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, as amended 

United States Department of the Treasury 

November 2019 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Introduction 

This report is provided in accordance with a legislative provision that requires Treasury to report 

to Congress on certain reform efforts and policy implementation undertaken by the International 

Monetary Fund (IMF). 

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

amended (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 various policies and reforms as described in section 1503(a) of the IFI Act, 22 U.S.C. § 

262o-2(a), and (b) the IMF in adopting and implementing the policies described in Section 

801(c)(1)(B) of the Foreign Operations, Export Financing, and Related Programs Appropriations 

Act, 2001, Pub .L. 106-429. 

Treasury supports strengthened implementation of IMF country programs and promotes sound 

policy decisions within the IMF. To achieve these goals, Treasury and the Office of the U.S. 

Executive Director (OUSED) at the IMF vigorously seek to build support for these policies in 

the IMF’s Executive Board and with IMF management. Treasury and the OUSED discuss these 

policies with IMF staff and other Board members, and the OUSED advances these reform 

policies in statements and votes on programs in the IMF Executive Board. 

In addition, Treasury’s Office of International Monetary Policy and the OUSED communicate 

with other Treasury offices and U.S. Government agencies, as appropriate, to increase awareness 

about legislative mandates affecting U.S. participation in the IMF and identify opportunities to 

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

Progress of the USED in Promoting Policies at the IMF Described in Section 1503(a) 

While the OUSED continues to advance all IMF policies described in Section 1503(a), this 

report specifically highlights new developments in relevant policy areas since October 1, 2018. 

Exchange Rate Surveillance 

The United States continually presses for further improvements to the IMF’s surveillance on 

exchange rates, emphasizing candor, transparency, and even-handedness in the IMF’s analysis. 

The United States regularly emphasizes the need for greater even-handedness and transparency 

in assessing exchange rate regimes in the IMF’s surveillance of member countries. For example, 

in the U.S. Board statement for China’s 2019 Article IV staff report, the U.S. chair noted the 

report placed too much emphasis on the need for short-run exchange rate flexibility to counter 

trade shocks, without a discussion of the trade-offs entailed in further depreciation. The OUSED 

also supported the IMF’s call for greater transparency in China’s exchange rate policies, 

including a request that China disclose foreign exchange intervention promptly given its 

economic size and importance. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With U.S. support, the IMF is undertaking a review of its Multiple Currency Practices (MCP) 

policy, in line with Article VIII Section 3 of the IMF Articles of Agreement, which prohibits 

members from engaging in discriminatory currency arrangements or multiple currency practices, 

unless authorized by the IMF. The review will update the current policy to take into account 

developments in foreign exchange markets over the last two decades and greater availability of 

data. The U.S. chair has urged staff to call out MCPs and exchange restrictions more forcefully 

in bilateral surveillance. The United States has also called for more regular reviews of the MCP 

policy to account for future developments in exchange markets. During Angola’s Extended 

Fund Facility review, for example, the OUSED called for the removal of exchange restrictions 

and MCPs to support market-based price formation, protect reserves, and help absorb external 

shocks. 

Good Governance 

In April 2018, the IMF adopted the new Framework for Enhanced Fund Engagement on 

Governance in response to Board pressure, particularly from the United States, for more 

consistent and candid discussions of and engagement on poor governance, specifically 

corruption. Under the new framework, IMF staff analyze and provide recommendations to 

reduce corruption opportunities in countries where corruption has a significant macroeconomic 

impact in one or more of the following areas: fiscal governance; financial sector oversight; 

central bank governance and operations; market regulation; rule of law; and anti-money 

laundering/countering the financing of terrorism (AML/CFT). 

