IMPLEMENTATION OF 

CERTAIN LEGISLATIVE PROVISIONS 

RELATING TO THE 

INTERNATIONAL MONETARY FUND 

A Report to Congress 

in accordance with 

Section 1705(a) of the International Financial Institutions Act 

and 

Section 605(d) of the 

Foreign Operations, Export Financing, and Related Programs 

Appropriations Act, 1999 

United States Department of the Treasury 

March 2016
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Table of Contents 

Introduction ............................................................................................................................... 2

International Financial Institutions Act, Section 1503(a) Provisions, by Subsection 

1. Exchange Rate Stability ................................................................................................ 2

2. Independent Monetary Authority, Internal Competition, Privatization, 

 Deregulation, Social Safety Nets, Trade Liberalization ............................................... 3-5

3. Strengthened Financial Systems .................................................................................... 6

4. Bankruptcy Laws and Regulations ................................................................................ 6

5. Private Sector Involvement ............................................................................................ 7

6. Good Governance .......................................................................................................... 8

7. Channeling Public Funds toward Productive Purposes ................................................. 9

8. Individual Economic Prescriptions ................................................................................ 9

9. Core Labor Standards .................................................................................................... 10

10. Discouraging Ethnic and Social Strife............................................................................ 10

11. Environmental Protection ............................................................................................... 10

12. Greater Transparency ..................................................................................................... 10

13. Accountability/Evaluation............................................................................................... 11

14. Microenterprise Lending ................................................................................................ 12

15. Anti-Money Laundering and Combating the Financing of Terrorism............................. 13

Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2001, Section 

801(c)(1)(B) Provisions, by Subsection 

I. Suspension of Financing for Diversion of Funds ............................................................ 14 

II. IMF Financing as Catalyst for Private Sector Financing ................................................ 14

III. Conditions for Disbursement ......................................................................................... 14 

IV. Trade Liberalization ....................................................................................................... 14 

V. Focus on Short-Term Balance of Payments Financing ................................................... 15 

VI. Progress toward Graduation from Concessionary Financing ........................................ 15

Annex 1: New IMF Lending Arrangements, Per Section 605(d) of the Foreign Operations, 

Export Financing, and Related Programs Appropriations Act, 1999 
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Introduction 

This report provides a consolidated response to two legislative provisions that require Treasury 

to report to Congress on reform efforts and standby arrangements or programs undertaken by the 

International Monetary Fund (IMF). 

IMF Policies Reform Report: Section 1705(a) of the International Financial Institutions Act (IFI 

Act), 22 U.S.C. § 262r-4(a), requires the Secretary of the Treasury to submit a report on the 

progress made by (a) the U.S. Executive Director (USED) in influencing the IMF to adopt the

policies and reforms described in section 1503 of the IFI Act, 22 U.S.C. § 262o-2(a), and (b) the 

IMF in implementing the policies set forth in section 801(c)(1)(B) of the Foreign Operations, 

Export Financing, and Related Programs Appropriations Act, 2001, P.L. 106-429. 

Treasury and the Office of the U.S. Executive Director (OUSED) at the IMF consistently 

endeavor to build support in the IMF’s Executive Board and with management for these policies, 

including through meetings with IMF staff and other Board members on country programs and 

IMF policies, through formal statements by the USED in the IMF Board, and through USED 

votes in the Board. Treasury’s overarching objective is to support strengthened implementation 

of IMF country programs and sound policy decisions within the IMF. Also, Treasury’s Office of 

International Monetary Policy undertakes outreach to other Treasury offices to increase

awareness among Treasury staff about legislative mandates and to identify opportunities to 

influence IMF decisions in line with broader U.S. international economic policy objectives. 

Standby Arrangements: Section 605(d) of the Foreign Operations, Export Financing, and 

Related Programs Appropriations Act, 1999, P.L. 105-277, mandates reports on IMF standby or 

other arrangements with its member countries. Annex I provides the information that responds 

to that provision.

I. Progress of the OUSED in Promoting Policies at the IMF Described in Section 

1503(a) 

(1) Exchange rate stability 

The United States continues to advocate for further improvements to the IMF’s surveillance over 

exchange rates. In 2012, with strong U.S. support, the IMF produced a pilot External Sector 

Report (ESR), which represents a substantial enhancement to the IMF’s work on external 

analysis as it includes (a) much greater in-depth coverage of IMF exchange rate assessments, as 

well as assessments of reserves; (b) the drivers of current account imbalances; and (c) 

information on capital flows and measures. In response to U.S. pressure, the IMF elevated the 

ESR in 2015 from a “pilot” to a permanent publication. 

