I would like to emphasize that GAO does not take a position on what action the Congress should take on the executive branch’s request. The most important of these, according to IMF, are the currency holdings provided through quota subscriptions that underpin most of IMF’s operating funds. Availability of IMF’s Currency Holdings

IMF’s determination of available currency holdings, its primary source of readily available funding for carrying out its operations, is based on its judgment concerning the level of usable currency and the level of reserves needed for contingencies. IMF officials have stated that reserves are necessary for two reasons: (1) to maintain sufficient working balances in various currencies to execute foreign exchange transactions and (2) to have available for use in the event that some currencies become unusable and can no longer be used to finance IMF transactions due to a deterioration in members’ balance of payments and external reserve positions. First, IMF calculates the amount of currency holdings from quotas, which was estimated to be about $195 billion as of July 20, 1998. Of the $195 billion of currency holdings, IMF estimates that, before taking into consideration IMF extended credit, about $130 billion, or 67 percent, is usable. The remaining $65 billion is unusable. Estimated undrawn commitments total about $17 billion. In order not to drop below this 30-percent threshold, IMF would have to retain about $30 billion to $35 billion of its $43 billion in usable and uncommitted resources, which would leave only about $8 billion to $13 billion of resources that IMF could use. July 20, 1998)

		Other Potential Resources Available to IMF

In addition to its permanent, quota-based resources, IMF’s Articles of Agreement permit it to borrow funds for use in its operations and transactions. In 1995, IMF’s Executive Board adopted a policy on gold. However, these documents are not publicly available. According to IMF, these documents contain information that could be market sensitive because they include judgment calls about which members’ currencies are strong or weak. IMF and U.S. Treasury officials told us that few people outside of IMF use or rely on IMF’s public financial statements for information about IMF’s financial condition or liquidity, and IMF and Treasury officials indicated that most potential users of financial statements do not consider them to be very useful for decisionmaking purposes. The International Monetary Fund’s Current Lending

You asked us to provide information on IMF’s current lending. Indonesia’s November 1997 IMF financing arrangement for about $10.1 billion, which was augmented by an additional $1.3 billion on July 15, 1998, now totals about 557 percent of its quota.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the International Monetary Fund's (IMF) financial operations and financial reporting, focusing on: (1) what resources IMF currently has available to carry out its operations; and (2) whether IMF's financial condition can be determined from publicly available information. GAO did not take a position on what action the Congress should take on the executive branch's request for about $17.5 million for IMF.

What GAO Found

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.