Since the Executive Board approved this framework, we have seen improvements in IMF staff 

monitoring and policy advice on the issue of corruption. Annual country surveillance reviews 

increasingly feature IMF staff analysis of anti-corruption measures, which provide a helpful 

basis for candid Board discussions on these issues. For example, in an August 2019 report 

presented to the IMF, Mozambique government authorities, with assistance from IMF staff, 

conducted an internal analysis of governance and corruption challenges and identified areas for 

reform. In Iraq’s 2019 annual Article IV surveillance review, the IMF provided analysis of 

public financial management issues, noting that Iraqi authorities are prioritizing anti-corruption 

and have begun developing an anti-corruption framework. U.S. Board statements have 

continued to highlight the importance of governance: for example, our statement on Mali’s 

request for an Extended Credit Facility noted the macro-critical nature of corruption and called 

on the authorities to align anti-corruption standards with international levels and strengthen its 

AML/CFT regime to meet FATF standards. The U.S. Board statement on Angola’s Extended 

Fund Facility pressed authorities to tackle corruption, improve governance of public institutions, 

and strengthen the business environment. 

Debt Transparency 

In November 2018, the IMF – in coordination with the World Bank – adopted a multi-pronged 

approach to enhance sovereign debt transparency and sustainability. The approach includes 

multiple work streams to improve recording, monitoring, and reporting of debt obligations, as 

well as to strengthen creditor coordination in debt restructuring situations. In line with this 

agenda, the U.S. chair has pushed the IMF to broaden debt coverage to include off-budget and 
 

 

 

 

 

 

 

 

 

 

contingent liabilities in both surveillance and lending. The U.S. chair has also pressed IMF 

members to increase transparency of debt data through publication. For example, the U.S. Board 

statement for Mali’s request for an Extended Credit Facility pressed the authorities to broaden 

the coverage of debt to include liabilities of state-owned enterprises and contingent liabilities to 

improve transparency and debt management. During the first review of Ecuador’s Extended 

Fund Facility, the OUSED called for the authorities to bring debt reporting up to international 

standards, while commending their work in providing staff with improved information on 

external debt. In China’s Article IV review, the OUSED called for authorities to bring lending 

practices under the Belt and Road Initiative (BRI) in line with global standards, including the 

G20 Principles for Quality Infrastructure Investment. The IMF has incorporated conditions 

aimed at increasing debt transparency and limiting new collateralized debt in Angola’s Stand-By 

Arrangement approved in December 2018. In Mongolia and North Macedonia, the IMF is 

supporting implementation of stronger standards for voluntary public data dissemination. 

Strengthened Financial Systems, including Anti-Money Laundering/Combating the 

Financing of Terrorism (AML/CFT) 

The United States actively supports the IMF’s focus on AML/CFT to help maintain the integrity 

of the global financial system. The IMF contributes to the global AML/CFT policy agenda in 

cooperation with the Financial Action Task Force (FATF), the World Bank, and other 

stakeholders. In addition, AML/CFT and financial integrity issues have been increasingly 

integrated into the IMF’s core activities. For example: 

• The IMF routinely includes AML/CFT issues in country surveillance, identifying 

potential risks to domestic or international stability, highlighting best practices, and 

offering policy recommendations. 

• The IMF also leads in-depth assessments of member countries’ compliance with the 

FATF’s global AML/CFT standard. In addition, the IMF regularly reviews mutual 

assessments led by other institutions including the FATF, FATF-Style Regional Bodies 

(FSRBs), and the World Bank to help ensure quality and consistency. 

• The IMF includes an evaluation of the country’s financial integrity efforts in all of its 

financial sector assessment reviews, which can help integrate AML/CFT-related 

vulnerabilities into the broader discussion of financial sector vulnerabilities and reform 

efforts. 

Over the past year, with the Fund’s technical assistance, Afghanistan, Iraq, Kuwait, Nepal, and 

Sudan have exited FATF monitoring lists, and recently Angola, Guatemala, and Jamaica used 

IMF capacity development assistance to improve regulatory standards to help respond to 

correspondent banking pressures. 