The United States encourages countries to pursue more flexible exchange rates, based on 

underlying fundamentals, including through the following examples:

 In a December 2014 Board statement on the 5th review of Tunisia’s Stand-By 

Arrangement, the OUSED welcomed the authorities’ recent shift to greater exchange rate 
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flexibility and encouraged the government to allow the overvalued exchange rate to 

adjust to bolster reserve buffers and reduce a large current account deficit.

 In a September 2015 Board statement on Australia’s Article IV, the OUSED expressed 

concern over the authorities’ public statements on the desired direction of the exchange 

rate. The OUSED urged the authorities to avoid statements that could be perceived as 

inconsistent with their international commitment to a market-determined exchange rate.

As part of the G-20 agenda, Treasury has pressed for increased candor, transparency, and evenhandedness of IMF exchange rate surveillance. In particular, Treasury continues to advocate that 

IMF staff make tougher ultimate judgments on members’ exchange rate management practices.

At the September 2015 G-20 Finance Minister and Central Bank Governors meeting in Ankara,

Turkey, members reiterated that they would move more rapidly toward more market-determined 

exchange rate systems and exchange rate flexibility that reflects underlying fundamentals, and 

not to target exchange rates for competitive purposes.

(2) Policies to increase the effectiveness of the IMF in promoting market-oriented reform, 

trade liberalization, economic growth, democratic governance, and social stability through: 

(A) Establishment of an independent monetary authority 

With the support of the United States, the IMF consistently advocates for greater independence 

for monetary authorities in member economies. In fact, IMF program conditionality frequently 

includes measures to strengthen central bank autonomy and accountability; and the institution 

provides technical assistance to help countries achieve these goals. The United States continues 

to encourage the IMF to support monetary authority independence in various ways, such as: 

 In a June 2015 Board statement on the 7

th review of Pakistan’s Extended Fund Facility, 

the OUSED urged the authorities to pass a bill to enhance central bank independence and 

highlighted the implementation of an improved interest rate corridor. 

 In a March 2015 joint Board statement on Malawi’s 5th and 6th Extended Credit Facility 

review, the OUSED noted that a clearly articulated monetary policy communicated by an 

independent central bank will contribute to stabilizing the economy. 

 In a November 2014 Board statement on Turkey’s Article IV staff report, the OUSED 

urged the authorities to safeguard central bank independence. In particular, the OUSED 

noted with concern recent comments by senior Turkish policymakers about the conduct 

of monetary policy and stressed that further political interference could undermine the 

credibility and independence of the central bank. 

(B) Fair and open internal competition among domestic enterprises 

Although the World Bank leads on this issue, the IMF encourages member countries to pursue

policies to improve economic efficiency. These measures may include ending directed lending 

(or other relationships between government and businesses based on favoritism), improving 
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antitrust enforcement, and establishing a sound and transparent legal system. United States 

leadership at the IMF encourages fair and open competition globally, including: 

 In a December 2014 Board statement on the 5th review of Tunisia’s Stand-By 

Arrangement, the OUSED urged the authorities to advance economic legislation, 

particularly bills related to bankruptcy, competition, and public-private partnerships, 

noting that such policies are vital to raising potential growth and improving the political 

and security environment. 

 In a September 2015 Board statement on the Democratic Republic of the Congo’s Article 

IV staff report, the OUSED encouraged the authorities to submit a supplementary budget

and urged greater progress with respect to collecting adequate royalties and improving 

the competitive bidding process in the mining sector. 

 In an October 2015 Board statement on Ethiopia’s Article IV staff report, the OUSED 

noted that domestic bank credit was strikingly low and much of it was funneled to stateowned enterprises via a complex system of financial repression, crowding out the private 

sector and hindering its ability to contribute meaningfully to growth. 

(C) Privatization 

Often collaborating with the World Bank, the IMF supports competitive and transparent 

privatization processes to promote economic efficiency and improve member country fiscal 

positions. Examples of IMF program and surveillance discussions in which the OUSED has 

advocated privatization include: 

 In a June 2015 Board statement on the 7th review of Pakistan’s Extended Fund Facility, 

the OUSED underscored the need for continued progress on the privatization of public 

sector enterprises.

 In an April 2015 Board statement on The Gambia’s request for a Rapid Credit Facility, 

the OUSED welcomed the authorities’ intention to privatize the state telecom company.

(D) Economic deregulation and strong legal frameworks 

A lack of strong property rights, fair and open competition, and contract enforcement distorts 

markets and stifles entrepreneurship. While the World Bank often addresses these issues, IMF 

staff also provides relevant advice on measures considered critical to macroeconomic 

performance. The United States continues to advocate at the IMF for improved legal 

frameworks to protect property rights and promote open competition. 

 In an August 2015 Board statement on the United Arab Emirates’ Article IV staff report, 

the OUSED highlighted the importance of structural reforms to diversify the economy 

and to accelerate private sector-led job creation. The OUSED urged the authorities to 

open the economy to foreign direct investment and to improve the business environment. 
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 In a February 2015 Board statement on India’s Article IV staff report, the OUSED 

recommended that the authorities further liberalize the country’s capital markets by 

relaxing caps that restrict foreign investor holdings of government securities. 

