. Paul                            Mr. Bereuter
Mr. Jones                           Mr. Baker, R.
Mr. Sanders                         Mr. Bachus
                                    Mr. Castle
                                    Mr. Campbell
                                    Mr. Lucas
                                    Mr. Ehrlich
                                    Mr. Fox
                                    Mrs. Kelly
                                    Mr. Ryun
                                    Mr. Snowbarger
                                    Mr. Riley
                                    Mr. LaTourette
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Ms. Waters
                                    Ms. Roybal-Allard
                                    Mr. Barrett, T.
                                    Ms. Velazquez
                                    Mr. Watt
                                    Mr. Hinchey
                                    Mr. Bentsen
                                    Mr. Jackson, Jr.
                                    Mr. Maloney
                                    Mr. Sherman
                                    Mr. Sandlin
                                    Mr. Meeks, G.

    Second, an amendment offered by Mr. Sanders to withhold 
authorization of U.S. contributions to the NAB and IMF quota 
increase from taking effect until the Secretary of the Treasury 
certifies that the IMF has amended its bylaws to prohibit the 
IMF from providing assistance to any country which has not 
adopted and is enforcing laws promoting respect for 
internationally-recognized worker rights as defined in the 
Trade Act of 1974, as amended. This amendment was defeated 15-
23.
        YEAS                          NAYS
Mr. Ney                             Mr. Leach
Dr. Paul                            Mrs. Roukema
Mr. Kennedy                         Mr. Bachus
Ms. Waters                          Mr. Castle
Mr. Sanders                         Mr. Royce
Mr. Gutierrez                       Mr. Lucas
Ms. Roybal-Allard                   Mr. Ehrlich
Mr. Barrett, T.                     Mr. Barr
Mr. Watt                            Mr. Fox
Mr. Hinchey                         Mrs. Kelly
Mr. Jackson, Jr.                    Dr. Weldon
Mr. Maloney                         Mr. Ryun
Mr. Weygand                         Mr. Cook
Mr. Torres                          Mr. Snowbarger
Mr. Meeks, G.                       Mr. Riley
                                    Mr. Fossella
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mrs. Maloney
                                    Mr. Bentsen
                                    Ms. Hooley
                                    Mr. Sandlin

    Third, an amendment offered by Mr. Bachus to instruct the 
U.S. Executive Director of the IMF to oppose provision of loans 
to countries which hinder the free exercise of religion. This 
amendment was defeated 8-30.
        YEAS                          NAYS
Mr. Bachus                          Mr. Leach
Mr. Lucas                           Mrs. Roukema
Mr. Metcalf                         Mr. Bereuter
Dr. Paul                            Mr. Lazio
Mr. Ryun                            Mr. King
Mr. Cook                            Mr. Campbell
Mr. Riley                           Mr. Royce
Mr. Jones                           Mr. Ehrlich
                                    Mr. Barr
                                    Mrs. Kelly
                                    Mr. LaTourette
                                    Mr. Fossella
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Ms. Waters
                                    Mr. Sanders
                                    Mrs. Maloney
                                    Ms. Roybal-Allard
                                    Mr. Barrett, T.
                                    Mr. Watt
                                    Mr. Bentsen
                                    Mr. Maloney
                                    Ms. Hooley
                                    Mr. Weygand
                                    Mr. Sherman
                                    Mr. Sandlin
                                    Mr. Meeks, G.

    Fourth, an amendment offered by Mr. McCollum that would 
condition the quota increase on whether a law is enacted that 
would bar the use of any funds from the Exchange Stabilization 
Fund without Congressional authorization. This amendment was 
defeated 9-32.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mr. Bachus                          Mrs. Roukema
Mr. Campbell                        Mr. Bereuter
Mr. Royce                           Mr. Baker, R.
Mr. Metcalf                         Mr. Lazio
Mr. Ryun                            Mr. Castle
Mr. Jones                           Mr. King
Mr. Fossella                        Mr. Ehrlich
Mr. Sanders                         Mrs. Kelly
                                    Mr. Cook
                                    Mr. LaTourette
                                    Mr. Manzullo
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Ms. Waters
                                    Mrs. Maloney
                                    Ms. Roybal-Allard
                                    Mr. Barret, T.
                                    Ms. Velazquez
                                    Mr. Watt
                                    Mr. Hinchey
                                    Mr. Bentsen
                                    Mr. Jackson, Jr.
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson
                                    Mr. Weygand
                                    Mr. Sherman
                                    Mr. Sandlin

    Fifth, an amendment offered by Mr. McCollum requiring the 
Secretary of the Treasury to instruct the U.S. Executive 
Director of the IMF to oppose loans from the IMF to any country 
in an amount that exceeds the equivalent of the lesser of $10 
billion; or the greater of an amount equal to 150% of the 
Special Drawing Rights of the country or $5 billion, unless 
Congress has approved such loans by joint resolution. The 
amendment was defeated 9-35.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mr. Bachus                          Mrs. Roukema
Mr. Metcalf                         Mr. Bereuter
Mr. Barr                            Mr. Lazio
Mr. Ryun                            Mr. Castle
Mr. Hill                            Mr. King
Mr. Sessions                        Mr. Campbell
Mr. Jones                           Mr. Royce
Mr. Fossella                        Mr. Lucas
                                    Mr. Ehrlich
                                    Mr. Cook
                                    Mr. LaTourette
                                    Mr. Manzullo
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Ms. Waters
                                    Mr. Sanders
                                    Mrs. Maloney
                                    Ms. Roybal-Allard
                                    Mr. Barrett
                                    Ms. Velazquez
                                    Mr. Watt
                                    Mr. Hinchey
                                    Mr. Bentsen
                                    Mr. Jackson, Jr.
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson
                                    Mr. Weygand
                                    Mr. Sherman
                                    Mr. Sandlin
                                    Mr. Meeks, G.

    Sixth, an amendment offered by Mr. McCollum to require the 
Secretary of the Treasury to withdraw the U.S. from the IMF 
within 3 years of the date of enactment; submit reports on new 
mechanisms for addressing international monetary issues; and 
further requires the repeal of the Bretton Woods Agreement Act 
3 years after the date of enactment. This amendment was 
defeated 12-36.
        YEAS                          NAYS
Mr. McCollum                        Mr. Leach
Mr. Bachus                          Mrs. Roukema
Mr. Campbell                        Mr. Bereuter
Mr. Royce                           Mr. Lazio
Mr. Ney                             Mr. Castle
Mr. Barr                            Mr. King
Mr. Ryun                            Mr. Lucas
Mr. Riley                           Mr. Ehrlich
Mr. Hill                            Mrs. Kelly
Mr. Sessions                        Mr. Cook
Mr. Jones                           Mr. LaTourette
Mr. Sanders                         Mr. Manzullo
                                    Mr. Fossella
                                    Mr. LaFalce
                                    Mr. Vento
                                    Mr. Frank
                                    Mr. Kanjorski
                                    Mr. Kennedy
                                    Ms. Waters
                                    Mrs. Maloney
                                    Ms. Roybal-Allard
                                    Mr. Barrett, T.
                                    Ms. Velazquez
                                    Mr. Watt
                                    Mr. Hinchey
                                    Mr. Ackerman
                                    Mr. Bentsen
                                    Mr. Jackson, Jr.
                                    Mr. Maloney
                                    Ms. Hooley
                                    Ms. Carson
                                    Mr. Weygand
                                    Mr. Sherman
                                    Mr. Torres
                                    Mr. Sandlin
                                    Mr. Meeks, G.

    A motion to adopt H.R. 3114, as amended, for final passage 
and favorably report it to the full House was approved by a 
vote of 40-9.
        YEAS                          NAYS
Mr. Leach                           Mr. McCollum
Mrs. Roukema                        Mr. Bachus
Mr. Bereuter                        Mr. Campbell
Mr. Lazio                           Mr. Royce
Mr. Castle                          Mr. Barr
Mr. King                            Mr. Riley
Mr. Lucas                           Mr. Hill
Mr Metcalf                          Mr. Jones
Mr. Ney                             Mr. Sanders
Mr. Ehrlich
Mrs. Kelly
Mr. Ryun
Mr. Cook
Mr. Sessions
Mr. LaTourette
Mr. Manzullo
Mr. Fossella
Mr. LaFalce
Mr. Vento
Mr. Frank
Mr. Kanjorski
Mr. Kennedy
Ms. Waters
Mrs. Maloney
Ms. Roybal-Allard
Mr. Barrett, T.
Ms. Velazquez
Mr. Watt
Mr. Hinchey
Mr. Ackerman
Mr. Bentsen
Mr. Jackson, Jr.
Mr. Maloney
Ms. Hooley
Ms. Carson
Mr. Weygand
Mr. Sherman
Mr. Torres
Mr. Sandlin
Mr. Meeks, G.

                      Committee Oversight Findings

    Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of 
the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of 
the House of Representatives, no oversight findings have been 
submitted to the Committee by the Committee on Government 
Reform and Oversight.

                        Constitutional Authority

    In compliance with clause 2(l)(4) of rule XI of the Rules 
of the House of Representatives, the Constitutional Authority 
for Congress to enact this legislation is derived from Article 
I, section 8, clause 1 (relating to the general welfare of the 
United States); Article I, section 8, clause 3 (relating to 
Congressional power to regulate commerce); Article 1, section 
8, clause 5 (relating to the power ``to coin money'' and 
``regulate the value thereof''; and Article I, section 8, 
clause 18 (relating to making all laws necessary and proper for 
carrying into execution powers vested by the Constitution in 
the government of the United States).

