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To: lorne who wrote (21392)	10/10/1998 6:31:00 PM
From: goldsnow	Respond to of 116825

"Only" one line to be negotiated on IMF...:) Congress, Treasury Close to Agreement on IMF Reforms; Funding to Follow U.S. Congress, Treasury on Verge of Agreement on IMF Funding Washington, Oct. 10 (Bloomberg) -- Congressional Republicans and the U.S. Treasury Department were on the verge of concluding an agreement that would provide the International Monetary Fund with $17.9 billion in return for reforms at the agency. Senate Majority Leader Trent Lott said negotiators were discussing only ''about one phrase'' in a 35-page package of reforms that would require the IMF to open its decision-making to greater transparency, charge above-market interest rates for some of its loans, and provide loans for shorter periods of time. ''I believe frankly, that it's pretty much done,'' Lott said, while adding that disbursement of the funds was contingent on the IMF making the reforms. ''Until we can get a better look at what they're doing with the money, transparency, trying to make sure the money isn't going to cronyism and bad bank loans, the money isn't going to be provided,'' he said. Negotiators have agreed that the Treasury Secretary must certify to Congress that the U.S. and the IMF's major shareholders, essentially the Group of Seven industrialized nations, are pressing the agency to enact a host of reforms. Under the package, the $17.9 billion would go to the IMF 15 days after the Treasury Secretary certified reforms were underway. The reforms and funding will be part of a larger spending bill Congress is aiming to complete next week. Reform Package Republicans want the agency to make a portion of its loans at rates at least 3 percentage points above the London Interbank Offer Rate, according to a proposal shown to Bloomberg News. The 3-month dollar-denominated Libor rate is currently 5.34 percent. Treasury officials, however, insisted on a lower rate. Currently, the IMF is lending to most countries at rates of about 4 percent to 4.5 percent, though its loans to South Korea and Indonesia were at higher rates. Republicans also want the IMF to provide more loans that come due in a shorter period of time. They had initially demanded that the IMF make no loans longer than one year, which the administration rejection. They are now close to an agreement on a compromise that would call for the IMF to make some portion of its loans for no more than two to three years. Most IMF loans currently last about 10 years, along with a four to five year grace period. One of the last remaining sticking points revolves around what percentage of IMF loans would be required to meet the loan rate and maturity conditions. The rate and maturity provisions are designed to spur countries that receive IMF aid to enact the economic reforms necessary to allow them to meet the conditions required to borrow from private lenders. Delays Congress has blocked the Clinton administration's request for the U.S. contribution to the IMF for the past year. Republicans are demanding the agency reform its operations, and they have also questioned whether the agency's prescriptions have in fact made the economic troubles in Asia and Russia worse. ''The IMF has had bad policies,'' Lott said. ''In fact, their actions have often been counterproductive.'' Of the funds, $14.5 billion would go for the U.S. contribution to the fund's regular loan pool and $3.4 billion would go to a new lending facility. The IMF says the money is crucial to international efforts to aid countries whose economies are ailing and to preserve U.S. markets. Clinton has said it would be ''unacceptable for Congress to leave Washington before acting'' on the IMF funding. The IMF says its cash reserves are at their lowest point since the 1980s because of its participation in bailouts of South Korea, Russia, Thailand, and Indonesia. Also, countries such as Pakistan want money, and fresh pledges may soon be made to Latin American countries. The IMF says it has only about $5 billion to $9 billion left to lend. To pull together a bailout in Latin America, the IMF would need to draw on a line of credit with the major industrial nations. It drew on that reserve for most of the $15.1 billion in new money pledged to Russia, leaving only $15 billion to spare. ''If we know the money is coming, we can let our reserves go down'' to provide aid to other countries,'' IMF First Deputy Managing Director Stanley Fischer said Saturday. The $17.9 billion increase in IMF funds that Clinton is pushing for is part of an $88 billion infusion that the IMF is awaiting from its 182 members. Other IMF members have already approved their contributions or are in the process of doing so. The IMF is also waiting on a new line of credit with 25 nations. Both measures were approved at the last annual meeting of the IMF members a year ago. Because the U.S. is the agency's largest contributor, the capital boost won't be effective until the U.S. approves the extra money. bloomberg.com