(E) Social safety nets 

Investment in human development and basic social services is important for sustained economic 

growth. Cost effective social safety nets can be important in garnering popular support for 

economic reforms and in cushioning the impact of economic downturns on the population. 

Through Board statements at the IMF, the United States has stressed the importance of 

protecting social safety net spending, including: 

 In a May 2015 Board statement on Korea’s Article IV staff report, the OUSED urged the 

authorities to strengthen the country’s social safety nets in the face of growing inequality 

and weak fiscal redistribution.

 In a June 2015 Board statement on Grenada’s Article IV staff report, the OUSED 

encouraged the authorities to expedite progress on social spending. The OUSED also 

urged implementation of the country’s Growth and Poverty Strategy to complement 

recent tax and investment regime reforms. 

 In a February 2015 Board statement on Liberia’s request for a Rapid Credit Facility and 

Debt Relief under the Catastrophic Containment and Relief (CCR Trust), the OUSED 

urged the authorities to devote additional resources to strengthen social safety nets,

including food programs and non-Ebola related healthcare. 

(F) Opening of markets for agricultural goods through reductions in trade barriers 

The IMF encourages a multilateral, rules-based approach to trade liberalization across all sectors 

of the global economy, including the agricultural sector. The IMF is prepared to provide 

transitional assistance to member countries experiencing agricultural payment imbalances arising 

from trade reform legislation. Through Board statements at the IMF, the United States has 

stressed the importance of opening markets for agricultural goods, including: 

 In a March 2015 Board statement on Niger’s Article IV staff report and 5th and 6th

Extended Credit Facility reviews, the OUSED encouraged the authorities to implement 

the government’s food deficit initiative. The OUSED urged the government to boost 

agricultural production by removing trade and non-trade barriers and by improving 

farming techniques. 

 In an October 2015 Board statement on Ethiopia’s Article IV staff report, the OUSED 

urged the authorities to reduce trade barriers, and noted that structural reforms and greater 

trade openness could boost competitiveness.
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(3) Strengthened financial systems and adoption of sound banking principles and practices 

The joint IMF-World Bank Financial Sector Assessment Program (FSAP) is an important 

instrument for financial sector surveillance and advice. IMF staff uses FSAPs to assess 

compliance with key financial sector standards, including the Basel Committee’s Core Principles 

for Effective Banking Supervision, the International Organization of Securities Commissions’

Objectives and Principles of Securities Regulation, and the IMF’s own Code of Good Practices 

on Transparency in Monetary and Financial Policies.

The IMF also conducts financial sector surveillance through a semi-annual Early Warning 

Exercise (EWE) and Global Financial Stability Report (GFSR), which identify the most relevant 

tail risks to the global economy or major regions and provide relevant policy advice. In 2015, 

the United States underwent an FSAP surveillance process, and the report can be found using the 

following link: http://www.imf.org/external/pubs/ft/scr/2015/cr15170.pdf. Examples of the 

United States supporting the strengthening of financial systems include: 

 In a June 2015 Board statement on Lebanon’s Article IV staff report, the OUSED 

welcomed the central bank’s introduction of new macro-prudential measures aimed at 

containing risks within the financial sector. The OUSED further noted that the size of the 

financial sector and the interlinkages with the public sector represent a key vulnerability 

for Lebanon, and, with this in mind, urged the authorities to align risk-weighting policies 

with the Basel capital adequacy framework to provide banks with sufficient buffers 

against potential shocks. 

 In a January 2015 Board statement on Ireland’s 2nd post-program monitoring review, the 

OUSED emphasized the need for banks to accelerate resolution of non-performing 

commercial loans to ensure businesses’ access to credit. The OUSED commended Irish 

authorities for the success of their Mortgage Arrears Resolution Targets program, 

designed to facilitate faster resolution of home foreclosures through more efficient 

bankruptcy proceedings, but encouraged the authorities to address remaining legal and 

administrative impediments to quicker commercial loan resolution. 

 In an October 2015 Board statement on Namibia’s Article IV staff report, the OUSED 

commended staff’s assessment that the rapid increase in house prices and household 

credit poses risks to the financial sector that need to be contained. 

(4) Internationally acceptable domestic bankruptcy laws and regulations 

In coordination with other international financial institutions, including the World Bank, IMF 

staff provides technical assistance to member economies as they develop efficient insolvency 

regimes. An example of the OUSED supporting the development of domestic bankruptcy laws 

and regulations include: 

 In a September 2015 Board statement on Cyprus’ 5th, 6th, and 7th Extended Fund Facility 

review, the OUSED welcomed the strengthening of the foreclosures regime and new 

personal insolvency legislation, and concurred with staff that making these frameworks 
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operational should be an immediate objective. The OUSED noted that having the 

frameworks in place is a necessary condition for the banks to reduce their portfolios of 

non-performing loans, which amount to more than 50 percent of gross loans. 

