QUARTERLY REPORT TO CONGRESS ON

FINANCIAL IMPLICATIONS OF U.S. PARTICIPATION

IN THE INTERNATIONAL MONETARY FUND

FEBRUARY 2002

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 provides quarterly data for FY 2001. It provides information on U.S. participation in

the IMF’s General Department 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.

Data on U.S. participation in the IMF’s General Department during the second, third, and fourth

quarters, and year-end data for fiscal year 2001 are provided in Table 1. Data on U.S.

participation in the SDR Department of the IMF are provided in Table 2. Historical data are also

included in this report to reflect a methodological adjustment, relative to previous reports. In

previous reports dollar financing costs were calculated using the 3-month T-bill rate. This

methodology has been revised to use the average cost of funds to the U.S. Treasury on all of its

borrowings.

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

Department for the quarters ending March 31, June 30, and September 30, 2001. Table 2 shows

the net interest and valuation changes related to U.S. participation in the SDR Department, also

for the quarters ending March 31, June 30, and September 30, 2001. The attached footnotes

 

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.
2

explain the columns shown on each table and provide pertinent information and assumptions

used in the calculations.

As shown in Table 1, for the second, third, and fourth quarters 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 $7 million, positive $1 million, and negative

$16 million, respectively. The valuation changes for the second, third, and fourth quarters were

negative $474 million, negative $181 million, and positive $543 million, respectively. For FY

2001 as a whole, net interest paid was $4 million. The valuation change on the reserve position

was negative $56 million. 3

As shown in Table 2, for the second, third, and fourth quarter of FY 2001, the net interest effect

of U.S. participation in the SDR Department was negative $12 million, negative $6 million, and

negative $10 million, respectively. Over the same period, the valuation changes on SDR holdings

were negative $135 million, negative $50 million, and positive $150 million, respectively. For

FY 2001 as a whole, net interest paid was $47 million. The valuation change on the reserve

position was negative $20 million. 4

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.
Valuation Changes Totals

fiscal year

ending 9/30

(Col. 1+2) (Col. 4+5+6) (Col 7+ 8)

 Col. 1 Col. 2 Col. 3 Col. 4 Col.5 Col.6 Col. 7 Col. 8 Col. 9

1981 -2,061 -840 -2,902 -189 22 45 -122 -365 -487

1982 -3,883 -1,186 -5,069 -520 216 121 -183 -323 -506

1983 -6,564 -1,685 -8,249 -672 345 138 -189 -150 -339

1984 -9,501 -1,601 -11,102 -1,066 673 175 -218 -565 -783

1985 -9,102 -1,405 -10,507 -958 644 154 -161 547 386

1986 -8,073 -1,052 -9,125 -690 595 111 17 1,444 1,461

1987 -6,904 -597 -7,501 -511 449 71 9 575 584

1988 -5,846 -217 -6,063 -434 406 49 22 135 157

1989 -5,262 -3 -5,265 -462 471 22 31 -67 -36

1990 -4,686 0 -4,686 -435 546 4 115 810 925

1991 -5,078 0 -5,078 -364 475 0 111 -178 -67

1992 -5,068 0 -5,068 -282 400 0 118 687 805

1993 -7,752 0 -7,752 -336 422 0 86 -336 -250

1994 -7,310 0 -7,310 -321 336 0 15 394 409

1995 -9,649 0 -9,649 -421 407 0 -14 270 256

1996 -11,051 0 -11,051 -488 475 0 -13 -695 -708

1997 -10,433 0 -10,433 -489 438 0 -50 -787 -837

1998 -17,363 -410 -17,773 -732 590 1 -141 151 10

1999 -16,058 0 -16,058 -769 686 21 -62 198 136

2000 -10,004 0 -10,004 -598 578 0 -21 -1,119 -1,140

1Q01 -11,949 0 -11,949 -129 133 0 4 56 60

2Q01 -11,378 0 -11,378 -128 135 0 7 -474 -467

3Q01 -13,778 0 -13,778 -114 115 0 1 -181 -180

4Q01 -17,021 0 -17,021 -121 105 0 -16 543 527

2001 -17,021 0 -17,021 -492 488 0 -4 -56 -60

Detail may not add to total due to rounding.

Table 1 -- Net Interest and Valuation Changes Related to US Participation in the General Department, IMF

(U.S. Fiscal Year Basis, in millions of US Dollars)

Transactions with the IMF Interest Calculations

Transactions Under US 

Quota (Letter of Credit 

&Transfers of Reserve 

Assets, Cumulative)

US Loans to IMF Under 

SFF, GAB, NAB 

(Cumulative)