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of rule XI of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

                      Advisory Committee Statement

    An advisory committee within the meaning of Section 5(b) of 
the Federal Advisory Committee Act was created to advise the 
Treasury Department on its policy toward the IMF. The Federal 
Advisory Committee Act (FACA) was instituted because Congress 
found that there were numerous committees and similar groups 
established to advise officers and agencies and there was a 
need to set the standards and uniform procedures on how they 
functioned and for how long. Because H.R. 3114 provides for an 
advisory committee on IMF policy representative of business, 
labor, nongovernmental environmental and human rights 
organizations, agriculture and financial services, and the 
provisions of the FACA apply. In order to override the 
termination provision of 2 years under sec. 14(a)(1) of the 
FACA for this advisory committee, Congress expressly provided 
that this section should not apply. Therefore, the bill 
specifically provides that the termination provision of the 
FACA should not apply to the IMF advisory committee.

                    Congressional Accountability Act

    The reporting requirement under section 102(b)(3) of the 
Congressional Accountability Act (PL-104-1) is inapplicable 
because this legislation does not relate to terms and 
conditions of employment or access to public services or 
accommodations.

 Congressional Budget Office Cost Estimates and Federal Mandate Costs 
                                Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 16, 1998.
Hon. James A. Leach,
Chairman, Committee on Banking and Financial Services, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3114, the 
International Monetary Fund Reform and Authorization Act of 
1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Joseph C. 
Whitehill.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 3114--International Monetary Fund Reform and Authorization Act of 
        1998

    Summary: H.R. 3114 would authorize appropriations for an 
increase in the United States' quota in the International 
Monetary Fund (IMF) equal to 10,622,500,000 Special Drawing 
Rights (SDR) and for an increase in the authority to make loans 
to the IMF equal to 2,462,000,000 SDR. In dollars, the 
authorizations would amount to approximately $14.5 billion and 
$3.4 billion, respectively. The authorizations would not 
directly affect federal outlays.
    In addition, the bill would create a new advisory 
commission and would require additional reports. The new 
requirements are estimated to cost less than $500,00 a year, 
assuming the appropriation of the necessary funds.
    Because H.R. 3114 would not affect direct spending or 
receipts, pay-as-you-go procedures would not apply. The bill 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA), and 
would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3114 is shown in the following table. 
The costs of this legislation fall within budget function 150 
(international affairs) and budget function 800 (general 
government).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal years, in millions of dollars--     
                                                           -----------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Proposed Changes:                                                                                               
    Authorization Level...................................   17,861    (\1\)    (\1\)    (\1\)    (\1\)    (\1\)
    Estimated Outlays.....................................        0    (\1\)    (\1\)    (\1\)    (\1\)   (\1\) 
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         

    Basis of estimate: The estimate assumes enactment of the 
bill and subsequent appropriation of approximately $14.5 
billion for the quota increase in the IMF and approximately 
$3.4 billion for authority to lend to the IMF under the New 
Arrangements to Borrow as requested by the President. The 
authorizations in the bill are specified in terms of Special 
Drawing Rights (or SDRs, a currency created by the IMF for the 
use of IMF members). In recent months, one SDR has been worth 
about $1.35.
    The quota subscription would involve an exchange of 
monetary assets between the Treasury and the IMF. The United 
States would turn over one form of internationally acceptable 
money and in exchange receive rights to draw international 
reserves from the IMF pool. The IMF has requested that the U.S. 
quota increase be paid in SDRs, which the United States would 
ultimately purchase from other IMF members. Only one-quarter of 
the $14.5 billion increase in the U.S. quota, or about $3.6 
billion, would be transferred to the IMF in the form of SDRs. 
The rest would be provided in a letter of credit, which the IMF 
could draw on as needed. Similarly, the $3.4 billion for the 
New Arrangements to Borrow would not involve cash payments to 
the IMF unless circumstances threatened international economic 
stability.
    Exchanges of monetary assets--which change the composition 
but not the level of the government's holdings of cash, or its 
equivalent--are not counted as budgetary outlays. Accordingly, 
increasing the United States' IMF quota would not directly 
affect the budget surplus or deficit. The quota increase would 
ultimately increase the federal debt because the Treasury would 
have to purchase additional SDRs. To the extent that interest 
earnings received from the IMF on reserve holdings differ from 
the interest costs on the increase in the debt, the surplus or 
deficit could be affected. In addition, there would be a chance 
of gain or loss from currency fluctuations.
    Finally, the bill would create a new advisory committee and 
require the Treasury to prepare additional reports. CBO 
estimates that preparing the reports and funding the advisory 
committee would cost less than $0.5 million annually.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: The bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Joseph C. Whitehill. 
Impact on State, Local, and Tribal Governments: Pepper 
Santalucia. Impact on the Private Sector: Patrice Gordon.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                      Section-by-Section Analysis

Section 1. Short Title

    This Act may be cited as the ``International Monetary Fund 
Reform and Authorization Act of 1998.''

Section 2. Findings

    This section includes Congressional findings with respect 
to the International Monetary Fund and U.S. interests, the 
social and economic impact of the Asian financial crisis, the 
need for reforms of the IMF and the international financial 
system, the need to minimized moral hazard, and the importance 
of contributions by the private sector to resolutions of 
financial crises.

                  Title I--International Monetary Fund

    Sec. 101--Participation in Quota Increase. This section 
authorizes the Administration's FY 1998 supplemental budget 
request of the dollar equivalent of 10,622.5 billion SDRs 
(approximately $14.5 billion in budget authority but with no 
outlay effect) for an increase in the quota of the United 
States in the IMF. The effectiveness of the authorization is 
made subject to a certification by the Secretary of the 
Treasury to the House and Senate authorizing committees that 
investors and banks make a significant contribution in 
conjunction with a financing package that, in the context of an 
international financial crisis, might include taxpayer 
supported official financing. The sentiment behind the adoption 
of this provision and the identical one in section 201 below, 
is to signal the strong opposition of the Committee to the 
privatization of gain and the socialization of loss in 
connection with an IMF-led financial stabilization effort.

                  Title II--New Arrangements to Borrow

    Sec. 201--New Arrangements to Borrow. This section 
authorizes the Administration's FY 1998 supplemental budget 
request of the dollar equivalent of 2,462 billion SDRs 
(approximately $3.4 billion not with no outlay effect) for U.S. 
participation in the New Arrangements to Borrow. It would also 
permit the dollar equivalent of 4,250 SDRs already authorized 
by Section 17 of the Bretton Woods Agreements Act for the GAB 
to be made available to the IMF under the NAB. The amount 
previously authorized for the GAB would continue to be made 
available under the GAB, although the NAB would be the facility 
of first recourse. However, funds from the U.S. under the GAB 
and NAB combined may not exceed the dollar equivalent of 6,712 
billion SDRs. The effectiveness of the authorization is made 
subject to a certification by the Secretary of the Treasury to 
the Congressional authorizing committees that investors and 
banks make a significant contribution in conjunction with a 
financing package that, in the context of an international 
financial crisis, might include taxpayer supported official 
financing.

