QUARTERLY REPORT TO CONGRESS ON 

FINANCIAL IMPLICATIONS OF U.S. PARTICIPATION 

IN THE INTERNATIONAL MONETARY FUND 

MARCH 2001 

This report has been prepared in compliance with Section 504(b) of Appendix E, Title V of the 

Consolidated Appropriations Act for FY 20001

. The report focuses exclusively on the financial 

implications of U.S. participation in the IMF and does not attempt to quantify the broad and 

substantial economic benefits to the United States and the global economy resulting from U.S. 

participation in the IMF. 

As required, the report provides financial information on the net interest and valuation changes 

associated with U.S. participation in the International Monetary Fund (IMF). The broader 

context for the financial implications of U.S. participation in the IMF and the methodology used 

in deriving these figures is laid out in previous reports; the methodology is also summarized 

briefly in the footnotes attached to the tables. Reports under this provision are prepared quarterly 

and made available to the public on the Treasury website: 

http://www.treas.gov/press/releases/reports.htm. 

This report covers the quarter ended December 30, 2000. It provides information on U.S. 

participation in the IMF’s General Department (consistent with past practice in providing 

information to Congress on the financial implications of U.S. participation in the IMF) as well as 

information related to U.S. holdings of Special Drawing Rights (SDRs)2 as part of its 

international reserves and the financial implications of U.S. participation in the SDR Department 

of the IMF. 

Table 1 shows the net interest and valuation changes related to U.S. participation in the General 

Department for the quarter ending December 31, 2000. Table 2 shows the net interest and 

valuation changes related to U.S. participation in the SDR Department, also for the quarter 

ending December 31, 2000. The attached footnotes explain the columns shown on each table 

and provide pertinent information and assumptions used in the calculations. 

 

1

 Section 504(b) of Appendix E, Title V of the Consolidated Appropriations Act for FY 2000, Public Law 106-113, 

113 Stat. 1501A-317 requires that the Secretary of the Treasury prepare and transmit to the appropriate committees 

of the Congress a quarterly report on the costs or benefits of United States participation in the International 

Monetary Fund (IMF), detailing the costs or benefits to the United States, as well as valuation gains or losses on the 

United States’ reserve position in the IMF. 

2

 The SDR is an international reserve asset created by the IMF. The SDR is used as a unit of account by the IMF 

and other international organizations. Its value is determined as a weighted average of a basket of currencies -- the 

dollar, euro, pound sterling and yen. The SDR carries a market-based interest rate determined on the basis of a 

weighted average of interest rates on short-term instruments in the markets of the currencies included in the SDR 

valuation basket. 
As shown in Table 1, for the first quarter of the fiscal year beginning on October 1, 2000 (FY 

2001), the financial implications of U.S. participation in the General Department reflected a net 

interest effect of positive $15 million, and a valuation change of positive $56 million.3

As shown in Table 2, for the first quarter of FY 2001, the net interest effect of U.S. participation 

in the SDR Department was negative $17 million. Over the same period, the valuation change on 

SDR holdings was positive $15 million.4 

As explained in earlier reports, economic theory suggests that fluctuations in the SDR against the 

dollar and differentials in the dollar and SDR interest rates should be offsetting. In practice, the 

exchange rate and interest rate differentials rarely fully offset each other for any given period – 

so that there may be a significant positive or negative total in any particular quarter(s). 

Nonetheless, the historical average suggests that the economic theory is borne out over time. 

Attachments 

 

3

 For an explanation of the methodology used in deriving these figures, see section on “Calculating the Financial 

Implications of U.S. Participation in the General Department” in the report prepared for the fourth quarter of fiscal 

year 2000, submitted in December 2000 and available at http://www.treas.gov/press/releases/reports.htm. 4

 For an explanation of the methodology used in deriving these figures, see section on “Calculating the Financial 

Implications of U.S. Participation in the SDR Department” in the report prepared for the fourth quarter of fiscal year 

2000, submitted in December 2000 and available at http://www.treas.gov/press/releases/reports.htm. 
Table 1 Net Interest and Valuation Changes Related to U.S. Participation in the General Department 

of the IMF, U.S. Fiscal Year, Quarterly

(in millions of U.S. Dollars)

Valu

(Col 1+2) (Col. 4+5+6) 

 Col. 1 Col. 2 Col. 3 Col. 4 Col.5 Col.6 Col. 7 

FY 2001

Q1 -9,762 0 -9,762 -118 133 0 15 

Detail may not add to total due to rounding.

V

o

Transactions with the IMF Interest Calculations

Transactions Under U.S. 

Quota (Letter of Credit 

&Transfers of Reserve 

Assets, Cumulative)

U.S. Loans to IMF 

Under SFF, GAB, 

NAB (Cumulative)

Total U.S. 

Transactions with 

the IMF 

Interest Associated 

with U.S. 

Transactions with 

the IMF

Remuneration 

Received by U.S. 

from IMF & 

Refund of Burden 

Sharing

Interest Received 

from IMF Under 

SFF, GAB, and 

NAB Net Interest 
Footnotes to Columns in Table 1 

Column 1: Total cumulative transactions under the U.S. Quota, including drawings by the IMF under the 

Letter of Credit (75% portion of the U.S. quota) and the transfers of reserve assets to the IMF (generally 

25% of the U.S. quota). 

