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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (2461)	10/21/1998 5:27:00 PM
From: Tom	Read Replies (1) \| Respond to of 2951

More on IMF Transparency Act With bill passage, Congress tries to change way IMF does business. by William Roberts WASHINGTON -- Congress has attached a surprisingly stringent and lengthy set of conditions to the $17.9 billion it is giving the International Monetary Fund. And in an interview, a senior House leader warned that the IMF must agree to the terms or face a cutoff of future U.S. support. Rep. Robert L. Livingston, R-La., chairman of the House Appropriations Committee, said the conditions "are going to change the way the IMF does business. "They are going to have to comply with these or there is not going to be an IMF as far as the United States is concerned," he said. Congress fully expects the Treasury Department and the IMF to return in a year with another request to increase the multilateral institution's capital. "Secetary Rubin's had it sitting on his desk for months. They are going to come back in another two years with another request for replenishment," Mr. Livingston said Tuesday after the House passed a $500 billion spending package that includes funding for the U.S. contribution to a 45% increase in IMF capital funds. The measure was passed 65-29 by the Senate Wednesday. The 4,000-page document -- hustled through the House and Senate by aides wielding hand carts -- includes 35 pages of statutory language governing the new funds for the IMF. Among the surprises included is strong language prohibiting IMF funds from being used for Korean steel, semiconductor and other industries. It also includes labor rights language and environmental language. Further, labor and other non-government organizations must be included on a Treasury advisory committee on the IMF. The legislation also calls for substantial reductions to barriers in agriculture trade in exchange for any IMF assistance. The legislation stipulates none of the funds appropriated may be obligated or made available to the IMF until 15 days after the Treasury secretary and the Federal Reserve chairman jointly provide a written statement that the major nations participating in the fund have agreed to and will act to implement the following congressional demands: IMF recipient nations would have to agree to schedules for internal economic policy changes, including liberalization of restrictions on trade, elimination of government-directed lending and subsidies to favored industries and providing a nondiscriminatory bankruptcy laws for foreign creditors. Written summaries of executive board meetings and key IMF policy decisions must be made publicly available within three months. But the legislation contemplates broad allowances of redaction of information that would be deemed proprietary, market-sensitive or affecting national security. In major bailouts to troubled economies "experiencing balance of payments difficulties due to a large short-term financing need resulting from a sudden and disruptive loss of market confidence, "the IMF would have to provide loans at rates 3 percentage points above international market rates. Those loans would have to be repaid within 30 months. In addition to these three changes sought by Rep. Richard Armey, R-Texas, House majority leader, the budget bill further instructs the Treasury Department to oppose further funding for South Korea unless certain conditions are met. The bill blocks the use of IMF funds to assist South Korean semiconductor, steel, automobile, shipbuilding, and textile and apparel industries. The legislation establishes a review commission at the Treasury Department comprised of 11 commission members appointed by Congress during the next 45 days. The commission's charter will be to advise and report to Congress on the future role and responsibilities of international financial institutions and the World Trade Organization and Bank for International Settlements. It is to examine the effect of globalization, increase trade and capital flows on the institutions and their effectiveness in carrying out goals. The commission is authorized to hold hearings. The legislation also seeks to strengthen procedures for monitoring the use of IMF funds. It calls for regular progress reports to Congress on the changing "architecture" of the international monetary system. Additionally, the bill sets down a long list of policies the U.S. representative at the IMF must "aggressively pursue," including labor rights, environmental standards and agricultural trade liberalization.