                      Title III--Policy Provisions

    Sec. 301--Advocacy of Certain Policies. Section 301 amends 
Title XV of the International Financial Institutions Act by 
adding at the end a new section 1503. Section 301(a) directs 
the Secretary of the Treasury to instruct U.S. Executive 
Director of the IMF to use aggressively his or her voice and 
vote to do the following: (1) vigorously promote policies to 
increase the effectiveness of the IMF contributing to exchange 
rate stability and avoiding competitive devaluations; (2) 
vigorously promote policies to increase the effectiveness of 
the IMF promoting market-oriented reform; (3) vigorously 
promote policies to increase the effectiveness of the IMF, in 
concert with appropriate international authorities and other 
international financial institutions, in strengthening 
financial systems in developing countries; (4) vigorously 
promote policies to increase the effectiveness of the IMF, in 
concert with appropriate international authorities and other 
international financial institutions, in facilitating the 
development and implementation of internationally financial 
institutions, in facilitating the development and 
implementation of internationally acceptable bankruptcy laws; 
(5) vigorously promote policies that aim at appropriate burden-
sharing by the private sector so that investors and creditors 
bear more fully the consequences of their decisions; (6) 
vigorously promote policies that would make the IMF a more 
effective mechanism, in concert with appropriate international 
authorities and other international financial institutions, for 
promoting good governance principles; (7) vigorously promote 
the design of IMF programs and assistance so that governments 
that borrow from the IMF channel public funds away from 
unproductive purposes and toward investment in human and 
physical capital, as well as social programs for the neediest; 
(8) work with the IMF to foster economic prescriptions that are 
tailored for individual borrowing countries; (9) structure IMF 
programs and assistance so that the maintenance and improvement 
of core labor standards are routinely incorporated as an 
integral goal in the policy dialogue with recipient countries; 
(10) vigorously promote the adoption and enforcement of laws 
promoting respect for internationally recognized worker rights; 
(11) vigorously promote IMF programs and policies to discourage 
ethnic or social strife; (12) vigorously promote recognition by 
the IMF of the need to promote policies for sustainable 
development and environmental protection; (13) facilitate 
greater IMF transparency; (14) facilitate greater IMF 
accountability an enhance IMF self-evaluation; (15) vigorously 
promote coordination with the World Bank and other 
international financial institutions in promoting structural 
reforms which facilitate the provision of credit to small 
business, including microenterprise lending; (16) vigorously 
promote, in the context of the IMF's policy dialogue with 
member countries, measures to protect the rights and land of 
indigenous peoples; (17) vigorously promotepolicies so that 
when the IMF lends to member countries the Fund considers the extent to 
which the borrowing country has demonstrated a commitment to 
transparent defense budgets, reducing excessive military involvement in 
the economy, and making substantial reductions of excessive military 
expenditures; and (18) structure IMF debt relief programs so that they 
do not impose unfair conditions on heavily indebted poor countries. the 
section also requires the Secretary of the Treasury to coordinate with 
other executive departments to the extent it would assist in achieving 
the above policy goals.
    The committee recognizes that several of the policy 
provisions contained in Section 301(a) broadly reflect the 
approach to the Asian crisis taken by the U.S. and the IMF. 
Both with respect to the situation in Asia and in general, the 
U.S. and the Fund are committed to policies that seek to 
prevent competitive devaluations, promote market-oriented 
reform, trade liberalization, and the adoption of sound banking 
principles and practices. In this regard, the IMF-led 
stabilization programs in Thailand, Indonesia, and south Korea 
all emphasize measures to strengthen the domestic financial 
system, the elimination of cronyism and corruption, the opening 
of domestic capital markets, and structural reforms to break up 
commodity monopolies and to open other protected areas of 
economy to foreign competition. These changes should not only 
help these countries stabilize their economies and promote 
sustainable development, but also help to open markets and 
create new opportunities for American businesses, workers, and 
farmers.
    With respect to market opening in agriculture, reference in 
this section to ``agricultural commodities and products'' shall 
refer to all agricultural commodities and products of 
agricultural commodities in the broadest sense of the term, 
including unprocessed timber and wood and wood products 
processed to standards and specifications suitable for end 
product use.
    Weak banking systems are widely recognized to have 
contributed to the development of the Asian crisis. The 
Committee notes that open markets are particularly important in 
finance where foreign banks and financial firms can assist in 
capital formation and help to underpin robust financial 
systems. As the IMF has observed, providing well-managed 
financial institutions with access to developing as well as 
developed markets promotes the spread of high-quality 
management systems and professional skills, contributing to the 
strengthening of ``credit culture.'' In the United States, for 
example, over 26% of bank assets and approximately 38% of all 
commercial and industrial loans are held by foreign banks. In 
Hong Kong, foreign-owned banks hold roughly 70% of bank assets. 
Little appears more counterproductive for countries than 
protectionism in financial services. Likewise, to the extent 
that sources of financial instability can be found in 
microeconomic and institutional failings, including weakness in 
domestic laws that undermine the collection of collateral, the 
Committee supports efforts to develop credible international 
bankruptcy standards.
    The Committee understands that the genesis of the Asian 
crisis had more to do with structural weaknesses in handling 
large capital inflows than lax monetary or fiscal policies, and 
that unlike Mexico the short-term external debts of the Asian 
economies in difficulty are primarily to obligations of private 
sector entities. Thus the Committee would strongly underscore 
its concern that the IMF's role is not expanded from being a 
last-resort stabilizer of currencies and economies to a lender 
of last-resort to banking systems. The IMF can responsibly 
stabilize economies to protect innocent bystanders against the 
effects of financial contagion, but it is not the IMF's role to 
bail out banks or other private creditors. Capitalists should 
not be shielded from mistakes of capital allocation. In this 
context, Section 301 of the bill references several elements of 
a May 1996 G-10 study on the prevention and resolution of 
sovereign liquidity crises, and strongly encourages the U.S. to 
vigorously explore a variety of approaches to minimize moral 
hazard with respect to creditors and debtors.
    The Committee is aware that the U.S. has been pursuing an 
active reform agenda within the IMF. Sound monetary and fiscal 
policies should remain the cornerstone of IMF policy advice and 
conditional lending to member governments. However, with the 
strong support of the U.S. and other countries, the IMF has 
also become an increasingly effective promoter of market-
oriented structural reforms--as demonstrated by its recent 
programs in Asia. Further emphasis on appropriate structural 
reforms by the IMF in conjunction with other international 
financial institutions would be warranted. Areas of emphasis in 
structural reform highlighted in this legislation include: 
reform of governmental procurement policies to ensure a non-
biased, open, transparent and fair bidding process (utilizing 
third party procurement services where appropriate); promoting 
good governance by reducing opportunities for corruption; and 
ensuring that scarce budgetary resources are channeled away 
from unproductive purposes, including excessive military 
spending, and toward investment in human and physical capital 
as well as social safety nets.
    The Committee believes that the establishment of core labor 
standards and ensuring human rights are vital to successful 
development, and has therefore included language in the 
legislation ensuring that these issues receive a high priority 
at the Department of the Treasury and the International 
Monetary Fund. the legislation therefore directs the Secretary 
of the Treasury Department to aggressively use the voice and 
vote of the U.S. Executive Director of the IMF programs and 
assistance so that the maintenance and improvement of core 
labor standards are routinely incorporated as an integral goal 
in the policy dialogue with recipient countries, in order to 
achieve several important policy objectives enumerated in the 
bill advancing worker projects. These objectives are: recipient 
governments commit to affording the right to exercise 
internationally recognized worker rights, including the right 
of free association and collective bargaining through unions of 
their own choosing; measures designed to facilitate labor 
market flexibility are consistent with such core worker rights; 
the staff of the IMF takes into account the views of the ILO, 
particularly with respect to the effect of labor market 
flexibility measures on core worker rights in such countries; 
and the staff of the IMF surveys the labor market policies and 
practices of recipient countries and recommends policy 
initiatives that will help ensure the maintenance of 
improvement of core labor standards.
    Likewise, the Committee included language strongly 
encouraging the U.S. to ensure that IMF stabilization plans are 
tailored to address the specific causes of a particular 
country's crisis, do not exacerbate social tensions or ethnic 
strife, protect the rights and land of indigenous peoples, and 
promote policies for sustainable development and environmental 
protection.
    The Committee recognizes that the U.S. demand for greater 
Fund transparency has been controversial. Many IMF members 
believe that the candor of the Fund's consultations with 
governments and its access to highly sensitive exchange rate, 
interest rate and other policy data, which are necessary for 
the Fund to perform its mission, would be jeopardized if the 
traditional confidentiality of its activities were not kept. 
But it is the Committee's view that the kinds of deep 
structural reforms the IMF is asking governments to carry out 
are far more likely to be sustained if accompanied by broad 
public understanding and support. Indeed, the IMF itself 
appears to recognize the need for some increase in Fund 
transparency. Although the Committee applauds these 
improvements, the Administration is nevertheless urged to 
redouble its efforts to ensure that to the maximum degree 
possible, the Fund errs on the side of greater transparency and 
disclosure.
    The Committee strongly believes that full accountability 
and objective evaluation of Fund operations and programs is 
essential. In this regard, the Committee understands that in 
1996, after repeated prodding from the United States, the IMF 
agreed to strengthen the external and internal evaluation of 
Fund programs and activities. First, the IMF agreed, for the 
next several years, to commission 2-3 independent and external 
evaluations a year. These external policy reviews are designed 
to complement ongoing external audits. Second, the IMF also 
agreed to strengthen its in-house evaluation of activities and 
programs. Among these latter reforms, the Fund's Office of 
Internal Audit and Review was reorganized and redesignated as 
the Office of Internal Audit and Inspection. The Committee is 
prepared to give these reforms the benefit of the doubt, 
provided the principles that guide internal audit activities 
include independence, effectiveness, transparency, and 
comprehensiveness. To the extent that this internal evaluation 
unit does not facilitate timely review of Fund programs and 
afford the opportunity for policy changes, the Committee would 
strongly support a separate evaluation office independent from 
management and the Executive Board.
    The Committee also included a provision referencing the 
IMF's role in providing structural adjustment to poor 
developing countries (funded by contributions to the Enhanced 
Structural Adjustment Facility), and the Reform of the Heavily 
Indebted Poor Countries Debt Initiative (HIPC). The HIPC 
initiative is a framework supported by the United States, and 
developed jointly by the World Bank and IMF, to address the 
external debt problems of heavily indebted poor countries. Most 
of the HIPCs are in Sub-Saharan Africa. The HIPC initiative 
recognizes that simply providing new financing to help pay for 
old financing was not an effective means for helping debtor 
countries with unsustainable debt burdens. The initiative seeks 
to reduce the debt burden of poor countries to sustainable 
levels and thereby increase the resources available for private 
sector economic activity, infrastructure development, and 
poverty reduction. The Committee expects to continue its close 
consultations with Treasury on this matter.
    Section 301(b) requires the establishment of a new eight 
member private sector advisory committee on IMF policy. The 
eight members, to be appointed by the Secretary of the Treasury 
after appropriate consultations with the relevant 
organizations, shall be composed of 2 members each from: 
organized labor, banking and financial services, industry and 
agriculture, and nongovernmental environmental and human rights 
organizations. The Advisory Committee shall meet not less 
frequently than every six months with either the Secretary or 
Deputy Secretary of the Treasury to review, and provide advice 
on, the extent to which individual country IMF programs meet 
the policy goals set forth in this legislation regarding the 
IMF.
    By creating a mechanism for regular interchange between the 
Treasury Department and the private sector on the IMF, the 
effectiveness of the Fund should be strengthened and U.S. 
public support for its mission and programs be enhanced. The 
Committee originally contemplated linking this important 
consultative mechanism with the National Advisory Council on 
International Monetary and Financial Policies (NAC), created in 
1966 under Executive Order. However, the Committee concluded 
that the NAC has become moribund and plays little or no 
policymaking role. In addition, under Chapter 3 of Public Law 
91-599, the NAC is required to present an annual report to 
Congress. But the last report Congress received was the NAC 
report for 1992. The Committee is concerned not only that the 
NAC may have outlived its usefulness, but that Treasury has so 
egregiously failed to produce required reports to Congress on a 
timely basis. The Committee will not tolerate such tardiness in 
the future.
    Sec. 302--Availability of IMF letters of intent regarding 
agreements required in order to receive assistance. This 
section further amends Title XV of the International Financial 
Institutions Act by adding a new section 1504 that requires the 
Secretary of the Treasury to make letters of intent and similar 
Fund documents available to the public seven calendar days 
after receiving a copy of such documents from the U.S. 
Executive Director of the IMF--or ten days after the Fund 
itself receives or approves such documents. There are three 
exceptions to this strong presumption in favor of full 
transparency, when release of the documents would: endanger the 
national security of the country or the U.S.; disrupt markets; 
or be contrary to the obligations of the U.S. as a member of 
the IMF. Should all or parts of such documents be withheld from 
the public, the Committee expects those documents to be 
promptly made available to Members (as they are now available 
upon request) with a full explanation of why there was no 
public disclosure. Given that the purpose of this section is to 
encourage timely, open disclosure of IMF agreements, the 
Committee expects these exceptions to be narrowly construed and 
infrequently invoked. As noted earlier, the Committee strongly 
encourages the Fund to work with member countries to ensure 
public disclosure of documents and agreements, such as Article 
IV consultations.
    Sec. 303--Enforcement of Indonesian compliance with reforms 
required by the IMF. This provision requires a certification by 
the Secretary of the Treasury to the Congressional authorizing 
committees that the U.S. Executive Director at the IMF will 
oppose further disbursements of funds to Indonesia unless the 
Indonesian government complies with the terms of its IMF 
standby agreement. The Committee is greatly concerned that 
continued delays in the full and demonstrable implementation of 
IMF reforms in Indonesia will further undermine market 
confidence there, with potential negative ramifications 
throughout the region. In this regard, the IMF recently 
announced that it would delay the second tranche of $10 billion 
in loan commitments to Indonesia, worth roughly $3 billion. 
While the Committee is mindful of the economic and social costs 
of adjustment and the consequent need for reasonable policy 
flexibility, implementation of IMF policy conditionality is 
both critical to the success of the stabilization effort and to 
mitigating the moral hazard associated with IMF-led financial 
assistance packages.
    Sec. 304--Sense of the Congress on the treatment of Muchtar 
Pakpahan. This provision states the sense of Congress that the 
government of Indonesia should immediately release the 
independent labor leader Muchtar Pakpahan from prison and have 
all criminal charges against him dismissed.
    Sec. 305--Sense of the Congress on the role of Japan in 
restoring regional and global economic growth. This provision 
states the sense of Congress that Japan should assume a greater 
regional leadership role in helping to resolve the ongoing 
economic and financial crisis in Asia, a role which would 
coincide with Japan's goal of promoting strong domestic demand-
led growth and avoiding a significant increase in its external 
surplus with the U.S. and the countries of the Asia-Pacific 
region.