Column 2: Total cumulative dollar funding through loans to the IMF made by the U.S. under the 

Supplementary Financing Facility (SFF, in 1980), the General Arrangements to Borrow (GAB, in 

FY1998) and the New Arrangements to Borrow (NAB, in FY1999). All U.S. loans under the three 

facilities/arrangements have been repaid. 

Column 3: Total cumulative U.S. transactions with the Fund (horizontal summation of columns 1 and 2). 

Column 4: Total interest associated with total cumulative transactions shown in column 3. This includes 

interest paid on additional public borrowing to fund day-to-day transactions under the Letter of Credit and 

occasional transfers under loan arrangements (SFF, GAB, NAB), as well as interest income foregone due 

to the transfer of reserve assets to the IMF at the time of a quota increase. In order to provide resources 

under the Letter of Credit or under loan arrangements, the Treasury borrows from the public via 

additional issuance in the Treasury market; the three-month Treasury Bill rate is used as a proxy for 

calculating the associated interest cost. This portion of the total interest paid enters the U.S. budget as 

interest on the public debt. For purposes of calculating foregone interest on the transfer of reserve assets 

to the IMF, the SDR interest rate is used. 

Column 5: The U.S. earns interest on the non-gold portion of its reserve position in the IMF. This 

interest is called remuneration and, in combination with an adjustment by the IMF related to burdensharing, is paid by the IMF every quarter. If remuneration is paid in SDRs, it is paid to the Exchange 

Stabilization Fund (ESF) and the ESF transfers the dollar equivalent to the Treasury General Fund. It is 

recorded in the budget as an offsetting receipt from the public. If the United States took payment in 

dollars (which it does not now do) the payment would be in the form of a decrease in the U.S. Letter of 

Credit and a counterpart increase in the U.S. reserve position. 

Column 6: These amounts constitute the interest payments the United States has received on its loans to 

the IMF under the SFF, GAB, and NAB. 

Column 7: Total net interest paid, foregone or received as a result of U.S. participation in the General 

Department of the IMF. 

Column 8: The U.S. reserve position in the IMF is denominated in SDRs. The valuation gain (if 

positive) or loss (if negative) refers to the exchange rate gain or loss on the reserve position due to 

changes in the dollar value of the SDR. For example, if the SDR appreciates/dollar depreciates, then the 

dollar value of the reserve position rises and a valuation gain is recorded. This column would also 

include valuation gains or losses experienced as a result of U.S. loans under SFF, GAB and NAB 

Column 9: The total of net interest and valuation changes, obtained by summing column 7 and column 8. 
Valuatio

fiscal year ending 9/30

Dollar Value of 

SDR Holdings

Dollar Value of 

Cumulative SDR 

Allocation

Net SDR 

Holdings (Col. 1 

minus Col. 2)

Interest Earned 

(or Paid) on Net 

SDR Holdings

Interest Associated 

with Financing 

Cumulative U.S. SDR 

Transactions

Net Interest 

(Column 4 - 5)

Va

Ch

Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6 C

1Q-2000 10,336 6,717 3,619 35 (48) (13) 2Q-2000 10,335 6,599 3,736 40 (55) (15) 3Q-2000 10,444 6,552 3,892 43 (57) (14) 4Q-2000 10,316 6,359 3,957 46 (61) (15) 2000 10,316 6,359 3,957 164 (221) (58) 1Q-2001 10,539 6,384 4,155 45 62 (17) 

Table 2. Net Interest and Valuation Changes Related to U.S. Participation in the SDR Department of the IMF (in mi

Net SDR Holdings Interest Calculations
Footnotes to Columns in Table 2 

Column 1: Total stock of U.S. holdings of Special Drawing Rights (SDRs) measured from end of period, 

converted into dollars at the fiscal year-end exchange rate. Source: IMF. 

Column 2: Total stock of U.S. SDR allocations measured from end of period, converted into dollars at the 

fiscal year-end exchange rate. Changes in dollar value of SDR allocations reflect only exchange rate 

changes. Source: IMF. 

Column 3: Total stock of U.S. SDR holdings minus allocations measured from end of period (Column 1 

minus Column 2), converted into dollars at the fiscal year-end exchange rate. 

Column 4: Net interest earned on SDR holdings. Derived by subtracting charges on SDR allocations (the 

SDR end-of-quarter interest rate times SDR allocations) from interest earned on SDR holdings (the SDR 

end-of-quarter interest rate times SDR holdings). All interest is calculated as compounding quarterly. 

Column 5: Net effect on U.S. borrowing costs due to cumulative net SDR purchases or sales, using the 

simplifying assumption that transactions are carried out in dollars. Derived by multiplying the dollar 

equivalent of cumulative net SDR purchases by the end-of-quarter three-month Treasury T-bill rate. 

Interest is calculated on the basis of end-quarter holdings and compounded quarterly. 

Column 6: Net Interest (Column 4 minus 5). 

Column 7: Derived by subtracting the change in total SDR holdings from the change in the dollar 

equivalent of total SDR holdings (end-period to end-period) divided by the end-period SDR/dollar 

exchange rate. The valuation gain (if positive) or loss (if negative) refers to the exchange rate gain or loss 

on the reserve position due to changes in the dollar value of the SDR. For example, if the SDR 

appreciates/dollar depreciates, then the impact on the dollar value of U.S. holdings of SDRS is positive, 

and a valuation gain is recorded. 

 

Column 8: The total net interest and valuation changes (sum of Columns 6 and 7).