(5) Private sector involvement in crisis resolution

A healthy private sector contributes to economic stability and growth. The private sector, 

therefore, plays an important role in moving countries out of economic and financial crisis. The 

United States encourages governments to promote private sector activity, including through 

business climate reforms and privatization of state-owned enterprises. The following examples

highlight actions the OUSED has taken to continue to promote private sector growth: 

 In a June 2015 Board statement on the Seychelles’ Article IV staff report and the 2nd

review of its Extended Fund Facility, the OUSED noted that structural reforms to 

promote private sector activity could strengthen the medium-term outlook and reinforce 

macroeconomic stability. The USED also suggested that reforms to loss-making stateowned enterprises could increase competitiveness while simultaneously reducing fiscal 

risks. 

 In a July 2015 Board statement on the 1st review of Ukraine’s Extended Arrangement, the 

OUSED urged the authorities to redouble their efforts to tackle corruption and to 

transform the business climate to support private sector led growth. 

(A) Strengthening crisis prevention through improved surveillance of economic policies and 

financial sector development

The United States encourages the IMF to further strengthen surveillance and crisis prevention 

capabilities, and to support robust surveillance on monetary and financial issues, including:

 In a February 2015 Board statement on Liberia’s request for a Rapid Credit Facility and 

Debt Relief under the Catastrophic Containment and Relief (CCR) Trust, the OUSED 

echoed IMF staff concerns about widespread regulatory forbearance and called on staff 

and the authorities to closely monitor financial sector vulnerabilities. 

 In a January 2015 Board statement on Canada’s Article IV staff report, the OUSED 

encouraged the authorities to continue to implement the over-the-counter derivatives 

reform committed to at the 2009 G-20 Leaders Summit. The OUSED noted that recent 

efforts to identify financial sector data gaps by mandating reporting of certain financial 

transactions to trade repositories are an example of progress in fulling these 

commitments. 

(B) Strengthening of emerging markets' financial systems 

The IMF continues to work with other IFIs to promote stronger financial systems in emerging 

market economies. Beyond carrying out financial system surveillance functions, the IMF

provides technical assistance to low- and lower-middle-income countries to promote financial 
8

sector sustainability. Examples of the OUSED supporting a strengthening of emerging market 

financial systems include: 

 In a July 2015 Board statement on China’s Article IV staff report, the OUSED argued 

that faster progress on financial liberalization is needed to move to a market-based 

financial system, which would help address significant vulnerabilities in China from high 

and still rising credit rates.

 In an April 2014 Board statement on The Gambia’s request for a Rapid Credit Facility, 

the OUSED noted the dangers posed to the financial sector through excessive exposure to 

government debt, the high levels of non-performing loans, and a significant degree of 

concentration risk. The OUSED welcomed the Gambian request for IMF technical 

assistance to improve credit risk testing, and to develop a resolution framework. 

(C-H) Strengthened crisis resolution mechanisms 

The United States encourages appropriate private sector involvement in financial crisis 

resolution, including facilitating IMF efforts to strengthen crisis prevention and resolution 

mechanisms worldwide. Most recently, the United States has worked to improve sovereign debt 

restructuring processes. In October 2014, the IMF Board endorsed a proposal based on work 

from a Treasury-facilitated roundtable for a new model of pari passu and collective action 

clauses (CAC). During the Board meeting, the OUSED strongly supported these contract 

revisions and underscored the IMF’s lead role in promoting adoption of the clauses. The IMF 

reported in September 2015 that 85 percent of new sovereign foreign debt issuances include the 

new provisions. To reduce the outstanding stock of debt that does not contain the clauses, the 

IMF plans to consider potential market-based solutions such as accelerated turnover and 

proactively managing restructurings to minimize holdout risks. 

(6) Good governance 

The IMF emphasizes good governance when providing policy advice, financial support, and 

technical assistance to member countries. The IMF supports good governance through an 

emphasis on transparency, strong fiduciary diagnostics, and promotion of market-based reforms.

The IMF’s involvement has focused on those governance aspects that are generally considered 

part of the IMF’s core expertise, such as improving public administration, increasing government 

transparency, enhancing data dissemination, and implementing effective financial sector 

supervision. Examples of U.S. efforts to encourage good governance include:

 In a September 2015 Board statement on Kenya’s Stand-By Arrangement review, the 

OUSED encouraged the authorities to continue to improve the business climate and put 

in place procedures and measures to maximize the return on infrastructure investments.