                           title iv--reports

    Sec. 401--Semiannual reports on financial stabilization 
programs led by the IMF in connection with financing from the 
Exchange Stabilization Fund. This section amends Title XVII of 
the International Financial Institutions Act by adding at the 
end a new section 1704. This provision requires the Secretary 
of the Treasury, in consultation with the Secretary of Commerce 
and other appropriate federal agencies, to prepare reports on 
the implementation of financial stabilization programs led by 
the IMF in countries in connection with which the U.S. has 
either made a commitment to provide, or actually provided, 
financing from the Exchange Stabilization Fund (ESF) 
established by the Gold Reserve Act of 1934.
    The Gold Reserve Act of 1934, as amended, provides that 
consistent with the obligations of the U.S. in the IMF on 
orderly exchange rates, the Secretary of the Treasury, with the 
approval of the President, may deal in gold, foreign exchange, 
and other instruments of credit and securities as necessary. A 
loan or credit to a foreign entity or government of a foreign 
country may be made for more than 6 months in a 12-month period 
only if the President gives Congress a written statement that 
unique or emergency circumstances require the loan to be for 
more than six months. There have been no appropriations to the 
ESF since 1934, as the ESF is self-financing. The 
Administration has pledged $3 billion in supplemental 
conditional financing to Indonesia, and another $5 billion to 
South Korea, as a second line of defense in support of their 
IMF-led financial stabilization packages. To date, there has 
been no disbursement from the ESF in connection with these 
programs. Although the Committee strongly opposes efforts to 
restrict necessary Executive Branch flexibility in utilizing 
the ESF, it likewise would emphasize the importance of 
providing a complete accounting to the Congress in this report 
on the use of this facility--including the extent to which the 
extension of any credits through the ESF is backed by 
collateral or other guarantees.
    Section 401 provides for semi-annual reports on any IMF 
financial stabilization programs in which the U.S. has either 
pledged or used the resources of the ESF. With respect to these 
reports, the Committee strongly urges the Secretary of the 
Treasury, the Secretary of Commerce and other appropriate 
federal agencies to focus particular attention on the 
implementation of structural reforms in the sectors that in the 
past have been the beneficiaries of significant government 
support in East Asian countries, including the semi-conductor, 
steel, and paper industries.
    There is now a broad consensus that the Asian financial 
crisis stems to a significant measure from overinvestment, and 
from the practice of policy-based lending on non-commercial 
terms to promote the rapid expansion of favored industries. 
When world markets could not absorb the resulting excess 
capacity, the prices for major export products of these 
countries declined sharply, thereby threatening the ability of 
the companies in these sectors to service the substantial and 
often short-term foreign currency loans used to underwrite the 
aggressive capacity expansion. The Committee concurs with the 
assessment of Michel Camdessus, the Managing Director of the 
IMF, who recently said ``the relationships among governments, 
corporations, and financial institutions were so close * * * 
that in the long run they could only result in unclear 
accountability and disastrous investment and lending decisions, 
ultimately banking sector health and impeding competition.''
    The IMF-led financial stabilization programs in Asia, if 
fully and faithfully implemented, should increase transparency 
and promote market-based investment decisions. The goal of the 
Fund's structural reforms is to sever the link between the 
government, the financial sector, and corporations. Market 
mechanisms must be allowed to work, even if this means allowing 
those companies that are unable to sustain themselves on a 
commercial basis to fail. The Committee is concerned that 
countries in the region may attempt to rely solely on an 
export-led recovery, including the practice of targeted 
exports, in order to solve their economic difficulties. The 
Committee believes that domestic demand-led recoveries are 
preferable and more sustainable in the long run, as well as 
more compatible with structural reform efforts that should 
reduce excess capacity and eliminate economic inefficiencies.
    The Committee supports the actions taken by the 
Administration to pursue dispute settlement at the WTO against 
Indonesian violations of the WTO Subsidies Code through 
subsidies to the national care program, but the Committee is 
concerned that this is the only action pursued by the 
Administration since the new WTO Subsidies Code went into 
effect on January 1, 1995. In light of all the testimony 
received by the Committee on subsidies and other unfair trade 
practices in areas spanning agriculture, autos, paper and wood 
products, semi-conductors, and steel, the Committee urges the 
Administration to vigilantly monitor and pursue these practices 
at the WTO.
    In particular, the Committee urges WTO attention to the 
evidence of massive subsidies granted to Hanbo Steel, Korea's 
second largest steel producer. The Committee understands that 
this company declared bankruptcy in January 1997 after 
receiving $5.8 billion in loans from government owned and 
government directed banks. It has evidently continued to 
receive government support since its bankruptcy filing and its 
lenders may never be repaid. According to press reports, 
however, government controlled POSCO is completing the Hanbo 
steel complex. The Committee expects to work closely with the 
committees of jurisdiction on this important trade issue, and 
likewise expects Treasury and other appropriate federal 
agencies to closely monitor implementation of Korean reforms 
directed at corporate governance, corporate structure, and the 
cessation of subsidized support or tax privileges to individual 
corporations.
    The Committee believes particular attention must be paid to 
the accuracy of financial reports. The failure of governments 
and the private sector in Asian countries that have received 
financial assistance to maintain accurate financial and 
accounting records, has been a major element of the crisis of 
confidence in the region. It is critical that international 
accounting standards be adopted and maintained by recipients of 
IMF assistance.
    To this end, the Committee feels strongly that the 
conditions imposed in the IMF stabilization programs must be 
monitored and enforced in the most effective manner possible. 
The reporting requirements contained in this provision require 
a high level of oversight by the Administration regarding 
implementation of the stabilization programs. In this regard, 
the Committee would be supportive of efforts through the 
appropriations process to ensure that adequate funding is 
available to place additional personnel with expertise in these 
countries. The IMF and the U.S. must be prepared to react 
rapidly when they see policies or practices being adopted that 
contradict the letter or intent of the conditions contained in 
the stabilization programs. If recipients of IMF-led financial 
assistance are not implementing agreed upon reforms, the U.S. 
must strongly consider recommending to the IMF that the Fund 
withhold future disbursements under such programs until 
satisfactory steps are taken in these countries to implement 
the conditions.
    Sec. 402--Reports on Reforming the Architecture of the 
International Financial System. The purpose of this provision 
is help to protect the U.S. from future international financial 
upheavals and to promote reforms in the international financial 
system by strengthening U.S. efforts to improve the performance 
of the IMF and the financial practices of the nations receiving 
IMF assistance. In addition to providing the policy guidance on 
international financial reform discussed below, the section 
also requires several interim and one final report by the 
Secretary of the Treasury to several Congressional committees 
regarding progress made toward enhancing the stability of the 
international financial system.
    In the wake of the Mexican financial crisis, the U.S. and 
other G-7 nations agreed that the international community must 
take steps to improve its ability to address the risks inherent 
in the dramatic growth of private capital flows, the increased 
integration of domestic capital markets, and greater recourse 
to financial innovations. The IMF has carried out a number of 
these initiatives launched by the G-7 countries at the June 
1995 Halifax Summit.
    The clear emphasis in these initiatives was to strengthen 
early warning systems, through improved and more effective 
surveillance of national economic policies and financial market 
developments by the IMF and fuller disclosure of key 
information to market participants. The most significant 
achievement has been the establishment, in April 1996, in the 
IMF of the voluntary Special Data Dissemination Standard for 
provision of economic and financial statistics to the public. 
In addition, prior to the onset of the Asian crisis, the Fund 
had begun work on in strengthening financial supervision in 
emerging market economies.
    In retrospect, however, it is evident that these efforts to 
promote stability in a globalized economy lost momentum and did 
not go far enough. Despite the Halifax reforms, the IMF was not 
successful in anticipating and/or preventing the full extent of 
the Asian crisis. But this is probably also an unrealistic 
objective. Even when the IMF believes a country is pursuing 
unsustainable economic policies, it cannot compel a country to 
take policy measures if it is unwilling. The example of Mexico 
in 1994-1995 is widely recognized as an example of the Fund 
failing to anticipate a serious financial crisis, while the 
case of Thailand in 1996-1997 may emerge as an example of 
timely advice going unheeded.
    The Committee is also cognizant that the issues are 
extremely complex, are perhaps not yet fully understood by the 
most sophisticated financial authorities and market 
participants, and will need to be addressed in a multilateral 
context. Consequently, the Committee identifies several areas 
of weakness in present international financial system and finds 
that the Treasury and Federal Reserve should seek to establish 
robust and common international standards with respect to 
private sector accounting and disclosure, disclosure of cross-
border financial flows, banking standards and supervision, open 
investment rules, and acceptable bankruptcy rules and 
procedures. The Committee strongly expects to continue close 
consultations with the Treasury and Federal Reserve on these 
and related matters.
    Nonetheless, as Chairman Greenspan has testified, it is 
prudent to expect that despite current and future efforts at 
risk containment and prevention the system may fail in some 
instances, ``triggering vicious cycles and all the associated 
contagion for innocent bystanders.'' By providing a backup 
source of highly conditional international financial support, 
the IMF plays an essential stabilizing role. While the last 
half of the twentieth century has hardly been crisis free, it 
has featured nothing like the deep and prolonged global 
economic downturns that characterized earlier eras.
    Sec. 403--Annual report and testimony on the state of the 
international financial system, IMF reform, and compliance with 
IMF agreements. This section amends Title XVII of the 
International Financial Institutions Act by adding at the end a 
new section 1705, requiring an annual report and testimony on 
the state of the international financial system, IMF reform, 
and compliance with IMF agreements by the Secretary of the 
Treasury. The purpose of the annual report is to provide the 
Congressional authorizing committees an assessment of the 
extent to which progress has been made by the U.S. in 
influencing the IMF to adopt the policies and reform in its 
internal procedures through utilizing the voice and vote of the 
U.S. Executive Director. The purpose of the annual testimony by 
the Secretary of the Treasury is to provide the authorizing 
committees with a thorough overview of U.S. interests and 
leadership in the international financial system, with specific 
reference to: progress made in reforming the IMF; the status of 
efforts to reform the international financial system; and the 
compliance of countries which have received assistance from the 
IMF with agreements made as a condition of receiving 
assistance.
    Sec. 404--Audits of the international monetary fund. This 
provision further amends Title VII of the International 
Financial Institution Act by adding a new section 1706, 
regarding audits of the IMF. It requires a certification by the 
Secretary of the Treasury to the authorizing committees of 
Congress that the Secretary has instructed the U.S. Executive 
Director at the IMF to facilitate timely access by the GAO to 
information and documents of the IMF needed by the GAO to 
perform financial reviews of the Fund. It further requires by 
June 30, 1999, and annually thereafter the GAO shall prepare 
and submit to the above Congressional committees a report on 
the financial operations of the Fund during the preceding year. 
The Committee expects to consult closely with GAO regarding the 
production of this report.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

