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FROM THE OFFICE OF PUBLIC AFFAIRS

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June 28, 2004
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Report To Congress on Financial Implications of U.S. Participation in the International Monetary Fund
First Quarter 2004

 This report has been prepared in compliance with Section 504(b) of Appendix E, Title V of the Consolidated Appropriations Act for FY 2000. [1]   The report focuses exclusively on the financial implications of U.S. participation in the International Monetary Fund (IMF) and does not attempt to quantify the broad and substantial economic benefits to the United States and the global economy resulting from U.S. participation in the IMF.

As required, the report provides financial information on the net interest income and valuation changes associated with U.S. participation in the IMF.  The broader context for the financial implications of U.S. participation in the IMF and the methodology used in deriving these figures have been laid out in previous reports.  The methodology is also summarized briefly in the footnotes attached to the tables.  Reports under Section 504(b) are prepared quarterly and made available to the public on the Treasury website: www.treas.gov/press/reports.html.

This report provides quarterly data for the first quarter of fiscal year 2004.  It provides information on U.S. participation in the IMF's General Department as well as information related to U.S. holdings of Special Drawing Rights (SDRs) as part of its international reserves and the financial implications of U.S. participation in the SDR Department of the IMF. [2]

Data on the net interest income and valuation changes related to U.S. participation in the IMF's General Department during the first quarter of fiscal year 2004 are provided in Table 1.  For comparison purposes, previously-reported data for the last four fiscal years are also provided.

Similarly, data for net interest income and valuation changes related to U.S. participation in the SDR Department of the IMF during the first quarter of fiscal year 2004 are provided in Table 2.  For comparison purposes, previously reported data for fiscal years 2002 and 2003 are also provided.

The attached footnotes explain the columns shown on each table and provide pertinent information and assumptions used in the calculations.

As shown in Table 1, for the first quarter of fiscal year 2004, the financial implications of U.S. participation in the General Department reflected a net interest income effect of $13 million, relative to $18 million in the prior year period.  The valuation change in the U.S. Reserve Position for the first quarter of fiscal year 2004 was $0.9 billion, up from $0.6 billion in the first quarter of 2003. [3]

As shown in Table 2, for the first quarter of fiscal year 2004, the net interest income effect of U.S. participation in the SDR Department was $4 million, relative to $5 million in the prior year period.  The valuation change for the first quarter on U.S. SDR holdings was $199 million, up from $146 million in the first quarter of 2003. [4]

[1] Section 504(b) of Appendix E, Title V of the Consolidated Appropriations Act for FY 2000, Public Law 106-113, 113 Stat. 1501A-317 requires that the Secretary of the Treasury prepare and transmit to the appropriate committees of the Congress a quarterly report on the costs or benefits of United States participation in the International Monetary Fund (IMF), detailing the costs or benefits to the United States, as well as valuation gains or losses on the United States' reserve position in the IMF.

[2] The SDR is an international reserve asset created by the IMF.  The SDR is used as a unit of account by the IMF and other international organizations.  Its value is determined as a weighted average of a basket of currencies -- the dollar, euro, pound sterling and yen. The SDR carries a market-based interest rate determined on the basis of a weighted average of interest rates on short-term instruments in the markets of the currencies included in the SDR valuation basket.

[3] For an explanation of the methodology used in deriving these figures, see the section on "Calculating the Financial Implications of U.S. Participation in the General Department" in the report prepared for the fourth quarter of fiscal year 2000, submitted in December 2000 and available at www.treas.gov/press/releases/report3073.htm

[4] For an explanation of the methodology used in deriving these figures, see the section on "Calculating the Financial Implications of U.S. Participation in the SDR Department" in the report prepared for the fourth quarter of fiscal year 2000, submitted in December 2000 and available at www.treas.gov/press/releases/report3073.htm.

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