Explanation of Position on a Second Committee Resolution on the International Financial System and Development

James Hamilton
U.S. Adviser for the Second Committee
New York, New York
November 20, 2023

AS DELIVERED

Thank you, Mr. Chairman. I would like to take this opportunity to thank the facilitator for her extraordinary work on this important resolution.

The United States is pleased to join consensus, but we must dissociate from operative paragraph 48, which contains a reference to certain “unilateral economic, financial, or trade measures.” Economic sanctions are an appropriate, effective, and legitimate tool that can be used to achieve national security and foreign policy objectives, and the United States is not alone in that view or in that practice. In cases where the United States has applied sanctions, we have done so with specific objectives in mind, including as a means to promote a return to rule of law or democratic systems, or respect for human rights and fundamental freedoms, or to respond to threats to international security.

We also take this opportunity to clarify our position on a few issues. We reiterate that the IMF and the Multilateral Development Banks have their own governance structures, mandates, and decision-making processes that are independent of the UN and are essential to helping ensure that they remain fiscally solvent and able to support the objectives of their shareholders. The proper fora to discuss the operations of these institutions are their respective boards.

With respect to PP25 and OP44, it is usually not the role of the official sector to intervene in the specific methodologies and/or practices of private credit-rating agencies. Issues related to determination of sovereign ratings should be resolved between private industry and the sovereign entities subject to the ratings. There is no clear indication that the ratings assigned by the rating agencies are not evidence- or fact-based.

With respect to PP26, we disagree with referencing IMF quota reform without mention of the new quota formula as a guide because we see a streamlined formula as the best way to meet the guiding principles for the quota review, particularly to be simple and transparent. We appreciate reference to the new quota formula in OP29.

With respect to OP12, we disagree with including language stressing the need to “consider an increase in concessional funding from multilateral development banks,” as the level of concessional funding is already considered during replenishment negotiations conducted by these institutions’ respective governance bodies. We also view the language on “consideration of global financial system reform” as too vague to have practical meaning.

With respect to OP24, we disagree with language that encourages the provision of “flexible, concessional, fast-disbursing, and front-loaded assistance” without regard to the financial sustainability of the institutions, the development impact and effect on poverty reduction of such assistance, or the presence of an appropriate macroeconomic policy framework. The concessionality of assistance is determined by the governance bodies of the International Financial Institutions, which allocate limited concessional resources considering income and creditworthiness. Furthermore, this language could be read as encouraging multilateral development banks to refrain from adhering to the high social, environmental, and fiduciary standards that are essential to achieving sustainable development.

With respect to OP33, we believe more requests for international cooperation will not necessarily lead to more investigations and prosecutions of illicit financial flows if the requests themselves are insufficient and that stronger or more effective international cooperation is needed, rather than simply more of it.

Finally, for further information regarding our position on the role and independence of the International Monetary Fund and the multilateral development banks in the international financial system, as well as on the issues of international financial institution reform, trade, the World Trade Organization, Special Drawing Rights, illicit financial flows, concessional finance, debt sustainability and transparency, technology transfers, and economic sanctions, we refer to our General Statement delivered on November 9, 2023, and the long-form version of the statement posted online.

Thank you.

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