 In a May 2015 Board statement on Haiti’s Article IV staff report, the OUSED urged the 

authorities to quickly establish a Treasury Single Account, which will enable more 

effective government financial management. 
9

(7) Channeling public funds away from unproductive purposes, including large “showcase” 

projects and excessive military spending, and toward investment in human and physical 

capital to protect the neediest and promote social equity 

The IMF’s Code of Good Practices on Fiscal Transparency identified principles and practices to 

enhance fiscal policy transparency, promote quality audit and accounting standards, and reduce 

or eliminate off-budget transactions. The IMF also developed a Guide to Resource Revenue 

Transparency and a Fiscal Report on Standards and Codes (Fiscal ROSC) for use in resourcerich (oil/gas-mining) countries. Examples of the OUSED promoting improved channeling of 

public resources include: 

 In an August 2015 Board statement on Mozambique’s Policy Support Instrument, the 

OUSED urged the authorities to effectively address the country’s large public sector 

wage bill and achieve a sustainable level of spending to avoid cutting critical 

infrastructure projects and basic health and education services. 

 In a July 2015 Board statement on Morocco’s successor Precautionary and Liquidity 

Line, the OUSED welcomed the authorities’ successful reduction of fiscal and current 

account deficits by reducing energy subsidies. The USED also encouraged the 

authorities to take advantage of favorable economic conditions to reform the remaining 

subsidy programs and establish more efficient programs to protect the most vulnerable. 

(8) Economic prescriptions appropriate to the economic circumstances of each country 

The United States has emphasized the need to focus policy advice on issues critical to growth 

and macroeconomic stability in each country. We have supported IMF staff efforts to 

increasingly tailor policy advice to country-specific circumstances. The United States has 

supported country-relevant economic prescriptions in the following ways: 

 In a July 2015 Board statement on the United Kingdom’s Article IV staff report, the 

OUSED noted that due to London’s housing inflation rate being far beyond that for the 

rest of the country, macro prudential policies to prevent a housing price bubble, including 

lowering loan-to-value ratios on mortgages, should be applied regionally. Since the 

government’s Help-to-Buy program to increase home ownership began in 2013, the 

number of mortgages with high loan-to-value ratios has increased significantly. 

 In a June 2015 Board statement on Portugal’s Article IV staff report, the OUSED 

acknowledged that fiscal adjustment should remain a priority given Portugal’s high debt 

stock. However, the OUSED recognized that Portuguese authorities face setbacks from 

multiple Constitutional Court rulings nullifying approved reforms. The OUSED 

welcomed staff efforts to explore growth-friendly measures and further improve the 

design of fiscal reforms. 
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(9) Core labor standards (“CLS”) 

The United States promotes integration of core labor standards into the IMF’s analysis, including 

by encouraging the IMF to cooperate with the International Labor Organization (ILO) to 

establish best practices on CLS policies. With United States encouragement, the IMF reviews 

member country labor market policies and practices, often as part of the annual Article IV 

consultation process. 

(10) Discouraging practices that may promote ethnic or social strife 

By helping to create the conditions for a sound economy, IMF assistance can help reduce ethnic 

and social strife. The United States encourages the IMF to highlight the development and 

improvement of social safety nets in member countries, including those implementing difficult 

economic reforms. The IMF increasingly consults widely throughout the population of such 

member countries, including with NGOs, academics, and think tanks, to develop a strong 

constituency for economic reforms. The United States continues to discourage practices that may 

promote ethnic or social strife. For example, in a February 2015 Board statement on Niger’s 

Article IV staff report and 5th and 6th Extended Credit Facility reviews, the OUSED welcomed 

the government’s intention to prioritize spending in key sectors, including food, water, health 

and education, but noted shortfalls in actual spending when compared with the authorities’ 

targets over the past several years. 

(11) Link between environmental and macroeconomic conditions and policies 

Where environmental issues pose fiscal, financial, and macroeconomic challenges, the IMF 

provides advice in line with its mandate and expertise. The other IFIs and the IMF work together 

to assess the magnitude of pollution and other major environmental side effects associated with 

fossil fuel use. Together, these IFIs provide guidance on energy tax reforms for a broad range of 

developed and developing countries. The United States supports policies that increase 

macroeconomic stability while reducing negative environmental impacts, including by 

encouraging fossil fuel subsidies in member countries as in the following examples:

 In a July 2015 Board statement on Iraq’s request for a Rapid Financing Instrument, the 

OUSED welcomed the authorities’ commitment to comprehensive economic reform, 

which the OUSED noted should include quick implementation of electricity tariff reform 

and further fuel subsidy reforms.

 In a September 2015 Board statement on the 6th review of Tunisia’s Stand-By 

Arrangement, the OUSED urged the authorities to implement durable energy subsidy 

reform, including an automatic fuel price adjustment mechanism and full cost-recovery 

electricity tariffs, to help insulate the budget from energy price fluctuations. 

