I
105TH CONGRESS
2D SESSION
H. R. 3287
To authorize United States participation in a quota increase and the New
Arrangements to Borrow of the International Monetary Fund, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 26, 1998
Mr. FRANK of Massachusetts (for himself, Mr. BONIOR, Ms. WATERS, Ms.
PELOSI, and Mr. TORRES) introduced the following bill; which was re-
ferred to the Committee on Banking and Financial Services
A BILL
To authorize United States participation in a quota increase
and the New Arrangements to Borrow of the Inter-
national Monetary Fund, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘International Monetary
Fund Reform and Authorization Act of 1998’’.
SEC. 2. FINDINGS.
The Congress finds that—
(1) the International Monetary Fund (IMF)
was conceived at Bretton Woods, New Hampshire,
to promote a sound and open world economy and a
stable international financial system;
(2) the IMF was founded fifty years ago with
its core mission focused on providing advice on mac-
roeconomic and exchange rate policy and highly con-
ditional financial assistance, including appropriate
economic and governance reforms, to countries fac-
ing balance of payments or liquidity problems;
(3) the IMF has advanced beyond its core mis-
sion and now concerns itself with structural redesign
of industrial policy and labor market interventions,
both of which have profound social and political
ramifications;
(4) the IMF has intervened in the private credit
markets in situations of extreme uncertainty and cri-
sis to restore investor and lender confidence which
has a consequence of potentially relieving such lend-
ers and investors of the negative consequences of im-
prudent lending and investment decisions;
(5) the expanded conditionality which accom-
panies IMF funding has profound domestic con-
sequences in the United States;
(6) the United States, as the leading power of
the post-cold-war world, has a greater interest than
any other country in a strengthened IMF that
multilateralizes the financial support for ongoing
economic reforms in countries important to United
States interests and that can respond to threats to
the international financial system;
(7) the United States is the only country with
veto power over major IMF decisions;
(8) to sustain its capabilities, the IMF needs to
sustain its strength relative to a rapidly expanding
global economy characterized by exponential growth
of global capital markets;
(9) the United States financial commitment to
the IMF leverages several times as much from other
countries, and its general resource financing is not
scored as a budgetary outlay;
(10) the ongoing currency and banking crisis in
the Far East has affected United States financial
markets and may result in a decline in United
States economic growth by as much as one and one-
half percent, and the United States has a vested eco-
nomic and national security interest in utilizing the
IMF and other multilateral mechanisms to help sta-
bilize certain Asian economies;
(11) the United States also has an interest in
not contributing to ‘‘moral hazard’’, the belief by
private investors and lenders that public credit will
be used to bail them out of the consequences of im-
prudent credit decisions;
(12) in establishing the terms for its financial
support, the United States must strike a balance be-
tween contributing to the stability of the Asian
economies and ensuring that the private creditors
who contributed to the crisis by their imprudent
lending also make a significant contribution to the
resolution of such crisis; and
(13) with respect to some East Asian coun-
tries—
(A) the IMF has often imposed a fiscal
austerity strategy designed for countries in
other parts of the world that follow excessively
expansionary fiscal and monetary policies, de-
spite the fact that in the East Asian countries,
by the IMF’s own account, such policies did not
contribute to the financial difficulties faced by
such countries;
(B) the rationale for such strategy has
been the purported need to attract foreign cap-
ital and divert production to export rather than
the domestic market;
(C) in the absence of a solution to the
short term debt overhang problem which re-
quires a rollover of such short term maturities
by the private creditors as an integral part of
the IMF program, no interest rate is high
enough to attract such capital;
(D) a high interest, fiscal austerity pro-
gram, combined with industrial restructuring
and labor market flexibility measures where
they are also a part of an IMF program, may
excessively depress the local economy, creating
potentially explosive social and political prob-
lems;
(E) such a strategy also creates excessive
pressure to export and reduce imports, eroding
support in the United States for a more open
international trading and investment regime, as
export markets collapse and a flood of imports
puts downward pressure on U.S. wages and em-
ployment; and
(F) there is a consequent need for both the
IMF and the United States Treasury to fashion
programs and policies that are adapted to local
conditions and integrate private creditor con-
tributions.