                      BRETTON WOODS AGREEMENTS ACT

          * * * * * * *
  Sec. 17. (a) In order to carry out the purposes of the 
decision of January 5, 1962, [and February 24, 1983] February 
24, 1983, and January 27, 1997, as amended in accordance with 
their terms, of the Executive Directors of the International 
Monetary Fund, the Secretary of the Treasury is authorized to 
make loans, in an amount not to exceed the equivalent of 
[4,250,000,000] 6,712,000,000 Special Drawing Rights, limited 
to such amounts as are provided in advance in appropriations 
Acts, except that prior to activation, the Secretary of the 
Treasury shall certify that supplementary resources are needed 
to forestall or cope with an impairment of the international 
monetary system and that the Fund has fully explored other 
means of funding, to the Fund under article VII, section 1(i), 
of the Articles of Agreement of the Fund. Any loan under the 
authority granted in this subsection shall be made with due 
regard to the present and prospective balance of payments and 
reserve position of the United States.
  (b) For the purpose of making loans to the International 
Monetary Fund pursuant to this section, there is hereby 
authorized to be appropriated [4,250,000,000] 6,712,000,000 
Special Drawing Rights, except that prior to activation, the 
Secretary of the Treasury shall certify whether supplementary 
resources are needed to forestall or cope with an impairment of 
the international monetary system and that the Fund has fully 
explored other means of funding, to remain available until 
expended to meet calls by the International Monetary Fund. Any 
payments made to the United States by the International 
Monetary Funds as a repayment on account of the principal of a 
loan made under this section shall continue to be available for 
loans to the International Monetary Fund.
          * * * * * * *
  (d) Unless the Congress by law so authorizes, neither the 
President, the Secretary of the Treasury, nor any other person 
acting on behalf of the United States, may instruct the United 
States Executive Director to the Fund to consent to any 
amendment to the Decision of February 24, 1983, or the Decision 
of January 27, 1997, of the Executive Directors of the Fund, if 
the adoption of such amendment would significantly alter the 
amount, terms, or conditions of participation by the United 
States in the General Arrangements to Borrow or the New 
Arrangements to Borrow, as applicable.
          * * * * * * *

SEC. 61. QUOTA INCREASE.

  (a) In General.--The United States Governor of the Fund may 
consent to an increase in the quota of the United States in the 
Fund equivalent to 10,622,500,000 Special Drawing Rights.
  (b) Subject to Appropriations.--The authority provided by 
subsection (a) shall be effective only to such extent or in 
such amounts as are provided in advance in appropriations Acts.
                              ----------                              


                INTERNATIONAL FINANCIAL INSTITUTIONS ACT

                        TITLE XV--OTHER POLICIES

          * * * * * * *

SEC. 1503. ADVOCACY OF POLICIES TO ENHANCE THE GENERAL EFFECTIVENESS OF 
                    THE INTERNATIONAL MONETARY FUND.