(12) Greater transparency 

With strong U.S. support, the IMF emphasizes the need for increased transparency in policy 

development and implementation. Part of this process includes publication of the Article IV 
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staff report, which the United States urges all member economies to do. The Board completed 

its latest review of IMF transparency in June 2013, which review continued to favor publication 

of all Article IV and Use of IMF Resources documents. According to the IMF, in 2014, 92 

percent of member countries agreed to publish a press release, providing the IMF Executive 

Board’s assessment of the member’s macroeconomic and financial situation, and 92 percent of 

members agreed to publish the IMF country report.

With U.S. support, the IMF continues to urge countries to provide additional economic and 

financial information to the public by regularly releasing data consistent with the IMF’s Special 

Data Dissemination Standards (SDDS). Over 90 percent of Fund members subscribe to either 

the General Data Dissemination Standards or SDDS. In 2015, the IMF announced the first group 

of adherents, including the United States, to the SDDS Plus initiative, which includes nine 

additional data categories. The OUSED continues to urge greater transparency of IMF member 

countries, including:

 In a July 2015 Board statement on China’s Article IV staff report, the OUSED urged the 

Chinese authorities to increase transparency of reserve holdings and exchange market 

intervention, through reporting to the Currency Composition of Official Foreign

Exchange Reserves (COFER) and through disclosure, ex post, of actual intervention 

amounts, and to dedicate resources to improve data quality. 

 In a May 2015 Board statement on Switzerland’s Article IV staff report, the OUSED 

commended the authorities for taking steps to bring bank secrecy laws in line with 

international standards. The OUSED called on the government to heighten bank 

disclosure requirements and noted that such measures are crucial to protect the integrity 

of the country as an international financial center, to prevent money laundering, and to 

counter tax base erosion in Switzerland’s partners.

 In a June 2015 Board statement on Lebanon’s Article IV staff report, the OUSED 

highlighted several references to the deteriorating apparatus for collecting, sharing, and 

disseminating data. The OUSED expressed concern about capacity constraints related to 

the country’s data production and asked IMF staff about the provision of technical 

assistance. 

(13) Greater IMF accountability and enhanced self-evaluation 

In 2000, with the strong urging of the OUSED, the Executive Board established an Independent 

Evaluation Office (IEO) to supplement existing internal and external evaluation activities. The 

IEO provides objective and independent evaluation of IMF policies and activities, and operates 

independently of IMF management and at arm's length from the IMF Board. The IEO has three 

key mission objectives: 1) to enhance the learning culture within the IMF, 2) to strengthen the 

IMF’s external credibility, and 3) to support institutional governance and oversight. On average, 

the IEO concludes two or three evaluations per year, and each evaluation normally takes about 
12

18 months to complete. Recent evaluations include the following, which are publicly available 

on the IEO’s website:

1

 Self-Evaluation at the IMF, an IEO Assessment (October 2015)

 IMF Response to the Financial and Economic Crisis: an IEO Evaluation (October 2014) 

 Revisiting the 2004 IEO Evaluation of the IMF's Role in PRSPs and the PRGF and the 

2007 IEO Evaluation of the IMF and Aid to Sub-Saharan Africa (August 2014)

The IEO is currently working on two other evaluations: The IMF and the Euro Area Crisis and 

Statistics for Global Economic and Financial Stability: the Role of the IMF. These reports 

should be available soon. 

In addition to supporting the IEO’s work, the United States encourages the IMF to continuously 

take stock of its policies and lending/policy support instruments, including:

 In a January 2015 Board statement on the 2nd review of Poland’s Flexible Credit Line, the 

OUSED raised concerns about the prolonged use of the IMF’s precautionary credit lines, 

including for Poland. The OUSED urged greater discussion on the conditions under 

which a country’s exit from the facility would be appropriate. 

 In a July 2015 Board statement on Japan’s Article IV staff report, the OUSED questioned 

the ideal level of fiscal consolidation, noting that the proposed 2015 level is the same as 

in 2014 – a level which considerably dampened growth. The OUSED asked staff to 

comment on the differences between recent work by the IMF Research Department 

indicating that fiscal multipliers are quite high at the zero lower bound (about 1.0) and 

OUSED-calculated implied multipliers that were comparatively lower (0.2 for 2015 and 

0.6 for 2016 based on IMF staff’s projection of the growth impact of Japan’s near-term 

fiscal consolidation).

(14) Structural reforms which facilitate the provision of credit to small businesses, including 

microenterprise lending 

Boosting financial services access to poor households in developing countries will positively 

impact economic growth. Through the IMF, the United States promotes structural reforms that 

encourage credit provision to small and micro enterprises, including:

 In an August 2015 Board statement on the United Arab Emirates’ Article IV staff report, 

the OUSED highlighted the importance of structural reforms aimed at further 

diversifying the economy and accelerating private sector-led job creation for nationals,

including through continued opening up of foreign direct investment, improving selected 

areas of business environment, transitioning toward a knowledge-based economy, easing 

access to finance for start-ups and SMEs, and creating the right incentives for 

entrepreneurship and job creation. 