TITLE I—INTERNATIONAL
MONETARY FUND
SEC. 101. PARTICIPATION IN QUOTA INCREASE.
The Bretton Woods Agreements Act (22 U.S.C. 286–
286mm) is amended by adding at the end the following:
‘‘SEC. 61. QUOTA INCREASE.
‘‘(a) IN GENERAL.—The United States Governor of
the Fund may consent to an increase in the quota of the
United States in the Fund equivalent to 10,622,500,000
Special Drawing Rights.
‘‘(b) SUBJECT TO APPROPRIATIONS.—The authority
provided by subsection (a) shall be effective only to such
extent or in such amounts as are provided in advance in
appropriations Acts.’’.
TITLE II—NEW ARRANGEMENTS
TO BORROW
SEC. 201. NEW ARRANGEMENTS TO BORROW.
Section 17 of the Bretton Woods Agreements Act (22
U.S.C. 286e–2 et seq.) is amended—
(1) in subsection (a)—
(A) by striking ‘‘and February 24, 1983’’
and inserting ‘‘February 24, 1983, and Janu-
ary 27, 1997’’; and
(B) by striking ‘‘4,250,000,000’’ and in-
serting ‘‘6,712,000,000’’;
(2) 
in 
subsection 
(b), 
by 
striking
‘‘4,250,000,000’’ and inserting ‘‘6,712,000,000’’;
and
(3) in subsection (d)—
(A) by inserting ‘‘or the Decision of Janu-
ary 27, 1997,’’ after ‘‘February 24, 1983,’’;
and
(B) by inserting ‘‘or the New Arrange-
ments to Borrow, as applicable’’ before the pe-
riod at the end.
TITLE III—POLICY PROVISIONS
SEC. 301. ADVOCACY OF CERTAIN POLICIES.
(a) IN GENERAL.—Title XVI of the International Fi-
nancial Institutions Act (22 U.S.C. 262p–262p–5) is
amended—
(1) by redesignating section 1622 as section
1624;
(2) by redesignating section 1621 (as added by
section 327 of the Antiterrorism and Effective
Death Penalty Act of 1996; 22 U.S.C. 262p–4q) as
section 1622, and by relocating such section so that
it appears after section 1621 (as added by section
526(e) of Foreign Operations, Export Financing,
and Related Programs Supplemental Appropriations
Act, 1994; 22 U.S.C. 262p–4p); and
‘‘(C) establishing adequate provisions for a
social safety net to cushion the effects on work-
ers of unemployment and dislocation.
‘‘(2) Make the International Monetary Fund a
more effective mechanism, in concert with appro-
priate international authorities and the International
Bank for Reconstruction and Development, to
strengthen financial systems in developing countries
and encourage the adoption of sound banking prin-
ciples and practices.
‘‘(3) Assist the International Monetary Fund to
avoid becoming a lender of last resort for private in-
vestors, including commercial banks, and accordingly
advocate policies which include—
‘‘(A) strengthening crisis prevention and
early warning signals through improved and
more effective surveillance of the national eco-
nomic policies and financial market develop-
ments of countries, and fuller disclosure of such
information to market participants;
‘‘(B) recognition that the unregulated flow
of capital without regard to maturity structure
has contributed to financial instability and cri-
sis, and consideration of measures that discour-
age inappropriate maturities in private market
borrowing;
‘‘(C) accelerating work on strengthening fi-
nancial systems in emerging market economies
so as to reduce the risk of financial crises;
‘‘(D) consideration of provisions in debt
contracts that would foster dialogue and con-
sultation between a sovereign debtor and its
private creditors, and among those creditors;
‘‘(E) consideration by the Executive Board
of the International Monetary Fund of extend-
ing the scope of its policy on lending to mem-
bers in arrears so as to encourage and expedite
such a dialogue and consultation;
‘‘(F) intensified consideration of mecha-
nisms to facilitate orderly workout mechanisms
for countries experiencing debt or liquidity cri-
ses; and
‘‘(G) the International Monetary Fund
avoiding the provision of funding to countries
experiencing a financial crisis resulting from
imprudent borrowing without a significant con-
tribution by the private creditors, investors, and
banks which had extended such credits.
