International Monetary Fund

Observations on Its Financial Condition Gao ID: T-NSIAD-98-220 July 23, 1998

As Congress debates the administration's $17.5 billion request for the International Monetary Fund (IMF), questions have arisen about the current level of IMF resources to carry out its operations and the extent to which information on IMF's financial condition is publicly available. This testimony focuses on these two issues.

GAO noted that: (1) IMF has a total of about $195 billion in currency holdings in its general resources account that has been provided through quota subscriptions by its 182 members; (2) however, as of July 20, 1998, IMF estimates that only about $130 billion of these funds represent resources that could be used; that is, are from members that are sufficiently strong economically to permit their currencies to be used for IMF operations; (3) of this amount, about $70 billion has already been used to finance credit to IMF members and about $17 billion has been committed for their use; (4) therefore, according to IMF's estimate, only about $43 billion of its $195 billion in currency holdings remain for operations, including lending; (5) further, IMF and Department of the Treasury officials have indicated in public statements that only about $10 billion to $15 billion of the available $43 billion could be used for additional credit to IMF members without leaving IMF seriously short of funds due to IMF's need to maintain certain reserves; (6) these IMF estimates do not take into account the $11.4 billion IMF financing arrangement for Russia that was approved by IMF's Executive Board on July 20, 1998; (7) about $2.9 billion of this $11.4 billion will come from IMF's remaining general currency holdings, and IMF will borrow the other $8.5 billion from 11 member governments that participate in the General Arrangements to Borrow; (8) IMF's available funds are reported in its annual report; however, the report is released six months after IMF's fiscal year ends and, according to IMF and Treasury officials, is of limited use for decisionmaking purposes; and (9) instead, decisionmaking requires the use of IMF's quarterly operational budgets, which are nonpublic.

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