FINANCIAL MANAGEMENT: Audit of the Exchange Stabilization Fund’s Financial Statements for Fiscal Years 2022 and 2021
Summary
Department of the Treasury Office of Inspector General Audit Report OIG-23-020, Audit of the Exchange Stabilization Fund's Financial Statements for Fiscal Years 2022 and 2021, dated January 26, 2023. A memorandum from Ade Bankole to the Principal Deputy Assistant Secretary for International Monetary Policy transmits the audit performed under contract by KPMG LLP (KPMG), a certified independent public accounting firm under OMB Bulletin No. 22-01. KPMG found that the financial statements were fairly presented, in all material respects, in accordance with U.S. generally accepted accounting principles, with no deficiencies in internal control over financial reporting considered material weaknesses and no instances of reportable noncompliance with laws, regulations and contracts tested.
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Audit Report
OIG-23-020
FINANCIAL MANAGEMENT
Audit of the Exchange Stabilization Fund’s Financial
Statements for Fiscal Years 2022 and 2021
January 26, 2023
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
DEPARTMENT OF THE TREASURY
W AS H I N GT ON, D.C. 2 0220
January 26, 2023
OFFICE OF
INS PECT OR G EN ER AL
MEMORANDUM FOR ANDREW BAUKOL
PRINCIPAL DEPUTY ASSISTANT SECRETARY FOR
INTERNATIONAL MONETARY POLICY
FROM: Ade Bankole /s/
Director, Financial Statement Audits
SUBJECT: Audit of the Exchange Stabilization Fund’s Financial
Statements for Fiscal Years 2022 and 2021
We hereby transmit the attached subject report. Under a contract monitored by our
office, KPMG LLP (KPMG), a certified independent public accounting firm, audited
the Exchange Stabilization Fund’s (ESF) balance sheets as of September 30, 2022
and 2021, and the related statements of net cost, changes in net position, and
budgetary resources for the years then ended. The contract required that the audit
be performed in accordance with U.S. generally accepted government auditing
standards, Office of Management and Budget Bulletin No. 22-01, Audit
Requirements for Federal Financial Statements, and the Government Accountability
Office/Council of the Inspectors General on Integrity and Efficiency, Financial Audit
Manual.
In its audit of the ESF, KPMG found
• the financial statements were fairly presented, in all material respects, in
accordance with U.S. generally accepted accounting principles;
• no deficiencies in internal control over financial reporting that are considered
material weaknesses; and
• no instances of reportable noncompliance with laws, regulations, and
contracts tested.
Page 2
In connection with the contract, we reviewed KPMG’s report and related
documentation and inquired of its representatives. Our review, as differentiated
from an audit performed in accordance with U.S. generally accepted government
auditing standards, was not intended to enable us to express, and we do not
express, an opinion on the ESF’s financial statements or conclusions about the
effectiveness of internal control or compliance with laws and regulations. KPMG is
responsible for the attached auditors’ report dated January 25, 2023, and the
conclusions expressed in the report. However, our review disclosed no instances
where KPMG did not comply, in all material respects, with U.S. generally accepted
government auditing standards.
If you wish to discuss this report, please contact me at (202) 927-5329, or a
member of your staff may contact Catherine Yi, Manager, Financial Statement
Audits, at (202) 927-5591.
Attachment
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
September 30, 2022 and 2021
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Table of Contents
Page
Management Discussion and Analysis (Unaudited) ....................................................................... 1
Independent Auditors’ Report ....................................................................................................... 12
Balance Sheets…………............................................................................................................... 15
Statements of Net Cost................................................................................................................... 17
Statements of Changes in Net Position.......................................................................................... 18
Statements of Budgetary Resources............................................................................................... 20
Notes to the Financial Statements .................................................................................................22
Required Supplementary Information (Unaudited)....................................................................... 52
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
MISSION
Section 10 of the Gold Reserve Act of 1934 (Gold Reserve Act) established the Exchange Stabilization
Fund (ESF), originally for the purpose of stabilizing the exchange value of the dollar. Section 10 has been
amended several times since 1934. This Section currently authorizes the Secretary of the Treasury
(Secretary), with the approval of the President, to deal in gold, foreign exchange, and instruments of credit
and securities consistent with United States (U.S.) obligations in the International Monetary Fund (IMF).
