Congressman García introduces Stop Onerous Surcharges (S.O.S.) Act to Reform IMF Surcharges that Cost Ukraine and Other Countries Billions

WASHINGTON, DC — Yesterday, Representatives Jesús “Chuy'' García (IL-04), Joyce Beatty (OH-03), Ranking Member of the House Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions, and seven other members introduced the Stop Onerous Surcharges (S.O.S.) Act to direct U.S. representatives at the International Monetary Fund (IMF) to support a review of the IMF’s surcharge policy and a pause in the policy for the duration of the review. The IMF imposes surcharges on countries that have particularly large or long-standing debt. These charges are owed in addition to regular interest payments and other fees.

A growing number of economists and public officials are calling for a review of the policy as the effects of the pandemic, climate change, and rising interest rates accumulate. Last week, the IMF confirmed that it plans to review its surcharge policy in 2024. 

“As Congress debates new military assistance to help Ukraine defend itself against Russia’s invasion, Ukraine is being made to pay millions each month in surcharges to an institution in Washington DC. And that’s just one example. Instead of dealing with the ravages of war, climate disaster and other crises, countries in need of help around the globe are being saddled with IMF surcharges. These surcharges trap countries in cycles of debt and raise the cost of borrowing, making it more difficult for them to address urgent challenges facing their people,” said Congressman Jesús “Chuy” García. “International momentum is growing for the IMF to review and reform its surcharge policies, and the U.S. should lead that call.”

“IMF surcharge fees imposed on already distressed countries are neither necessary nor constructive, particularly amid multiple global crises creating significant economic pressures,” said Congresswoman Joyce Beatty. “I am proud to join Congressman García and many of my colleagues on the House Financial Services Committee in introducing this bill, which would direct the United States to use its considerable influence at the IMF to advocate for a review of this outdated policy. As countries around the world join the call for surcharge reform, the United States as a global leader should be at the forefront of this effort.”

“Countries struggling under heavy debt burdens need support, not punishing fees,” said Alex Main, Director of International Policy at the Center for Economic and Policy Research. “It’s time to finally end the IMF’s harmful and counterproductive surcharge policy. We applaud Reps. García and Beatty for introducing the Stop Onerous Surcharges Act, and bringing us one step closer to that goal.”

“Over the last four years, a series of overlapping crises have caused the sovereign debts of countries in the Global South to balloon. Many, through no fault of their own, are now on the brink of default. The last thing that countries already grappling with high interest rates need are burdensome IMF surcharges that take away resources that could be spent on vital public services like health and education. Oxfam is grateful to Representatives García and Beatty for their leadership on this bill, which calls on the IMF to review its surcharge policy and suspend its surcharge payments – a welcome step that we hope will lead to eliminating those harmful payments all together. As many countries continue to face the devastating impacts of climate change and conflict, we must work towards reforming our international financial architecture in order to better support them and fight inequality across the globe,” said Gina Cummings, Vice President of Advocacy, Alliances & Policy for Oxfam America.

“Partners In Health commends Representatives García, Beatty, and cosigners for their leadership on the Stop Onerous Surcharges Act. This outdated IMF policy harms countries most in need of financing, diverting resources that could otherwise be used for healthcare and other urgent humanitarian needs. IMF surcharges require immediate review and suspension, and the policy should be discontinued,” said Cate Oswald, Principal Chief Program Officer, Partners In Health.

The following members are original co-sponsors of the Stop Onerous Surcharges (S.O.S.) Act: Representatives Emanuel Cleaver (MO-05), Pramila Jayapal (WA-07), Brittany Pettersen (CO-07), Ayanna Pressley (MA-07), Rashida Tlaib (MI-12), Juan Vargas (CA-52), and Nikema Williams (GA-05).

The legislation is endorsed by the following organizations: ActionAid USA, Center for Economic Policy and Research (CEPR), Partners In Health, Oxfam.

Text of the bill can be found here. 

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