‘‘(4) Make the International Monetary Fund a
more effective mechanism for promoting good gov-
ernance principles within recipient countries by fos-
tering structural reforms that reduce opportunities
for corruption and bribery.
‘‘(5) Structure the International Monetary
Fund programs and assistance so that governments
which draw on the International Monetary Fund
channel public funds away from unproductive pur-
poses, including excessive military spending, and to-
ward investment in human and physical capital as
well as social programs to protect the neediest and
promote social equity.
‘‘(6) Structure International Monetary Fund
programs and assistance so that—
‘‘(A) recipient governments commit to af-
fording workers the right to exercise inter-
nationally recognized core worker rights, includ-
ing the right of free association and collective
bargaining through unions of their own choos-
ing;
‘‘(B) measures designed to facilitate labor
market flexibility are consistent with such core
worker rights; and
‘‘(C) the staff of the International Mone-
tary Fund adequately takes into account the
views of the International Labor Organization,
particularly with respect to the importance of
labor market flexibility measures in reducing
unemployment in recipient countries, and the
impact such measures may have on core worker
rights in such countries.
‘‘(7) Structure International Monetary Fund
programs and assistance so as not to exacerbate or
precipitate ethnic strife within a recipient country.
‘‘(8) Work with the International Monetary
Fund to incorporate the recognition that macro-
economic developments and policies can affect and
be affected by environmental conditions and policies,
including by working independently and with the
multilateral development banks to encourage coun-
tries to correct market failures and to adopt appro-
priate environmental policies in support of macro-
economic stability and sustainable development.
‘‘(9) Do the maximum possible as a member
state to facilitate greater International Monetary
Fund transparency, including by enhancing acces-
sibility of the International Monetary Fund and its
staff, fostering a more open release policy toward
working papers, past evaluations, and other Inter-
national Monetary Fund documents; seeking to pub-
lish all letters of intent to the International Mone-
tary Fund, and establishing a more open release pol-
icy regarding Article IV consultations.
‘‘(10) Facilitate greater International Monetary
Fund accountability and enhance International Mon-
etary Fund self-evaluation by establishing an oper-
ations evaluation department modeled on the experi-
ence of the International Bank for Reconstruction
and Development, guided by such key principles as
usefulness, credibility, transparency, and independ-
ence.
‘‘(11) Coordinate with the International Bank
for Reconstruction and Development and other
international financial institutions (as defined in sec-
tion 1701(c)(2)) in advancing credit to small busi-
nesses, including microenterprise lending.
‘‘(b) COORDINATION WITH OTHER EXECUTIVE DE-
PARTMENTS.—To the extent that it would assist in achiev-
ing the goals described in subsection (a), the Secretary
of the Treasury shall pursue the goals in coordination with
the Secretary of State, the Secretary of Labor, the Sec-
retary of Commerce, the Administrator of the Environ-
mental Protection Agency, the Administrator of the Agen-
cy for International Development, and the United States
Trade Representative.
‘‘(c) FUNDING CONDITIONED ON ESTABLISHMENT IN
THE TREASURY DEPARTMENT OF PERMANENT IMF AD-
VISORY COMMITTEE.—
‘‘(1) IN GENERAL.—No officer or employee of
the Federal Government may, directly or indirectly,
provide any Federal funds to or for the benefit of
the International Monetary Fund unless the Sec-
retary of the Treasury has established an Inter-
national Monetary Fund Advisory Committee (in
this paragraph referred to as the ‘Committee’) that
meets the following requirements:
‘‘(A) MEMBERSHIP.—The Committee shall
consist of 12 members appointed by the Sec-
retary of the Treasury, after appropriate con-
sultations with the relevant organizations, as
follows:
‘‘(i) 3 members shall be representa-
tives from organized labor.
‘‘(ii) 3 members shall be representa-
tives from banking.
‘‘(iii) 3 members shall be representa-
tives from manufacturing and industry.