The Global Financial Crisis: Increasing IMF Resources and the Role of Congress

Jonathan E. Sanford
Specialist in International Trade and Finance

Martin A. Weiss
Specialist in International Trade and Finance

At their meeting in London on April 2, 2009, the leaders of the 20 systemically important industrialized and developing countries (G-20) agreed on several initiatives to bolster the International Monetary Fund's (IMF) resources, improving its ability to provide financial assistance to countries impacted by the ongoing financial crisis. These included increasing the resources of the IMF and international development banks by $1.1 trillion including $750 billion more for the IMF, $250 billion to boost global trade, and $100 billion for multilateral development banks. For the additional IMF resources, $250 billion was to be made available immediately through bilateral arrangements between the IMF and individual countries, while an additional $250 billion would become available as additional countries pledged their participation. 

In June 2009, Congress enacted legislation authorizing U.S. participation in this new increase in IMF resources. The White House formally requested on May 12 that Congress consider increasing the U.S. contribution to the IMF based on commitments made by the Bush Administration in 2008 and by the Obama Administration at the London meeting of the G-20 countries in April 2009. At the meeting, G-20 leaders agreed that the IMF's New Arrangements to Borrow (NAB), a supplemental fund to bolster IMF resources, should be increased by up to $500 billion from its present level of $50 billion. The Obama Administration proposed that the United States contribute up to $100 billion. The G-20 also agreed that the IMF should create $250 billion in new Special Drawing Rights (SDR) and allocate them to its members through its SDR Department. 

Already pending at the time of the G-20 meeting was a proposal for a new increase in IMF quota resources. Negotiations on a package of reforms and a new quota increase were completed in April 2008, and the proposals were submitted to the House and Senate by the Bush Administration in November 2008. The U.S. share is about $8 billion. The package includes reform of IMF governance, finances, and procedures. It also includes a proposal that the IMF sell 403 metric tons of gold to create a facility that would cover the costs of its country and global surveillance, technical assistance, research, and other non-lending operations. 

U.S. participation in the new IMF quota increase and a U.S. subscription of $100 billion for the NAB required congressional approval. Likewise, amendments to the IMF Articles—including the prospective Fourth Amendment for a new SDR allocation—required congressional approval. On the other hand, the proposed $250 billion allocation of SDRs (which is being made under a different provision of the IMF Articles) was too small to trigger the legal requirement that Congress give its assent. Any contributions to the IMF, to fund increases in the U.S. quota or to subscribe new resources to the NAB, must be authorized by Congress. 

Despite concerns about the process of authorizing and appropriating contributions to the IMF, and the impact on the global economy of creating a large of amount of SDRs, U.S. participation in the funding agreement, and the requisite authorizations for IMF reform efforts, were included in the FY2009 Spring Supplemental Appropriations for Overseas Contingency Operations (P.L. 111-32). .


Date of Report: January 29, 2010
Number of Pages: 23
Order Number: R40578
Price: $29.95

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