The United States supports enhancements to IMF engagement on AML/CFT, recognizing that 

safeguarding financial integrity remains essential to the core mandate of the IMF. In October 

2018, the IMF reviewed its strategy on AML/CFT. The U.S. chair stressed the importance of the 

IMF remaining closely engaged with the FATF and participating regularly in AML/CFT mutual 

evaluation assessments. The U.S. chair has also pressed IMF members to take steps to guard 

against money laundering risks. For example, in Montenegro’s Article IV surveillance review 

the OUSED encouraged authorities to staff the AML directorate and strengthen offsite 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

monitoring and onsite inspections. In Pakistan’s Extended Fund Facility review, the U.S. chair 

welcomed the inclusion of a benchmark related to the implementation of the of the FATF action 

plan, which will improve the AML/CFT framework. 

Transparency and Accountability 

As a result of the strong urging of the OUSED, the Independent Evaluation Office (IEO) has 

provided objective and independent evaluations of IMF policies and activities since 2001. The 

IEO operates independently of IMF management and the Board, and has three major 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. Evaluations are publicly available on 

the IEO’s website.1 In 2019, the IEO reviewed the IMF’s financial surveillance work, an 

evaluation the USED strongly supported. The IEO evaluation found that, in order to improve the 

relevance and traction of bilateral financial surveillance, the IMF needs to deepen its financial 

and macrofinancial analysis, particularly in its bilateral surveillance. The U.S. chair pressed the 

IMF to prioritize its core efforts on macro-financial analysis across the Fund’s various 

surveillance and analytical tools and recommended the FSAP process focus on key risks while 

remaining comprehensive in its assessments. The OUSED also continues to press for greater 

accountability at the IMF, including by strengthening the IMF’s process for addressing excessive 

delays in bilateral Article IV surveillance and calling for IMF members to publish their Article 

IV surveillance reviews. 

Tailored Economic Prescriptions 

In 2018, the IMF Executive Board approved technical reforms to the Low-Income Country Debt 

Sustainability Framework (LIC-DSF) that improved upon the previous standard by introducing a 

more comprehensive set of economic indicators to measure debt-carrying capacity, tailored 

scenario stress tests to account for country-specific vulnerabilities, and better differentiation 

across LICs vulnerable to external shocks or abrupt macroeconomic policy changes. The 

reforms reflect the IMF’s commitment to strengthening crisis prevention and early warning 

signals in LICs. The updated LIC-DSF was implemented beginning in July 2019, and the IMF is 

providing support to members on the revisions to the framework. 

In 2019, the Executive Board conducted a review of the Facilities for Low-Income Countries, 

with the aim of improving the effectiveness of IMF lending to LICs. The OUSED also pressed 

the IMF to increase information requirements on countries’ debt sustainability and capacity to 

repay, which will improve Executive Board oversight of countries with substantial IMF 

borrowing. 

Progress of the IMF in Implementing Policies Described in Section 801(c) of the Foreign 

Operations, Export Financing, and Related Programs Appropriations Act 

The IMF continues to implement the range of policies described in Section 801(c). In May 2019, 

the IMF updated its policy on conditionality in IMF lending programs. 

1 Independent Evaluation Office of the International Monetary Fund, https://ieo.imf.org/ (last visited Nov. 20, 

2019). 
 

 

 

 

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

upon implementation of specific reforms after initial disbursement 

The IMF’s lending programs include conditions aimed at helping countries resolve underlying 

balance-of-payments problems. Program conditions also help safeguard IMF resources by 

helping ensure that a country’s external position will allow it to repay the IMF. In May 2019, the 

IMF conducted a review of program design and conditionality to evaluate the performance of 

Fund-supported programs. The OUSED supported the recommendations resulting from this 

review, which included an enhanced focus on growth in conditionality, improving the realism of 

baseline projections, increasing the use of conditionality to boost debt transparency, and 

streamlined program conditions that are focused on achieving meaningful objectives.