In fiscal year (FY) 2020, Congress passed and the President signed the Coronavirus Aid, Relief, and
Economic Security Act, Public Law (P.L.) 116-136 (CARES Act), authorizing the Secretary to make
certain loans, loan guarantees, and investments in support of the Coronavirus Disease 2019 (COVID-19)
pandemic recovery. The ESF’s assets principally include U.S. dollars, foreign currencies, and Special
Drawing Rights (SDRs), an international reserve asset created by the IMF. The ESF’s assets also include
investments in Special Purpose Vehicles (SPVs) and loans receivable.
ORGANIZATION
The Secretary, subject to the approval of the President, has the authority to use the ESF in accordance
with section 10 of the Gold Reserve Act. The Secretary is the lead decision-maker for all ESF foreign
exchange intervention, credit operations, and investment activities, but has delegated to the Under
Secretary of International Affairs non-policy related investment decisions regarding technical adjustments
to the ESF’s foreign currency holdings and operations.
The Department of the Treasury (Treasury)’s Office of International Affairs has responsibility for
managing ESF operations, and Treasury’s Office of the Deputy Chief Financial Officer provides the
recordkeeping and financial reporting services for the ESF.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
The Federal Reserve Bank of New York (FRBNY) acts as the fiscal agent for the ESF, as permitted by
the Federal Reserve Act of 1913 (Federal Reserve Act). As the fiscal agent, the FRBNY plays a significant
role in the processing of foreign currency transactions that the Secretary authorizes. The manager of the
ESF foreign currency portfolio at the FRBNY consults regularly with the Federal Open Market Committee
and Treasury about the acquisition and disposition of investments and the status of the portfolio.
Treasury’s ESF management is responsible for the record keeping and investment decisions for foreign
currency transaction activity carried out by the FRBNY. The level and currency composition of the ESF
foreign currency portfolio are the products of Treasury’s policy determinations. Per reserve management
guidelines, the liquidity and safety of the investments are top priorities of the ESF’s management given
the foreign exchange intervention role of the ESF. Under current guidance, investment instruments
continue to carry low cost and have ample market liquidity while managing and/or limiting price, credit,
and settlement risk. In addition, consistent with the objectives of liquidity and safety, the currency
portfolios are designed to earn a high rate of return.
PERFORMANCE OVERVIEW
The Secretary is responsible for the formulation and implementation of U.S. international monetary and
financial policy, including exchange market intervention policy. The ESF helps the Secretary to carry out
these responsibilities. By law, the Secretary has considerable discretion over the use of ESF resources.
The ESF reports the results of its operations under the Treasury-wide goal to “Boost U.S. Economic
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
Growth.” Treasury is responsible for fostering prosperity and security for the American people and plays
a critical role in the domestic and global economies. Treasury utilizes the ESF to help safeguard U.S.
economic prosperity by strengthening the external environment to support U.S. growth, preventing and
mitigating global financial instability, and managing key domestic and global challenges.
To carry out its supporting mission, the ESF has historically leveraged its assets, including U.S. dollars;
foreign currency holdings of euros, yen, and other Foreign Currency Denominated Assets (FCDAs); and
holdings of SDRs. Appropriated funds from Congress also funded COVID-19 programs.
Consistent with its mission, the ESF has established the following two strategic goals:
• Goal 1: Exchange Stabilization. To engage in targeted foreign exchange intervention to address
excessive exchange rate volatility and to provide sovereign loans to emerging and developing
economies; this includes supporting the Government’s obligations to the IMF to ensure orderly
currency exchange arrangements worldwide.
• Goal 2: Economic Recovery Program. To support economic growth and stability at home,
including in response to the COVID-19 pandemic.