 

1

http://www.imf.org/external/np/ieo/index.htm
13

 In a July 2015 Board statement on Spain’s Article IV staff report, the OUSED questioned 

IMF staff’s call to reduce the share of GDP contributed by small and micro firms relative 

to larger firms. IMF staff pointed to the GDP share of small and micro firms in Germany 

as a target, but the OUSED warned that this would be counterproductive at a time when 

two-thirds of Spanish workers are employed by small and micro firms. The OUSED 

encouraged greater focus on legal and regulatory obstacles to entrepreneurship and 

company growth. 

(15) Anti-Money Laundering and Combating the Financing of Terrorism (“AML/CFT”) 

The United States supports the ongoing work of the IMF to integrate AML/CFT into its 

programs, including Reports on the Observance of Standards and Codes, the Financial Sector 

Assessment Program (FSAP), capacity development, and surveillance. In 2014 the IMF Board

endorsed the revised Financial Action Task Force (FATF) AML/CFT Recommendations and 

reaffirmed the IMF commitment to keep AML/CFT as a component of the FSAP. The United 

States FSAP completed in 2015 included an AML/CFT Technical Note published in July.

The United States supports the active role the IMF plays in the global AML/CFT network 

administered by the FATF and the FATF-style regional bodies. The IMF has had a direct role in 

nine of the 11 FATF compliance assessments under the new Recommendations that have been 

completed or are underway, and has led two assessments. The IMF co-chaired a FATF project 

team in 2015 developing guidance to countries on the collection and analysis of AML/CFT data 

and statistics. 

Examples of OUSED support for improved AML/CFT frameworks include the following: 

 In a June 2015 Board statement on the Bahamas’ Article IV staff report, the OUSED 

urged the authorities to undergo and complete an AML/CFT assessment in a timely 

fashion.

 In a September 2015 Board statement on Ecuador’s Article IV staff report, the OUSED 

noted concern about banks’ weakened asset quality and liquidity, and encouraged the 

authorities to continue efforts to improve financial sector supervision and strengthen the 

AML/CFT framework. 
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II. IMF Implementation of Six Reform Policies Described in Section 801(c)(1)(B) 

(I) Suspension of IMF financing if funds are being diverted for purposes other than the 

purposes for which the financing was intended 

With strong U.S. support, the IMF works to ensure that IMF resources are used solely for the 

purposes for which they are intended. One of the IMF’s most effective tools against corruption 

is the Safeguards Assessment used to prevent possible misuse of IMF resources and misreporting 

of information. All countries that request IMF resources must agree to undergo a Safeguards 

Assessment, to identify vulnerabilities in a central bank’s control systems. IMF staff carry out 

this diagnostic exercise to consider the adequacy of five key areas of control and governance 

within a central bank: (i) the external audit mechanism; (ii) the legal structure and independence; 

(iii) the financial reporting framework; (iv) the internal audit mechanism; and (v) the internal 

controls system. To date the IMF has completed 275 assessments covering 94 central banks. 

The IMF most recently reviewed the framework in October 2015. The review noted that there 

have been no serious reports of misuse of IMF funds, or misreporting, and that the 

implementation of recommendations remains high. 

(II) IMF financing as a catalyst for private sector financing 

The IMF recognizes that, if structured effectively, official financing can complement and attract 

private sector flows. The IMF promotes policy reforms that catalyze private financing and, in 

cases of financial crisis, allow countries to regain access to international private capital markets 

as quickly as possible. (See Section 5 above for a more in-depth discussion of private sector 

involvement.) 

(III) Financing must be disbursed (i) on the basis of specific prior reforms; or (ii) 

incrementally upon implementation of specific reforms after initial disbursement 

IMF disbursements are made in tranches based on a country’s performance against specified 

criteria and policy actions, both prior to and during the program. Together with the rest of the 

IMF’s Executive Board, the OUSED plays a strong oversight role in encouraging IMF

management to bring forward new programs or requests for disbursements only after requesting 

countries have completed required policy actions. 