  (a) In General.--The Secretary of the Treasury shall instruct 
the United States Executive Director of the International 
Monetary Fund to use aggressively the voice and vote of the 
Executive Director to do the following:
          (1) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund in 
        structuring programs and assistance so as to promote 
        policies and actions that will contribute to exchange 
        rate stability and avoid competitive devaluations that 
        will further destabilize the international financial 
        and trading systems.
          (2) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund in 
        promoting market-oriented reform, trade liberalization, 
        economic growth, democratic governance, and social 
        stability through--
                  (A) appropriate liberalization of pricing, 
                trade, investment, and exchange rate regimes of 
                countries to open countries to the competitive 
                forces of the global economy;
                  (B) opening domestic markets to fair and open 
                internal competition among domestic enterprises 
                by eliminating inappropriate favoritism for 
                small or large businesses, eliminating elite 
                monopolies, creating and effectively 
                implementing anti-trust and anti-monopoly laws 
                to protect free competition, and establishing 
                fair and accessible legal procedures for 
                dispute settlement among domestic enterprises;
                  (C) privatizing industry in a fair and 
                equitable manner that provides economic 
                opportunities to a broad spectrum of the 
                population, eliminating government and elite 
                monopolies, closing loss-making enterprises, 
                and reducing government control over the 
                factors of production;
                  (D) economic deregulation by eliminating 
                inefficient and overly burdensome regulations 
                and strengthening the legal framework 
                supporting private contract and intellectual 
                property rights;
                  (E) establishing or strengthening key 
                elements of a social safety net to cushion the 
                effects on workers of unemployment and 
                dislocation; and
                  (F) encouraging the opening of markets for 
                agricultural commodities and products by 
                requiring recipient countries to make efforts 
                to reduce trade barriers.
          (3) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund, in 
        concert with appropriate international authorities and 
        other international financial institutions (as defined 
        in section 1701(c)(2)), in strengthening financial 
        systems in developing countries, and encouraging the 
        adoption of sound banking principles and practices, 
        including the development of laws and regulations that 
        will help to ensure that domestic financial 
        institutions meet strong standards regarding capital 
        reserves, regulatory oversight, and transparency.
          (4) Vigorously promote policies to increase the 
        effectiveness of the International Monetary Fund, in 
        concert with appropriate international authorities and 
        other international financial institutions (as defined 
        in section 1701(c)(2)), in facilitating the development 
        and implementation of internationally acceptable 
        domestic bankruptcy laws and regulations in developing 
        countries, including the provision of technical 
        assistance as appropriate.
          (5) Vigorously promote policies that aim at 
        appropriate burden-sharing by the private sector so 
        that investors and creditors bear more fully the 
        consequences of their decisions, and accordingly 
        advocate policies which include--
                  (A) strengthening crisis prevention and early 
                warning signals through improved and more 
                effective surveillance of the national economic 
                policies and financial market development of 
                countries (including monitoring of the 
                structure and volume of capital flows to 
                identify problematic imbalances in the inflow 
                of short and medium term investment capital, 
                potentially destabilizing inflows of offshore 
                lending and foreign investment, or problems 
                with the maturity profiles of capital to 
                provide warnings of imminent economic 
                instability), and fuller disclosure of such 
                information to market participants;
                  (B) accelerating work on strengthening 
                financial systems in emerging market economies 
                so as to reduce the risk of financial crises;
                  (C) consideration of provisions in debt 
                contracts that would foster dialogue and 
                consultation between a sovereign debtor and its 
                private creditors, and among those creditors;
                  (D) consideration of extending the scope of 
                the International Monetary Fund's policy on 
                lending to members in arrears and of other 
                policies so as to foster the dialogue and 
                consultation referred to in subparagraph (C);
                  (E) intensified consideration of mechanisms 
                to facilitate orderly workout mechanisms for 
                countries experiencing debt or liquidity 
                crises;
                  (F) consideration of establishing ad hoc or 
                formal linkages between the provision of 
                official financing to countries experiencing a 
                financial crisis and the willingness of market 
                participants to meaningfully participate in any 
                stabilization effort led by the International 
                Monetary Fund;
                  (G) using the International Monetary Fund to 
                facilitate discussions between debtors and 
                private creditors to help ensure that financial 
                difficulties are resolved without inappropriate 
                resort to public resources;
                  (H) the International Monetary Fund 
                accompanying the provision of funding to 
                countries experiencing a financial crisis 
                resulting from imprudent borrowing with efforts 
                to achieve a significant contribution by the 
                private creditors, investors, and banks which 
                had extended such credits; and
                  (I) in the context of International Monetary 
                Fund responses to international financial 
                crises, vigorously promote consideration of 
                appropriate ways in which debtors and private 
                creditors, in consultation with central banks, 
                can be encouraged voluntarily to take steps to 
                achieve resolution of outstanding debts, and to 
                do so in a manner that provides for an 
                appropriate degree of burden-sharing.
          (6) Vigorously promote policies that would make the 
        International Monetary Fund a more effective mechanism, 
        in concert with appropriate international authorities 
        and other international financial institutions (as 
        defined in section 1701(c)(2)), for promoting good 
        governance principles within recipient countries by 
        fostering structural reforms, including procurement 
        reform, that reduce opportunities for corruption and 
        bribery, and drug-related money laundering.
          (7) Vigorously promote the design of International 
        Monetary Fund programs and assistance so that 
        governments that draw on the International Monetary 
        Fund channel public funds away from unproductive 
        purposes, including large ``show case'' projects and 
        excessive military spending, and toward investment in 
        human and physical capital as well as social programs 
        to protect the neediest and promote social equity.
          (8) Work with the International Monetary Fund to 
        foster economic prescriptions that are appropriate to 
        the individual economic circumstances of each recipient 
        country, recognizing that inappropriate stabilization 
        programs may only serve to further destabilize the 
        economy and create unnecessary economic, social, and 
        political dislocation.
          (9) Structure International Monetary Fund programs 
        and assistance so that the maintenance and improvement 
        of core labor standards are routinely incorporated as 
        an integral goal in the policy dialogue with recipient 
        countries, so that--
                  (A) recipient governments commit to affording 
                workers the right to exercise internationally 
                recognized core worker rights, including the 
                right of free association and collective 
                bargaining through unions of their own 
                choosing;
                  (B) measures designed to facilitate labor 
                market flexibility are consistent with such 
                core worker rights;
                  (C) the staff of the International Monetary 
                Fund adequately takes into account the views of 
                the International Labor Organization, 
                particularly with respect to the effect of 
                labor market flexibility measures on core 
                worker rights in such countries; and
                  (D) the staff of the International Monetary 
                Fund surveys the labor market policies and 
                practices of recipient countries and recommends 
                policy initiatives that will help to ensure the 
                maintenance or improvement of core labor 
                standards.
          (10) Vigorously promote the adoption and enforcement 
        of laws promoting respect for internationally 
        recognized worker rights (as defined in section 507(4) 
        of the Trade Act of 1974 (19 U.S.C. 2467(4))).
          (11) Vigorously promote International Monetary Fund 
        programs and assistance that are structured to the 
        maximum extent feasible to discourage practices which 
        may promote ethnic or social strife in a recipient 
        country.
          (12) Vigorously promote recognition by the 
        International Monetary Fund that macroeconomic 
        developments and policies can affect and be affected by 
        environmental conditions and policies, including by 
        working independently and with the multilateral 
        development banks to encourage countries to correct 
        market failures and pursue macroeconomic stability 
        while promoting policies for sustainable development 
        and environmental protection.
          (13) Facilitate greater International Monetary Fund 
        transparency, including by enhancing accessibility of 
        the International Monetary Fund and its staff, 
        fostering a more open release policy toward working 
        papers, past evaluations, and other International 
        Monetary Fund documents, seeking to publish all Letters 
        of Intent to the International Monetary Fund and Policy 
        Framework Papers, and establishing a more open release 
        policy regarding Article IV consultations.
          (14) Facilitate greater International Monetary Fund 
        accountability and enhance International Monetary Fund 
        self-evaluation by vigorously promoting review of the 
        effectiveness of the Office of Internal Audit and 
        Inspection and the Executive Board's external 
        evaluation pilot program and, if necessary, the 
        establishment of an operations evaluation department 
        modeled on the experience of the International Bank for 
        Reconstruction and Development, guided by such key 
        principles as usefulness, credibility, transparency, 
        and independence.
          (15) Vigorously promote coordination with the 
        International Bank for Reconstruction and Development 
        and other international financial institutions (as 
        defined in section 1701(c)(2)) in promoting structural 
        reforms which facilitate the provision of credit to 
        small businesses, including microenterprise lending, 
        especially in the world's poorest, heavily indebted 
        countries.
          (16) Vigorously promote, in the context of the 
        International Monetary Fund's policy dialogue with its 
        member countries, measures to protect the rights and 
        land of indigenous peoples, including the Penan of 
        Borneo, Malaysia, the Dayaks of East Kalimantan, 
        Indonesia, and the indigenous communities of Irian 
        Jaya, Indonesia.
          (17) Vigorously promote policies such that the 
        International Monetary Fund, in considering loan 
        programs and assistance, takes into account the extent 
        to which the recipient government has demonstrated a 
        commitment to--
                  (A) providing accurate and complete data on 
                the annual expenditures and receipts of the 
                armed forces;
                  (B) establishing good and publicly 
                accountable governance, including an end to 
                excessive military involvement in the economy; 
                and
                  (C) making substantial reductions in 
                excessive military spending and forces, 
                including domestic security forces.
          (18) Structure International Monetary Fund debt 
        relief programs so that the programs do not impose 
        unfair conditions on heavily indebted poor countries, 
        increase the amount of debt relief available to poor 
        countries, and decrease the time required to qualify 
        for debt relief.
  (b) Coordination With Other Executive Departments.--To the 
extent that it would assist in achieving the goals described in 
subsection (a), the Secretary of the Treasury shall pursue the 
goals in coordination with the Secretary of State, the 
Secretary of Labor, the Secretary of Commerce, the 
Administrator of the Environmental Protection Agency, the 
Administrator of the Agency for International Development, and 
the United States Trade Representative.

SEC. 1504. AVAILABILITY OF INTERNATIONAL MONETARY FUND LETTERS OF 
                    INTENT REGARDING AGREEMENTS REQUIRED IN ORDER TO 
                    RECEIVE ASSISTANCE.