Total US 

Transactions with 

IMF 

Interest 

Associated with 

Financing US 

Transactions 

with IMF Total 

Remuneration 

Received by US 

from IMF & 

Refund of Burden 

Sharing

Interest Received 

from IMF Under 

SFF, GAB, and 

NAB Net Interest 

Valuation Changes on 

US Reserve Position
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 (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 1980), the General Arrangements to Borrow (GAB, in FY1998) and the New Arrangements to Borrow (NAB, in FY1999). 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 aborrowing to fund day-to-day transactions under the Letter of Credit and occasional transfers under loan arrangements (SFFas interest income foregone due to the transfer of reserve assets to the IMF at the time of a quota increase. In order to provLetter of Credit or under loan arrangements, the Treasury borrows from the public via additional issuance in the Treasury mfunds is used as a proxy for calculating the associated interest cost. This portion of the total interest paid enters the U.S. bupublic debt. For purposes of calculating foregone interest on the transfer of reserve assets to the IMF, the SDR interest rate Column 5: The U.S. earns interest on the non-gold portion of its reserve position in the IMF. This interest is called remuncombination with an adjustment by the IMF related to burden-sharing, is paid by the IMF every quarter. If remuneration is to the Exchange Stabilization Fund (ESF) and the ESF transfers the dollar equivalent to the Treasury General Fund. It is rean offsetting receipt from the public. If the United States took payment in dollars (which it does not now do) the payment wa 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 Column 7: Total net interest paid, foregone or received as a result of U.S. participation in the General Department of the IMColumn 8: The U.S. reserve position in the IMF is denominated in SDRs. The valuation gain (if positive) or loss (if negatexchange rate gain or loss on the reserve position due to changes in the dollar value of the SDR. For example, if the SDR adepreciates, then the dollar value of the reserve position rises and a valuation gain is recorded. This column would also inlosses 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.
Table 2 -- Net Interest and Valuation Changes Related to U.S. Participation in the SDR Department

in the IMF, U.S. Fiscal Year, Quarterly*

(in millions of U.S. Dollars)

Valuation Changes Total

fiscal year 

ending 9/30

Dollar Value of 

SDR Holdings

Dollar Value of 

Cumulative SDR 

Allocation

Net SDR Holdings 

(Col. 1 - Col. 2)

Interest Earned (or 

Paid) on Net SDR 

Holdings

Interest Associated 

with Financing 

Cumulative U.S. SDR 

Transactions

Net Interest 

(Col. 4 + Col. 5) Valuation Changes Total

Col. 1 Col. 2 Col. 3 Col. 4 Col. 5 Col. 6 Col. 7 Col. 8

1981 3,896 5,608 -1,712 -233 311 78 274 352

1982 4,809 5,254 -445 -130 137 7 79 86

1983 5,628 5,178 450 10 -12 -2 -11 -14

1984 5,554 4,895 660 25 -31 -6 -23 -29

1985 6,847 5,191 1,656 95 -109 -14 85 71

1986 8,295 5,945 2,350 146 -157 -11 283 272

1987 9,078 6,270 2,809 153 -165 -12 130 119

1988 9,074 6,322 2,751 179 -215 -36 17 -18

1989 9,487 6,270 3,217 248 -265 -17 -35 -51

1990 10,666 6,823 3,843 344 -305 40 324 364

1991 10,722 6,703 4,019 312 -262 51 -64 -14

1992 12,111 7,216 4,895 290 -205 85 326 412

1993 9,203 6,950 2,253 98 -74 23 -266 -242

1994 9,971 7,189 2,782 106 -115 -9 91 82

1995 11,035 7,380 3,655 172 -225 -52 39 -13

1996 10,177 7,052 3,125 144 -202 -58 -170 -228

1997 9,997 6,689 3,308 129 -179 -50 -170 -220

1998 10,106 6,719 3,387 146 -184 -39 20 -19

1999 10,284 6,799 3,485 116 -160 -45 33 -12

2000 10,316 6,359 3,957 164 -227 -64 -247 -310

1Q-2001 10,539 6,384 4,155 45 -65 -19 15 -4

2Q-2001 10,379 6,177 4,202 41 -53 -12 -135 -147

3Q-2001 10,409 6,103 4,306 37 -43 -6 -50 -56

4Q-2001 10,919 6,316 4,604 30 -40 -10 150 140

2001 10,919 6,316 4,604 153 -201 -47 -20 -67

Detail may not add to total due to rounding.

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 doend 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 ein 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), 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-quarSDR allocations) from interest earned on SDR holdings (the SDR end-of-quarter interest rate times SDR holdings). All intcompounding quarterly.Column 5: Net effect on U.S. borrowing costs due to cumulative net SDR purchases or sales, using the simplifying assumpare carried out in dollars. Derived by multiplying the dollar equivalent of cumulative net SDR purchases by the average coInterest is calculated on the basis of end-quarter holdings and compounded quarterly.Column 6: Net Interest (Column 4 plus 5).Column 7: Derived by subtracting the change in total SDR holdings from the change in the dollar equivalent of total SDR hend-period) divided by the end-period SDR/dollar exchange rate. The valuation gain (if positive) or loss (if negative) refergain or loss on the reserve position due to changes in the dollar value of the SDR. For example, if the SDR appreciates/dolimpact 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).