The International Monetary Fund is a cooperative, intergovernmental, monetary and financial institution, and as of November 2000, it had 182 members. As part of the Fund’s mission to promote financial cooperation among its members, the Fund may provide financial assistance to countries facing actual or potential balance-of-payments difficulties that request such assistance. The Fund’s approach for providing financial assistance to its members has two main components—financing and conditionality—that are intended to address both the immediate crises as well as the underlying factors that contributed to the difficulties. The access to and disbursement of Fund financial assistance are conditioned upon the adoption and pursuit of economic and structural policy measures the Fund and recipient countries negotiate. This Fund “conditionality,” usually in the form of performance criteria and policy benchmarks, aims to alleviate the underlying economic difficulty that led to the country’s balance-of-payments problem and ensure repayment to the Fund. The Fund’s general framework for establishing a financial assistance arrangement is applied on a case-by-case basis that considers each country’s individual circumstances. The Fund and the recipient countries negotiate conditions for receiving Fund assistance that include a variety of changes in a country’s fiscal, monetary, and structural policies. Over the course of the arrangement, Fund staff and country officials periodically review the program’s status, and Fund staff determine whether or not the country has made satisfactory progress with respect to meeting the program’s conditions. In addition to providing financial assistance, the Fund conducts surveillance and provides policy advice regarding members’ economic policies as they relate to their overall external payments position. Article IV of the Fund’s charter provides that all members undergo a consultation process with the Fund as part of the surveillance effort; these reviews are usually conducted on an annual basis. The Treasury has instituted a systematic process for applying legislative mandates concerning the Fund to individual countries, based on their economic circumstances. This process, adopted in 1999, uses a task force to facilitate coordination between Treasury and the U.S. Executive Director and to identify early opportunities to influence decisions regarding Fund members’ programs and economic reviews. Generally, Treasury and the U.S. Executive Director’s office pursue the mandates that are most relevant to the particular circumstances of a given country, because they believe that this is where they can have the greatest impact and success in influencing Fund members. Our case study analyses show that Treasury and the U.S. Executive Director have actively promoted U.S. policies related to sound banking principles, labor issues, and audits of military expenditures as required by the applicable legislative mandates, through their discussions with Fund and member country officials and formal statements to the Fund’s Executive Board. In response to the growing number and complexity of legislative mandates concerning the Fund, Treasury has created a formal process to advance U.S. objectives at the Fund. Specifically, in March 1999 Treasury set up the Task Force on Implementation of U.S. Policy and Reforms in the International Monetary Fund. The task force was designed in part to increase awareness among Treasury officials of the importance of the mandates and identify opportunities to provide early input to the U.S. Executive Director to advance U.S. objectives toward the Fund. Treasury recognized the need to strengthen its efforts to routinely review and coordinate how mandates may apply to countries, because previously it had used an ad hoc approach of addressing mandates that relied heavily on Treasury officials’ own initiative to be cognizant of mandates. Under its new process, Treasury disseminates information on the mandates to all officials working on Fund matters and also makes reference material on the mandates easily accessible electronically. In addition, representatives from Treasury offices who work on Fund matters, and a representative from the U.S. Executive Director’s office, meet every 2 weeks as the task force to discuss how Treasury and the U.S. Executive Director can best apply mandates, given countries’ economic circumstances. In between these meetings, Treasury and U.S. Executive Director officials also coordinate to formulate and implement U.S. objectives at the Fund. (A detailed description of Treasury’s process for pursuing legislative mandates concerning the Fund is provided in app. II.) Treasury and U.S. Executive Director officials use a variety of means to pursue legislative mandates as part of their efforts to achieve U.S. policy objectives within the Fund. For example, on a regular basis the U.S. Executive Director makes oral and written statements to the Fund’s Executive Board to make Board members aware of U.S. policy objectives regarding requests from countries for new programs, Fund reviews of existing programs, and regular Fund reviews of all members’ economic policies. In addition, to build support for U.S. policy goals, U.S. officials also discuss U.S. policy objectives informally with other executive directors, Fund management and staff, and occasionally country authorities, particularly when the Fund is involved in negotiating with countries about