International Monetary Fund (IMF): Costs and Benefits of U.S. Participation

This report examines U.S. costs of participating in the International Monetary Fund (IMF). Under conventions governing U.S. budgetary treatment of the IMF, any expenditures (outlays) arising from transactions with the IMF are offset by the increase in the U.S. reserve position in the IMF and, thus, have no net impact on the budget. Nevertheless, funds for the IMF are both authorized and appropriated. Expenditures in connection with U.S. participation in the Fund, however, do give rise to three other types of financial flows that enter the budget: an increase or decrease in the Treasury's interest costs,
receipts from the IMF, mostly from interest (remuneration) earned on the U.S. reserve tranche position, and
foreign exchange gains and losses resulting from exchange rate movements between the Special Drawing Right (SDR) and the U.S. dollar.
For the period July 1, 1969 through December 31, 1982, the U.S. government sustained a loss on its transactions with the IMF that amounted to $1.4 billion or an annual average of $107 million. For the 18-year period extending from April 30, 1980 to April 30, 1997 (IMF fiscal year), the United States had a positive return to the U.S. budget of $1.3 billion or an annual average of $73 million. Within the total financial picture of the U.S. government, these sums are modest. For 1997 (IMF fiscal year), for example, the U.S. sustained a loss of $1.6 billion; this was equivalent to about 0.1 percent of total expenditures or 0.2 percent of discretionary expenditures (U.S. fiscal year). Gains and losses resulting from transactions with the IMF were largely attributable to exchange rate movements between the U.S. dollar and the SDR, the international reserve asset in which all IMF accounts are denominated. Benefits of the IMF to the United States, like those arising from most government programs, are difficult to quantify. Perhaps the most important point is that the U.S. government, with 18.25 percent of total IMF quotas (capital) and 17.78 percent of the voting power, is the largest shareholder. It has a veto over major IMF policies and a deciding say over much else, including support programs extended by the IMF within the context of major international financial crises. The IMF is deeply intertwined with U.S. international economic policy. Given the relatively modest financial costs of U.S. participation in the IMF, it would appear that the IMF's performance, policies, and programs are the more critical issue in the current policy debate over funding for the IMF. This report will be updated in light of later data provided to the House Banking General Oversight and Investigations Subcommittee on April 20, 1998.