  Within 3 business days after the United States Executive 
Director at the International Monetary Fund receives a letter 
of intent from a country regarding structural adjustment or an 
economic, social, or other agreement required by the Fund in 
order to receive assistance from the Fund, the Executive 
Director shall provide to the Secretary of the Treasury a copy 
of the letter and any related memorandum of understanding. 
Within 7 days after receiving the copy, the Secretary of the 
Treasury shall make the copy available to the public (by 
electronic or other readily and publicly accessible means) 
except to the extent that the Secretary determines that doing 
so would--
          (1) endanger the national security of the country or 
        of the United States;
          (2) disrupt markets; or
          (3) be contrary to the obligations of the United 
        States as a member of the International Monetary Fund.
          * * * * * * *

            TITLE XVII--CONSOLIDATED REPORTING REQUIREMENTS

SEC. 1701. ANNUAL REPORT BY CHAIRMAN OF THE NATIONAL ADVISORY COUNCIL 
                    ON INTERNATIONAL MONETARY AND FINANCIAL POLICIES.

  (a) * * *
          * * * * * * *
  (e) Advisory Committee on IMF Policy.--
          (1) In general.--The Secretary of the Treasury shall 
        establish an International Monetary Fund Advisory 
        Committee (in this subsection referred to as the 
        ``Advisory Committee'').
          (2) Membership.--The Advisory Committee shall consist 
        of 8 members appointed by the Secretary of the 
        Treasury, after appropriate consultations with the 
        relevant organizations, as follows:
                  (A) 2 members shall be representatives from 
                organized labor.
                  (B) 2 members shall be representatives from 
                banking and financial services.
                  (C) 2 members shall be representatives from 
                industry and agriculture.
                  (D) 2 members shall be representatives from 
                nongovernmental environmental and human rights 
                organizations.
          (3) Duties.--Not less frequently than every 6 months, 
        the Advisory Committee shall meet with the Secretary of 
        the Treasury or the Deputy Secretary of the Treasury to 
        review, and provide advice on, the extent to which 
        individual country International Monetary Fund programs 
        meet the policy goals set forth in this Act regarding 
        the International Monetary Fund.
          (4) Inapplicability of termination provision of the 
        federal advisory committee act.--Section 14(a)(2) of 
        the Federal Advisory Committee Act shall not apply to 
        the Advisory Committee.
          * * * * * * *

SEC. 1704. REPORTS ON FINANCIAL STABILIZATION PROGRAMS LED BY THE 
                    INTERNATIONAL MONETARY FUND IN CONNECTION WITH 
                    FINANCING FROM THE EXCHANGE STABILIZATION FUND.

  (a) In General.--The Secretary of the Treasury, in 
consultation with the Secretary of Commerce and other 
appropriate Federal agencies, shall prepare reports on the 
implementation of financial stabilization programs (and any 
material terms and conditions thereof) led by the International 
Monetary Fund in countries in connection with which the United 
States has made a commitment to provide, or has provided 
financing from the stabilization fund established under section 
5302 of title 31, United States Code. The reports shall include 
the following:
          (1) A description of the condition of the economies 
        of countries requiring the financial stabilization 
        programs, including the monetary, fiscal, and exchange 
        rate policies of the countries.
          (2) A description of the degree to which the 
        countries requiring the financial stabilization 
        programs have fully implemented financial sector 
        restructuring and reform measures required by the 
        International Monetary Fund, including--
                  (A) ensuring full respect for the commercial 
                orientation of commercial bank lending;
                  (B) ensuring that governments will not 
                intervene in bank management and lending 
                decisions (except in regard to prudential 
                supervision);
                  (C) the passage of appropriate financial 
                reform legislation;
                  (D) strengthening the domestic financial 
                system, through financial sector restructuring, 
                as well as improved transparency and 
                supervision; and
                  (E) the opening of domestic capital markets.
          (3) A description of the degree to which the 
        countries requiring the financial stabilization 
        programs have fully implemented reforms required by the 
        International Monetary Fund that are directed at 
        corporate governance and corporate structure, 
        including--
                  (A) making nontransparent conglomerate 
                practices more transparent through the 
                application of internationally accepted 
                accounting practices, independent external 
                audits, full disclosure, and provision of 
                consolidated statements; and
                  (B) ensuring that no government subsidized 
                support or tax privileges will be provided to 
                bail out individual corporations, particularly 
                in the semiconductor, steel, and paper 
                industries.
          (4) A description of the implementation of reform 
        measures required by the International Monetary Fund to 
        deregulate and privatize economic activity by ending 
        domestic monopolies, undertaking trade liberalization, 
        and opening up restricted areas of the economy to 
        foreign investment and competition.
          (5) A detailed description of the trade policies of 
        the countries, including any unfair trade practices or 
        adverse effects of the trade policies on the United 
        States.
          (6) A description of the extent to which the 
        financial stabilization programs have resulted in 
        appropriate burden-sharing among private sector 
        creditors, including rescheduling of outstanding loans 
        by lengthening maturities, agreements on debt 
        reduction, and the extension of new credit.
          (7) A description of the extent to which the economic 
        adjustment policies of the International Monetary Fund 
        and the policies of the government of the country 
        adequately balance the need for financial 
        stabilization, economic growth, environmental 
        protection, social stability, and equity for all 
        elements of the society.
          (8) Whether International Monetary Fund involvement 
        in labor market flexibility measures has had a negative 
        effect on core worker rights, particularly the rights 
        of free association and collective bargaining.
          (9) A description of any pattern of abuses of core 
        worker rights in recipient countries.
          (10) The amount, rate of interest, and disbursement 
        and repayment schedules of any funds disbursed from the 
        stabilization fund established under section 5302 of 
        title 31, United States Code, in the form of loans, 
        credits, guarantees, or swaps, in support of the 
        financial stabilization programs.
          (11) The amount, rate of interest, and disbursement 
        and repayment schedules of any funds disbursed by the 
        International Monetary Fund to the countries in support 
        of the financial stabilization programs.
  (b) Timing.--Not later than October 1, 1998, and semiannually 
thereafter, the Secretary of the Treasury shall submit to the 
Committees on Banking and Financial Services and International 
Relations of the House of Representatives and the Committees on 
Foreign Relations, and Banking, Housing, and Urban Affairs of 
the Senate a report on the matters described in subsection (a).

SEC. 1705. ANNUAL REPORT AND TESTIMONY ON THE STATE OF THE 
                    INTERNATIONAL FINANCIAL SYSTEM, IMF REFORM, AND 
                    COMPLIANCE WITH IMF AGREEMENTS.

  (a) Reports.--Not later than October 1 of each year, the 
Secretary of the Treasury shall submit to the Committee on 
Banking and Financial Services of the House of Representatives 
and the Committee on Foreign Relations of the Senate a written 
report on the progress (if any) made by the United States 
Executive Director at the International Monetary Fund in 
influencing the International Monetary Fund to adopt the 
policies and reform its internal procedures in the manner 
described in section 1503.''.
  (b) Testimony.--After submitting the report required by 
subsection (a) but not later than October 31 of each year, the 
Secretary of the Treasury shall appear before the Committee on 
Banking and Financial Services of the House of Representatives 
and the Committee on Foreign Relations of the Senate and 
present testimony on--
          (1) any progress made in reforming the International 
        Monetary Fund;
          (2) the status of efforts to reform the international 
        financial system; and
          (3) the compliance of countries which have received 
        assistance from the International Monetary Fund with 
        agreements made as a condition of receiving the 
        assistance.

SEC. 1706. AUDITS OF THE INTERNATIONAL MONETARY FUND.

  (a) Access to Materials.--Not later than 30 days after the 
date of the enactment of this section, the Secretary of the 
Treasury shall certify to the Committee on Banking and 
Financial Services of the House of Representatives and the 
Committee on Foreign Relations of the Senate that the Secretary 
has instructed the United States Executive Director at the 
International Monetary Fund to facilitate timely access by the 
General Accounting Office to information and documents of the 
International Monetary Fund needed by the Office to perform 
financial reviews of the International Monetary Fund that will 
facilitate the conduct of United States policy with respect to 
the Fund.
  (b) Reports.--Not later than June 30, 1999, and annually 
thereafter, the Comptroller General of the United States shall 
prepare and submit to the committees specified in subsection 
(a) a report on the financial operations of the Fund during the 
preceding year, which shall include--
          (1) the current financial condition of the 
        International Monetary Fund;
          (2) the amount, rate of interest, disbursement 
        schedule, and repayment schedule for any loans that 
        were initiated or outstanding during the preceding 
        calendar year, and with respect to disbursement 
        schedules, the report shall identify and discuss in 
        detail any conditions required to be fulfilled by a 
        borrower country before a disbursement is made;
          (3) a detailed description of whether the trade 
        policies of borrower countries permit free and open 
        trade by the United States and other foreign countries 
        in the borrower countries;
          (4) a detailed description of the export policies of 
        borrower countries and whether the policies may result 
        in increased export of their products, goods, or 
        services to the United States which may have 
        significant adverse effects on, or result in unfair 
        trade practices against or affecting United States 
        companies, farmers, or communities;
          (5) a detailed description of any conditions of 
        International Monetary Fund loans which have not been 
        met by borrower countries, including a discussion of 
        the reasons why such conditions were not met, and the 
        actions taken by the International Monetary Fund due to 
        the borrower country's noncompliance;
          (6) an identification of any borrower country and 
        loan on which any loan terms or conditions were 
        renegotiated in the preceding calendar year, including 
        a discussion of the reasons for the renegotiation and 
        any new loan terms and conditions; and
          (7) a specification of the total number of loans made 
        by the International Monetary Fund from its inception 
        through the end of the period covered by the report, 
        the number and percentage (by number) of such loans 
        that are in default or arrears, and the identity of the 
        countries in default or arrears, and the number of such 
        loans that are outstanding as of the end of period 
        covered by the report and the aggregate amount of the 
        outstanding loans and the average yield (weighted by 
        loan principal) of the historical and outstanding loan 
        portfolios of the International Monetary Fund.
          * * * * * * *