financial arrangements. U.S. officials also attempt to build support within the broader political arena to achieve U.S. objectives at the Fund. According to the U.S. Executive Director, a large part of advancing any policy issue is to reach a “critical mass” of support among other countries for a particular policy. Therefore, for some policies the dialogue necessary to reach an international political consensus also takes place outside of the Fund in other international forums. Since the legislative provisions direct Treasury to instruct the U.S. Executive Director to promote specific policies at the Fund, these policies are often referred to as “mandates.” However, to varying degrees U.S. officials have flexibility in determining how best to promote particular policies at the Fund. This flexibility generally allows Treasury and the U.S. Executive Director to take into account the individual circumstances of each country when promoting specific policies. This is especially true of mandates that do not involve directed votes, as is the case for most of the legislative mandates that concern the Fund. Treasury officials told us they promote such mandates for each country on a case-by-case basis, using their knowledge and judgment to decide whether an individual mandate is most relevant for a country and, moreover, whether a particular time is appropriate for advancing a mandate given a country’s economic circumstances. Countries that approach the Fund for financial assistance often face multiple economic problems, and Treasury prioritizes how best to address these problems. According to Treasury and U.S. Executive Director officials, the U.S. message can be made more compelling and effective when priorities are set based on country circumstances, taking into consideration the range of problems that can be manageably addressed at one time. However, some legislative mandates that pertain to the Fund are more prescriptive in nature. According to Treasury’s Office of the General Counsel, Treasury and the U.S. Executive Director are more constrained in the degree of flexibility they have to implement these mandates because they usually direct the U.S. Executive Director to oppose (which in practice means to vote against or abstain from voting on) a financial arrangement or Fund disbursement when a country meets or does not meet certain criteria. Examples include when a country has what is considered excessive external debt service payments or has been determined by the President to violate religious freedom. The directed nature of these mandates compels Treasury and the Executive Director to promote them regardless of whether they believe it is an appropriate time to do so given a country’s overall circumstances. From 1998 through 2000, Treasury and U.S. Executive Director officials actively promoted the policies we reviewed in our case studies—sound banking principles, labor standards, and audits of military expenditures— as required by the applicable legislative mandates, by identifying opportunities to influence Fund members’ program and economic reviews. For each policy, Treasury and U.S. Executive Director staff worked together to prioritize the issues that should be raised for each country. They then promoted those policies that they viewed as most relevant for the countries we reviewed, given the country’s economic and political circumstances. For example, in a 1999 statement to the Fund’s Executive Board in support of a new program for Kazakhstan, the U.S. Executive Director urged Kazakhstan both to ensure that any reforms to its labor code be consistent with internationally recognized labor standards and to consult with the International Labor Organization on this matter. Also, for a country that did not have a financial arrangement with the Fund, such as India, but where Treasury had prominent banking sector concerns, the U.S. Executive Director repeatedly highlighted U.S. concerns in statements to the Board during the Fund’s regular reviews of India’s economic policies. If Treasury determines through its analysis that a policy is not a major concern relative to other priorities for an individual country, it is not pursued at that time, unless it is a directed vote mandate. For example, until recently, Treasury determined that adherence to labor standards was not a major concern in Ghana relative to other problems Ghana faces as a poor country. According to a Treasury official, developing countries like Ghana typically lack an industrial base large enough for the protection of workers’ rights to be a major issue. In poor countries, labor issues, such as abusive child labor, are more likely to reflect human rights concerns than economic ones and thus are more difficult for the Fund to address. Our case study analysis indicates that while Treasury and the U.S. Executive Director have had some influence over Fund policies, it is difficult to attribute the adoption of a policy within the Fund solely to the influence and efforts of any one member, because the Fund generally operates on a consensus decision-making basis. Furthermore, the Fund’s willingness to adopt policy positions that are consistent with U.S. legislatively mandated policies is affected by whether a majority of Fund members perceive a given policy to be part of the Fund’s core mission to promote monetary cooperation and currency exchange rate stability and to provide resources to Fund members experiencing balance-of-payments problems.