(IV) Open markets and liberalization of trade in goods and services 

The IMF has advocated consistently for open markets and trade liberalization. The Fund also 

recognizes that trade adjustments can cause temporary balance of payments problems and has 

developed the Trade Integration Mechanism (TIM) to provide transitional financial assistance to 

countries if needed. The IMF also has a key responsibility in dealing with the revenue 

implications of trade liberalization, such as sequencing domestic tax reforms with the trade 

liberalization process. Throughout the financial crisis the IMF consistently advised countries 

that protectionism is not a path to economic recovery. 
15

The IMF has developed an implementation plan for international trade policy issues that calls for 

reviews of IMF work on trade policy every five years. The plan calls for more frequent coverage 

of cross-cutting trade policy issues in the IMF’s multilateral and regional surveillance vehicles 

(such as the World Economic Outlook and the Regional Economic Outlooks), as well as closer 

cooperation with the WTO and World Bank on trade matters. The first review of IMF work on 

trade policy was completed in 2015 and emphasized the need to adapt the IMF’s trade-related 

work to the changing global trade policy landscape, while keeping this work selectively focused 

on issues relevant to macroeconomic performance. A work agenda to operationalize this 

objective is now being developed.

(V) IMF financing to concentrate chiefly on short-term balance of payments financing 

With strong U.S. support, the IMF has continued to innovate, creating new facilities to respond 

to member countries facing short-term balance of payments concerns. In 2009, for instance, the 

IMF created the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL) and the 

Rapid Credit Facility (RCF) to provide members with shorter-term liquidity to meet temporary 

balance of payments needs. The IMF Board completed a review of these arrangements in 2014, 

resulting in a modification of PLL assessment criteria, adoption of institutional capacity 

indicators for assessing qualification, and creation of an external risk index that will help guide 

discussions about country exit from these credit line arrangements. 

(VI) Graduation from receiving financing on concessionary terms 

The United States supports comprehensive growth strategies to help countries graduate from 

concessional to market-based lending. The United States works closely with the IMF and World 

Bank to promote a growth-oriented agenda in developing countries based on strong 

macroeconomic and structural policies. The IMF extends concessional credit through the PRGT.

Eligibility is based principally on a country's per capita income and eligibility for financing from

the International Development Association (IDA), the World Bank's concessional window. The 

current operational cutoff point for IDA eligibility is a per capita GNI level of $1,215. A 

member will graduate and be removed from the PRGT-eligibility list if the following apply: (1) 

its annual per capita GNI has been above the IDA cutoff point for the past five years with an 

increasing trend, and is currently at least twice the operational IDA cutoff for most states (three 

times the cutoff for small states and six times the cutoff for microstates); and/or (2) the member 

has the ability to durably and substantially access international financial markets and has a per 

capita GNI above 80 percent of the IDA cutoff, with GNI per capita on an increasing trend for 

the past five years; and, (3) the member country faces a low risk of a sharp decline in income or 

market access and limited debt vulnerabilities, as determined by the IMF’s quantitative analysis. 

In 2015, Bolivia, Nigeria, Vietnam, and Mongolia graduated from access to concessionary 

financing. 
16

ANNEX 1 Report to Congress on International Monetary Fund Lending

October 1, 2014 – September 30, 2015

October 1 – December 31, 2014

Board

Approval Date Country Amount Type U.S. 

Position

11/3/14 Guinea-Bissau $5.24 million RCF Abstain

11/26/14 Mexico $70 billion FCL Support

12/3/14 Honduras $188.6 million SBA /SCF Support

January 1 – March 31, 2015

Board

Approval Date Country Amount Type U.S. Position

1/14/15 Poland 

(Republic of)

$23 billion FCL Support

2/2/15 Kenya $688.3 million SBA / SCF Support

2/23/15 Liberia $45.6 million

$36.5 million

RCF Support

3/11/15 Ukraine $17.5 billion EFF Support

3/18/15 Central African 

Republic

$7.62 million RCF Support

April 1 – June 30, 2015

Board

Approval Date Country Amount Type U.S. Position

4/2/15 The Gambia $10.8 million RCF Support

4/3/15 Ghana $918 million ECF Support

4/8/15 Kyrgyz Republic $92.4 million ECF Support

6/5/15 Vanuatu $11.9 million RCF Support

6/17/15 Colombia $5.45 billion FCL Support

6/24/15 Senegal No Financing PSI Support

July 1 – September 30, 2015
17

Board

Approval Date Country Amount Type U.S. Position

7/10/15 Guinea-Bissau $23.9 million ECF Abstain

7/13/15 Sao Tome & 

Principe

$6.2 million ECF Support

7/29/15 Iraq $1.24 billion RFI Support

7/29/15 Kosovo $206.4 million SBA Support

7/31/15 Nepal $49.7 million RCF Support

9/14/15 Central African 

Republic

$11.8 million RCF Support

Notes: 

1. FCL: Flexible Credit Line; RCF: Rapid Credit Facility; RFI: Rapid Financing Instrument; PLL: 

Precautionary and Liquidity Line; ECF: Extended Credit Facility; SBA: Stand-By Arrangement: 

PSI: Policy Support Instrument; EFF: Extended Fund Facility; 

2. The policies described in section 601(4) of the Foreign Operations, Export Financing, and 

Related Programs Appropriations Act 1999 did not apply to any of the programs above.