Goal 1: Exchange Stabilization
Congress, in 1934, appropriated to the ESF the sum of $2.0 billion out of the increment resulting from the
reduction in the “weight of the gold dollar.” Subsequent amendments to the Gold Reserve Act approved
the operation of the ESF through June 30, 1945. Section 7 of the Bretton Woods Agreements Act, approved
July 31, 1945, continued its operations permanently. The Bretton Woods Agreements Act also directed
the Secretary to pay $1.8 billion from the ESF to the IMF for the initial U.S. quota subscription in the
IMF, thereby reducing the ESF’s appropriated capital from its initial $2.0 billion to $200 million. Section
10 of the Gold Reserve Act was codified in 31 United States Code (U.S.C.) 5302.
Reflecting termination of the fixed exchange rate system, legislation enacted in 1976 (P.L. 94-564,
October 19, 1976) amended the language of Section 10 of the Gold Reserve Act to specify that the ESF
is to be used as the Secretary “may deem necessary to and consistent with the United States obligations in
the IMF.” This amendment became effective on April 1, 1978, the date of entry into force of the Second
Amendment of the IMF Articles of Agreement. In 1977, P.L. 95-147 further amended Section 10 of the
Gold Reserve Act. The following Gold Reserve Act codification now provides in relevant part:
“Consistent with the obligations of the Government in the IMF on orderly exchange
arrangements and a stable system of exchange rates, the Secretary or an agency designated
by the Secretary, with the approval of the President, may deal in gold, foreign exchange,
and other instruments of credit and securities the Secretary considers necessary. However,
a loan or credit to a foreign entity or government of a foreign country may be made for
more than 6 months in a 12-month period only if the President gives Congress a written
statement that unique or emergency circumstances require the loan or credit be for more
than 6 months (31 U.S.C. 5302 (b)).”
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
Pursuant to the Special Drawing Rights Act of 1968 (P.L. 90-349, amended by P.L. 94-564), SDRs
allocated by the IMF to the United States or otherwise acquired by the United States are resources of the
ESF.
22 U.S.C. 286p allows for SDRs to be monetized/demonetized through the issuance/redemption by the
Secretary of SDR certificates to the Federal Reserve Banks in exchange for dollars. The total amount of
SDR certificates outstanding cannot exceed the dollar equivalent of ESF (i.e., U.S.) holdings of SDRs;
such certificates are a liability of the ESF.
Since the start of the 21st century, the United States has intervened in foreign exchange markets two times
during bouts of extremely disorderly market conditions and through coordinated G7 action. Each of these
interventions utilized roughly $1 billion in ESF assets, working as a signal to stabilize markets rather than
an attempt to directly affect the level of an exchange rate.
The SDR is an international reserve asset created by the IMF in 1969 to supplement the existing reserve
assets of IMF member countries, including the United States. In addition to its role as a supplementary
reserve asset, the SDR serves as a means of payment within the IMF and with some other International
Financial Institutions (IFIs), as well as the unit of account for the IMF and several other international
organizations. Pursuant to the Special Drawing Rights Act of 1968, as amended, SDRs allocated by the
IMF to, or otherwise acquired by the United States, are resources (holdings) of the ESF.
To meet the long-term global need to supplement existing reserve assets, in August 2021, the IMF Board
of Governors approved a general allocation of SDRs equivalent to about $650 billion (SDR 456 billion).
This SDR allocation increased the total global stock of SDRs outstanding from about $290 billion (SDR
204 billion) to $940 billion (SDR 660 billion). Of the total August 2021 allocation, the United States
received about $113 billion (about SDR 80 billion).
For the first time since November 2016, in FY 2022, the ESF purchased $4.5 billion (SDR 3.3 billion) of
SDRs from ten participants (Ukraine, Paraguay, Jamaica, Serbia, Honduras, Egypt, Tanzania, Pakistan,
Mozambique, and Laos) through the IMF’s Voluntary Trading Arrangement market.
