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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7902 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 7902
To support a review of surcharge policy at the International Monetary
Fund.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 9, 2024
Mr. Garcia of Illinois (for himself, Mrs. Beatty, Ms. Pettersen, Mr.
Cleaver, Mr. Vargas, Ms. Williams of Georgia, Ms. Tlaib, Ms. Pressley,
and Ms. Jayapal) introduced the following bill; which was referred to
the Committee on Financial Services
_______________________________________________________________________
A BILL
To support a review of surcharge policy at the International Monetary
Fund.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Onerous Surcharges Act''.
SEC. 2. UNITED STATES SUPPORT FOR A REVIEW OF SURCHARGE POLICY AT THE
INTERNATIONAL MONETARY FUND.
(a) Findings.--The Congress finds the following:
(1) The International Monetary Fund (IMF) imposes a
surcharge, in addition to standard interest and service fees,
of 200 basis points on outstanding credit provided through its
General Resources Account that exceeds 187.5 percent of the IMF
country quota, and an additional 100 basis points if that
credit has been outstanding for over 36 or 51 months, depending
on the facility.
(2) According to the IMF, ``These level and time-based
surcharges are intended to help mitigate credit risk by
providing members with incentives to limit their demand for
Fund assistance and encourage timely repurchases while at the
same time generating income for the Fund to accumulate
precautionary balances.''.
(3) Surcharges substantially increase the cost of borrowing
from the IMF, constituting, on average, an estimated 39 percent
of conventional charges paid by affected countries in the past
5 years. Over the next 5 years, surcharges will make up an
estimated 39 percent of Ecuador's nonprincipal payments on its
IMF lending program, and 24 percent of Egypt's.
(4) Despite Russia's illegal invasion, Ukraine remains one
of the countries most heavily burdened by surcharges. From 2024
to 2028, Ukraine is expected to pay the IMF approximately
$1,500,000,000 in surcharges alone.
(5) The James M. Inhofe National Defense Authorization Act
for Fiscal Year 2023 (Public Law 117-263), which became law on
December 23, 2022, included language derived from the Ukraine
Comprehensive Debt Payment Relief Act of 2022. The Ukraine
Comprehensive Debt Payment Relief Act of 2022 requires the
Department of Treasury to make efforts to secure debt relief
for Ukraine, and was passed by the House of Representatives on
May 11, 2022, with overwhelming bipartisan support.
(6) As a result of the war in Ukraine and other factors, in
January 2024, the World Bank forecast that the world would
experience the worst 5-year period of growth in 30 years. The
external public debt of developing economies is at record
levels, and the World Bank, IMF, and United Nations have all
warned of coming defaults and a potential global debt crisis.
Due to conflict, economic conditions, and environmental
factors, the World Food Program estimates that 783,000,000
people are facing extreme hunger, and more than 333,000,000
people are facing acute levels of food insecurity.
(7) Official data shows that the number of countries paying
surcharges to the IMF has nearly tripled since 2019, and many
more countries are estimated to have debt burdens near the
threshold.
(8) In a 2022 statement, dozens of former heads of state
and government from across the political spectrum, including
United States allies such as the United Kingdom and Ukraine,
have called for the immediate suspension of IMF surcharges.
(9) An April 2022 brief from the United Nations Global
Crisis Response Group on Food, Energy, and Finance on the
impacts of the war in Ukraine on developing countries called
for the immediate suspension of surcharge payments for a
minimum of 2 years, because ``[s]urcharges do not make sense
during a global crisis since the need for more financing does
not stem from national conditions but from the global economy
shock''.
(10) In October 2023, International Monetary and Financial
Committee Chair Nadia Calvino stated that the Fund ``will
consider a review of surcharge policies''.
(11) According to Deputy Under Secretary for International
Finance Brent Neiman, ``China became the world's largest
official creditor in 2017, surpassing the claims of the World
Bank, IMF, and all Paris Club official creditors combined.''.
By dramatically increasing the cost of borrowing from the IMF,
surcharges may incentivize developing nations to seek financing
from alternative sources like China.
(b) Review of Surcharge Policy at the International Monetary
Fund.--The Secretary of the Treasury shall instruct the United States
Executive Director at the International Monetary Fund (IMF) to use the
voice and vote of the United States to--
(1) initiate an immediate review by the IMF of its
surcharge policy, to be completed, and its results and
underlying data published, within 365 days; and
(2) suspend and waive surcharge payments during the
pendency of the review.
(c) Components of the Review of Surcharge Policy.--The review
referred to in subsection (b) shall include the following:
(1) A borrower-by-borrower analysis of surcharges in terms
of cost and as a percentage of national spending on debt
service on IMF loans, food security, health, and education for
the 5-year period beginning January 1, 2018.
(2) Evaluation of the policy's effectiveness at achieving
its goals of--
(A) disincentivizing large and prolonged reliance
on IMF credit;
(B) mitigating the credit risks taken by the IMF;
(C) improving borrower balance of payments and debt
sustainability, particularly during periods of
contraction, unrest, public health emergency, high
interest rates, and high global prices of commodities;
and
(D) promoting fiscally responsible policy reforms.
(3) Evaluation of the policy's potential unintended
consequences of--
(A) incentivizing borrowers to seek opaque and
potentially predatory bilateral loans; and
(B) hindering the ability of borrowers to repay
private creditors and access the private credit market.
(4) Recommendations for--
(A) identifying alternative sources of funding for
the IMF's precautionary balances that prioritize stable
funding sources and equitable burden-sharing among IMF
members; and
(B) determining whether the Fund should maintain,
reform, temporarily suspend, or eliminate the use of
surcharges.
(5) Extensive consultation with relevant experts,
particularly those from countries that are currently paying or
have recently paid surcharges. These experts should include
government officials responsible for overseeing economic
development, fiscal policy, health care and other social
services, and defense, as well as experts in global financial
policy, global risk analysts, academics, and civil society
representatives.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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