DISSENTING VIEWS OF REPRESENTATIVE DAVE WELDON AND REPRESENTATIVE VINCE 
                               SNOWBARGER

    We write to express our opposition to H.R. 3114, or any 
legislation providing additional funding to the International 
Monetary Fund (IMF). We oppose this additional funding for the 
IMF for several reasons.
    First, some have attempted to create a crisis mentality 
over this bill, ``Pass this bill or we will experience a world 
depression.'' During consideration of H.R. 3114 before the 
committee, many members talked about how much this money was 
needed. The facts simply do not match up with the crisis 
mentality. The fact is, according to testimony before the 
committee and the admission of many who have looked into this 
issue in great detail, the IMF has enough money to take care of 
the current crisis and possibly has enough to handle another 
``Asian flu'' size crisis with its current liquid reserves, 
General Arrangements to Borrow (GAB), and near-term income.
    A review by the Heritage Foundation estimates that the IMF 
has $40 to $50 billion in liquid reserves. Additionally the IMF 
has GAB another $17 billion to $25 billion. Furthermore, if you 
add near term income which is somewhere in the range of $28 
billion if recent trends continue, the IMF has somewhere in the 
neighborhood of $85 to $100 billion in available near-term 
assets. This is more than enough money to deal with another 
Asian-size crisis.
    A study by the Joint Economic Committee finds that even 
after the Asian bailout, the IMF will hold about $30 billion in 
gold reserves and $25 billion in GAB. When added to an 
estimated $28 billion in near term income, this total reaches 
$83 billion.
    Because of the level of IMF reserves, should there be 
another crisis that needs immediate attention, the IMF does 
have the resources to act. There is no crisis or shortfall in 
the IMF's budget as many would like for us to believe.
    Second, some have argued that the IMF is achieving its 
goals in countries like South Korea, Thailand, and perhaps 
Indonesia by releasing funds in parcels (referred to as 
tranches). By letting funds flow from the IMF to these troubled 
nations in tranches, it is argued that the IMF has leverage and 
is exercising influence over the actions these nations are 
taking to reform their business, government, and financial 
systems. If indeed this is the case, it is a new and improved 
action by the IMF, and we must ask ourselves how the United 
States can best ensure that they follow the direction of the 
U.S. representative to the IMF to the greatest extent.
    We believe that the best way for the U.S. to exercise 
influence over the IMF is to refuse to give them another $18 
billion. This will enable us to maximize U.S. leverage over the 
IMF to ensure that the IMF is using our tax dollars to pursue 
the goals that this Congress has set forth. That is the best 
way to ensure that the IMF pursues the goals set forth by this 
Congress and the Administration in the area of human rights, 
labor rights, market reforms, bankruptcy reforms, and 
transparency.
    Unfortunately, the manner in which the IMF was set up does 
not enable the Congress to bind the IMF to follow certain 
policies. We can, however, influence the IMF in two ways. 
First, the Congress can and does instruct the U.S. 
representative to the IMF to use our voice and vote to pursue 
certain policies. This has limited success. Second, we can keep 
the pressure on the IMF by not writing them a check for $18 
billion. Once the U.S. writes an $18 billion check to the IMF, 
we remove the pressure and leverage that we have over them, and 
they can choose to ignore, or at least discount the voice and 
vote of the U.S.
    For those interested in achieving the goals set forth in 
H.R. 3114, the best way to achieve these goals is to reject the 
$18 billion transfer of funds to the IMF. We can best achieve 
these goals by voting down this funding at this time and 
keeping the pressure on the IMF to make the reforms this 
Congress would like to see. Let's give the IMF more time to 
prove that they are really interested in pursuing the goals set 
forth by the U.S. A vote for this $18 billion is a vote to give 
away our leverage, clear and simple. Once the coffers are 
refilled, while we don't lose all our leverage, the amount of 
leverage we do have will be diminished.
    We believe we should not lose this opportunity to achieve 
our goals by tossing away the best tool we have to influence 
policy and maintain leverage.

                                   Dave Weldon.
                                   Vince Snowbarger.

                      DISSENTING VIEW BY RON PAUL

    H.R. 3114 should be rejected. We should provide no 
additional funds to the International Monetary Fund. Created in 
the postwar era as an institution to manage the global fixed 
exchange rate system, the IMF lost any remaining justification 
for United States' continued involvement when President Richard 
Nixon closed the gold window in 1971. The IMF's charge of 
maintaining ``pegged but adjustable exchange rates'' no longer 
suits the current global financial system. The IMF has not 
proven to be an effective tool in managing international 
currencies and has done nothing to effectively warn us of the 
dangers that have marred the international financial system 
over the past several years. The bail-out of Mexico three years 
ago only served to encourage the same monetary policies that 
are now giving us the crisis in Southeast Asia. We are at a 
point in our history where formidable figures, like former 
Secretaries of the Treasury Simon and Schultz, are calling for 
getting out of the IMF, and Congress should give that serious 
consideration.

                      cause of the current problem

    The basic cause of the current crisis the various nations 
are facing in Southeast Asia, comes from a flawed monetary 
policy. These countries have inflated their currencies at a 20 
to 30% rate over the past decade which has led to mal-
investment, excess debt, over capacity, and an artificial boom 
period which predictably leads to a corrective bust. 
Fluctuating flat currencies, according to sound monetary 
theory, always produces financial and monetary chaos. Without 
considering the basic cause of the problems that exist in 
Southeast Asia, we are unable to devise sound policy here at 
home or internationally.
    The most important Congressional responsibility, with 
regards to currencies, is to maintain a sound dollar. It's now 
been 27 years since our currency has been linked to gold. Since 
that time the dollar has lost more than 50% of its value. The 
Constitution mandates that only silver and gold can be legal 
tender, and because this admonition has been ignored in dollar 
terms, gold has gone up nearly tenfold. If we continue to 
follow current policy of bailing out foreign countries through 
appropriations and further credit expansion, we do exactly the 
opposite of what we should be doing. This will further 
undermine the value of the dollar, expand our trade imbalances 
and lead to a crisis in the United States similar to that which 
Southeast Asia is facing today. We should never lose sight of 
our responsibility to maintain the value of the dollar. We 
certainly should never deliberately undermine the value of the 
dollar in a feeble attempt to prop up the value of other 
currencies, for whatever reason.
    Great danger lies ahead. I agree that the markets are in 
great danger but this is no justification for doing the wrong 
thing. It is true that protectionist sentiments may well result 
from current conditions. Obviously, competitive devaluations 
are even more troublesome than the lesser efforts at 
protectionism through tariffs. All world governments and 
central banks have embarked on a program of systematic 
inflation of their respective currencies which serve to lower 
their value in the marketplace. The currency crises and trade 
disruptions are indeed very serious because, if uncorrected, 
they will lead to political chaos. My disagreement with those 
who have expressed the concern about the impending danger is 
that we ought not continue the very policy that brought 
Southeast Asia their crisis.
    The only answer is a new approach to understanding 
currencies. A universal worldwide currency controlled by the 
marketplace and not the politicians would go a long way toward 
solving many of our financial and trade problems. Just as it 
would be devastating for the United States to have 50 different 
currencies, it is chronically disruptive for hundreds of 
countries throughout the world expanding credit at different 
rates and pretending that a sound efficient economy can operate 
under those conditions. The serious shortcoming of chronic 
currency devaluation is that although the money supply may 
gradually increase, the ramifications of these increases do not 
come in the same manner--they come with sudden jolts to the 
value of the currency as well as to consumer prices.
    There are three significant reasons why we in the Congress 
should oppose the IMF bailout: moral, economic and political. 
It's morally wrong to take funds from innocent taxpayers and 
give this to special interests, whether they be foreign 
corporations, foreign governments or for the benefit of the 
lending agencies in this country, as well as U.S. corporations 
who have invested in Southeast Asia. A lack of understanding of 
how credit creation undermines the value of the dollar will 
make it difficult, it not impossible, to prevent the currency 
crisis from affecting our economy; transferring wealth from one 
country to another, diluting the value of stronger currency for 
the benefit of a poorer currency, can never rectify the serious 
harm done by decades of monetary mischief. Redistributing 
wealth through government undermines the political foundations 
of voluntary exchange and prosperity.
    The amendment offered by Representatives McCollum, Bachus, 
Barr and myself to sunset the Bretton Woods Act in three years 
and call for the Treasury to report on alternatives in two 
years is the first, responsible step that must be taken. The 
IMF has outlived whatever justification it might have had; it 
has no place in the new era of floating exchange rates.
    A defeat of the IMF appropriations by the United States 
will be a very positive step in the direction of tackling the 
very serious problem which must be addressed. That is, 
promoting a sound currency for the United States and settling 
an example for the world. Only a gold or other commodity 
standard of money can do this. Political, or paper money, can 
only work for a short period of time and significantly enables 
authoritarian governments.

                                                          Ron Paul.