Until the late 1990s, the most frequent use of the ESF was to provide sovereign loans to foreign governments
experiencing external balance crises, often as short-term bridge loans to facilitate financing from IFIs. Since
2000, Treasury has used the ESF to provide short-term credit for bridge loans to Uruguay ($1.5 billion in
2002), to the International Development Association (IDA) to facilitate the clearance of Liberia’s arrears
with the World Bank ($888 million in 2008), and to the IDA to facilitate the clearance of Sudan’s arrears to
the World Bank ($1.2 billion in 2021). Treasury also has a notional written agreement with Mexico setting
out the framework for providing a $9 billion Foreign Currency swap, should circumstances require it. 1
1
Drawings are not automatic: the U.S. and Mexico would have to negotiate the amount, duration, interest rate, and assured
source of repayment of any borrowings.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
Goal 2: Economic Recovery Program:
Treasury has used the ESF during the past two economic and financial crises to help stabilize domestic
financial markets in support of a stable international monetary system. Treasury used the ESF in
coordination with the Federal Reserve to help stabilize financial markets in 2007-2008. These programs
have expired, and the ESF’s financial statements no longer reflect this support. Following the 2008 crisis,
however, Congress prohibited Treasury from using the ESF specifically to establish future guarantee
programs for the U.S. money market mutual fund industry (which prohibition was temporarily lifted by the
CARES Act).
In March of 2020, the Federal Reserve Board of Governors (Board) and Congress took steps to limit the
economic damage caused by the pandemic in the United States by helping to reduce the financial burden
on individuals and their families, minimize business and employment losses, and enhance the liquidity of
the U.S. financial system. The ESF played a critical role in the implementation and support of these
actions by the Board and Congress primarily through Treasury’s execution of CARES Act appropriations
used to support programs in recovery from the COVID-19 pandemic. Treasury pledged $215 billion to
Federal Reserve lending facilities—$20 billion committed from existing ESF assets and the remainder under
the authority of the CARES Act. 2
The CARES Act appropriated $500.0 billion to the ESF to fund the credit subsidy costs associated with
making loans, loan guarantees or investments through December 31, 2020 in support of eligible businesses,
states and municipalities that incurred losses as a result of COVID-19. The CARES Act authorized Treasury
to make such loans, loan guarantees and other investments that did not, in the aggregate, exceed
$500.0 billion. Treasury executed the COVID-19 programs through the ESF. During FY 2020, the ESF
disbursed an aggregate of $104.3 billion (comprised of $102.5 billion and $1.8 billion for investments and
direct loans, respectively), which was financed with $19.3 billion of the appropriation to fund the credit
subsidy portion of the investments and direct loans, and $85.0 billion of borrowings from the Fiscal Service.
As of September 30, 2020, $480.6 billion of the CARES Act appropriation remained.
Also during FY 2020, the ESF transferred $11.5 billion of the $20.0 billion committed under its core
authority provided by Section 10 of the Gold Reserve Act, as amended, to support two of the COVID-19
programs.
The December 27, 2020 enactment of the Consolidated Appropriations Act, 2021, P.L. 116-260 (CAA),
among other things, eliminated the ESF’s authority to make new loans and investments under the CARES
Act and prohibited the Federal Reserve from engaging in further lending or extensions of credit.
Accordingly, on December 27, 2020, the CAA rescinded $478.8 billion of the $500.0 billion appropriation
provided to Treasury (through the ESF).
2
The CARES Act provided Treasury authorization and appropriations to support Federal Reserve credit facilities using the ESF.
Using the ESF’s authority and CARES Act authority, Treasury supported facilities providing support to the money market
mutual fund market; the commercial paper, corporate bond, and municipal bond markets; asset-backed loans; and main street
loans.
5
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
On December 29, 2020, consistent with the CAA, Treasury cancelled and de-obligated any remaining
undisbursed investment commitments totaling an aggregate of $92.5 billion (along with an additional
$8.5 billion that was committed by ESF core funds), and the ESF received an interim distribution totaling
an aggregate of $62.2 billion related to four COVID programs. The ESF used this cash received to repay
outstanding debt to the Fiscal Service that was used to finance the non-subsidized portion of these investment
transactions. Also, during FY 2021, the FRBNY and FRBB fully dissolved three of its liquidity facilities,
resulting in a distribution to the ESF totaling an aggregate of $25.4 billion (of which $11.5 billion constituted
a return of ESF’s core funds). (Refer to Note 6).
