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 2018
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, P.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 USED 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 at the IMF Policies 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, 2017. 

Exchange rate surveillance

The United States advocates for further improvements to the IMF’s surveillance on exchange 

rates, emphasizing the need for increased candor, transparency, and even-handedness in the 

IMF’s exchange rate analysis. In response to U.S. pressure, in 2012 the IMF began producing an 

annual External Sector Report (ESR), which provides a multilateral assessment of global 

imbalances and movements in exchange rates for 29 major economies. In 2018, for the first 

time, IMF Management elevated the ESR to a “flagship” report, in that it is now a formal 

publication of the IMF.

Through U.S. Board statements, the United States also emphasizes the need for greater 

transparency in exchange rate regimes in the IMF’s surveillance efforts of member countries. 

For example, the U.S. Board statement for Thailand's 2018 Article IV report called on the 

authorities to allow greater exchange rate adjustment, ease controls on capital outflows, and 

publish intervention data. Likewise, the U.S. Board statement for Singapore's 2018 Article IV 
report called on the Singaporean government to increase the operational transparency of its 

exchange rate regime, including disclosure of foreign exchange market interventions. 

Good governance

The IMF adopted the new Framework for Enhanced Fund Engagement on Governance in April 

2018 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 AML/CFT. 

Since the Executive Board approved the new 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 Bulgaria’s 2018 

surveillance review, IMF staff provided analysis on judicial reform, and the Bulgarian authorities 

described progress on anti-corruption legislation. The South African authorities welcomed the 

IMF’s analysis of public financial management issues in the country’s 2018 surveillance review, 

noting that the authorities are making anti-corruption a policy priority in the new administration. 

Also in April, IMF staff updated its key tool for assessing infrastructure governance, the Public 

Investment Management Assessment (PIMA), to place greater emphasis on the procurement 

process. PIMA is one part of the IMF’s suite of fiscal governance assessment tools. First 

introduced in April 2015, the recently updated framework recognizes the importance of the 

procurement process in promoting efficiency and effectiveness in public investment, spurring 

economic growth, and combating corruption.

Strengthened financial systems, including Anti-Money Laundering/Combatting the Financing 

of Terrorism (AML/CFT)

The new Framework for Enhanced Engagement on Governance also contains a more robust 

focus on AML/CFT issues in bilateral IMF surveillance, including an assessment of the legal 

framework and institutional capacity for effective implementation of AML/CFT measures. The 

IMF also urges members to have their legal and institutional frameworks assessed to determine 

whether private actors are able to bribe foreign officials and if those officials are able to conceal 

bribery proceeds. The IMF will continue to rely on the Financial Action Task Force (FATF) and 

the World Bank for AML/CFT expertise to minimize work duplication, while continuing its 

existing financial oversight activities such as the Financial Sector Assessment Program and the 

Report on Standards and Codes. 

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

 The IEO recently evaluated the IMF’s role in fragile states –an evaluation 

that the U.S. Executive Board statement strongly supported. The IEO evaluation found that,

while the IMF provides unique and essential services to fragile states, the IMF’s overall impact is 

limited by inadequate financing instruments, poor collaboration with development partners, and 

other challenges. 

The IEO also recently completed an update on its 2008 Evaluation of IMF Governance, which 

covered IMF transparency and accountability. The update confirmed the significant 

improvement in the IMF’s transparency and archives policies, praised the IMF for its work to 

digitize Board-related documents for publishing on its website, and for recently clearing up a 

backlog of documents for disclosure. Based on discussions with external stakeholders, the IEO 

identified user-friendliness of the archive as an ongoing issue requiring attention, and in the

Board discussion the U.S. chair highlighted user-friendliness as an area for improvement. 

The OUSED also continues to lobby for greater transparency at the IMF, including by pressing 

for all countries to commit to publishing their Article IV surveillance reports, and urging IMF 

Management to reduce the number of informal Board meetings, as transcripts of informal

meetings are not released to the public.

Tailored Economic Prescriptions

In late 2017, the IMF Executive Board approved several technical reforms to the Low-Income 

Country Debt Sustainability Framework (LIC-DSF). The LIC-DSF is the primary tool used by 

the IMF (jointly with the World Bank) to integrate debt sustainability analysis (DSA) into policy 

advice, with the goal of preventing excessive debt build-up in LICs that are mobilizing financing 

in pursuit of development goals. The reforms came into effect in July 2018 and improve 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. 

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). There were 

no notable developments related to changes in the IMF’s policies on these issues since October 

1, 2017. 

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