congressional_record: CREC-1998-11-12-pt1-PgE2307
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| granule_id | date | congress | session | volume | issue | title | chamber | granule_class | sub_granule_class | page_start | page_end | speakers | bills | citation | full_text |
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| CREC-1998-11-12-pt1-PgE2307 | 1998-11-12 | 105 | 2 | IMF REFORM IS URGENTLY NEEDED | HOUSE | EXTENSIONS | ALLOTHER | E2307 | E2307 | [{"name": "Jim Saxton", "role": "speaking"}] | [{"congress": "105", "type": "HR", "number": "3331"}] | 144 Cong. Rec. E2307 | Congressional Record, Volume 144 Issue 152 (Thursday, November 12, 1998) [Congressional Record Volume 144, Number 152 (Thursday, November 12, 1998)] [Extensions of Remarks] [Page E2307] From the Congressional Record Online through the Government Publishing Office [www.gpo.gov] [[Page E2307]] IMF REFORM IS URGENTLY NEEDED ______ HON. JIM SAXTON of new jersey in the house of representatives Thursday, November 12, 1998 Mr. SAXTON. Mr. Speaker, I rise in support of reforming the International Monetary Fund (IMF). The reforms to be included in the appropriations bill, and particularly the enforcement provisions, are not nearly as extensive as I would have liked. Nonetheless, if these reforms are permitted to take effect, they will be steps in the right direction toward a longer-term reform of the IMF. The implementation of the IMF reforms in this bill will be an important test of the good faith and credibility of the Treasury Department and IMF. We in Congress will also have to do our part to maintain vigilant and intensive oversight to ensure these reforms are implemented in accordance with congressional intent, and I am planning to establish a systematic way to do this while also advancing an agenda for further IMF reform. With regard to the reforms themselves, a review of their development from earlier legislation is critical to understanding congressional intent. The structure of the reforms pertaining to transparency and market interest rates is clearly based on the IMF Transparency and Efficiency Act, H.R. 3331, which I introduced with Majority Leader Armey and others last March. The reform proposals in the budget bill are essentially narrowed versions of the policy changes mandated in the IMF Transparency and Efficiency Act. The biggest change is in the enforcement mechanism in this act, which has been replaced by a much weaker enforcement provision in the appropriations bill. Obviously I am disappointed with these changes, particularly with the weaker enforcement provisions, because it is unclear how diligently the Treasury and IMF will implement the reforms without airtight enforcement. Further enforcement measures will be called for if this mechanism proves insufficient. With respect to the IMF transparency reforms in the appropriations bill, suffice it to say they reflect a strong congressional consensus that IMF documents be publicly released, and that IMF minutes of IMF board meetings should be publicly released in some form. Any abuse of the flexibility provided in this language would clearly not be acceptable. With regard to the interest rate provisions, the higher interest rates are required any time the defined conditions of a balance of payments problem emerge. The compromise language uses some terms to describe these conditions also used by the IMF to describe an existing IMF loan facility, but there are essential differences that are important to note. Most importantly, the reform is to apply to all situations where the defined and rather typical characteristics associated with a balance of payments problem are present, whereas the IMF loan facility is to be used only in ``exceptional'' circumstances. Furthermore, the clear intent of this reform initiative is to require interest rates comparable to market interest rates, as expressed in H.R. 3331. What I intended in my bill was the use of a basic reference market interest rate, with an adjustment for risk added, so as to approximate the market interest rate a particular borrower would face. This would be at least equal to the market interest rates available to a borrower just before a crisis. Prior to these negotiations, the staff of the Joint Economic Committee devised a floor to permit an objective limit on how low the rate could go for the sole purpose of limiting the potential for egregious abuse. What emerged in the reform was an interest rate formula providing a floor, whereas in the IMF lending facility this approach appears to be effectively a ceiling. The interest rates floor in the reform should not be viewed as determining the appropriate interest rate, which will vary depending on the risk factors present in different borrowing countries. In the course of four hearings held by the Joint Economic Committee (JEC) the issues involving transparency and an end to interest rate subsidies were explored in extensive detail, as well as other issues. A complete legislative history of the IMF reforms about to be enacted with a view toward establishing congressional intent must include not only H.R. 3331, but also the germane material covered in these JEC hearings, the only hearings held that examined these reforms in any detail. In summation, the broad congressional intent behind these IMF reforms is clear, and is reflected in the legislative history. A good faith effort to carry out these IMF reforms in keeping with the letter and spirit of the law will be as evident as the failure to do so. ____________________ |