In November 2021, the ESF and the Federal Reserve further amended the SPV LLC Agreements, which
provided for additional interim distributions to the ESF, received in November 2021 and May 2022, totaling
an aggregate of $8.5 billion. The interim distributions in both FY 2022 and FY 2021 represent the amounts
by which funds that were contributed by the ESF to each facility (and earnings thereon) exceeded the
purchase price of the assets, loans, and/or loan participations, as the case may be, within each facility at such
time. The cash received was used to repay outstanding debt to the Fiscal Service that was used to finance
the non-subsidized portion of these investment transactions. Future interim distributions will take place in
November and May of each fiscal year in accordance with the terms of the most recent amended agreements.
The funds remaining in the SPVs funded under the CARES Act cannot be used for further lending, asset
purchases, or extensions of credit.
FINANCIAL HIGHLIGHTS AND ANALYSIS OF OPERATIONS
The financial highlights below are an analysis of the information included in the ESF’s financial
statements that appear within Part 2, “Financial Section” of this report. The ESF prepared principal
financial statements to report the financial position and results of operations of its programs consistent
with the requirements of 31 U.S.C. 3515(b). These statements have been prepared from the books and
records of the ESF (and the Department of the Treasury) in accordance with U.S. Generally Accepted
Accounting Principles (GAAP) for federal entities and the formats prescribed by the Office of
Management and Budget (OMB). These statements are in addition to the financial reports used to monitor
and control budgetary resources that are prepared from the same books and records and should be read
with the understanding that they are for a component of the U. S. government.
The chart below presents changes in key financial statement line items as of and for the fiscal year ended
September 30, 2022, as compared to September 30, 2021.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
Summary Financial Information (dollars in thousands)
2022 2021 $ Change % Change
Total Assets $ 207,945,230 $ 236,991,931 $ (29,046,701) (12.3)%
Total Liabilities $ 172,469,403 $ 194,768,607 $ (22,299,204) (11.4)%
Total Net Position $ 35,475,827 $ 42,223,324 $ (6,747,497) (16.0)%
Total Net Cost (Income) – Core Exchange Stabilization $ 4,624,302 $ 725,062 $ 3,899,240 537.8%
Total Net Cost (Income) – Economic Recovery Program $ (451,629) $ (4,256,380) $ 3,804,751 (89.4)%
Total Net Cost (Income) from Operations $ 4,172,673 $ (3,531,318) $ 7,703,991 (218.2)%
Total Budgetary Resources $ 41,483,881 $ 172,659,259 $ (131,175,378) (76.0)%
Agency Outlays, Net $ (4,636,942) $ (24,535,407) $ 19,898,465 (81.1)%
Financial Overview
The ESF financial performance as of and for the fiscal year ended September 30, 2022, reflects valuation
losses on the foreign asset portfolio held by the Exchange Stabilization component of the ESF due to the
weakening of the euro, yen, and SDR against the USD. The Foreign Currency and FCDAs and Other
Investments incurred a valuation loss of $4.3 billion and the SDR Holdings and SDR Allocations,
combined, incurred a valuation loss of $0.5 billion in FY 2022. In FY 2021, losses were $0.7 billion and
$2 million, respectively. The Economic Recovery Program experienced gains on the valuation of the
investments in SPVs and loans of $0.6 billion in FY 2022, as compared to $4.7 billion in FY 2021.
Total Assets
Total assets of $207.9 billion as of September 30, 2022, included fund balance with Treasury of
$0.5 billion, nonmarketable U.S. Treasury securities of $18.4 billion, SDR holdings and related interest
receivable of $153.6 billion, Foreign Currency and FCDAs of $12.8 billion, Investments in SPVs, net of
$17.8 billion, loans receivable, net of $1.0 billion, and other investments, net of $3.8 billion. The
$29.0 billion (or 12.3 percent) decrease in total assets at the end of FY 2022 from the prior fiscal year
primarily reflects a decline in SDR Holdings and related interest receivable of $10.7 billion. This decline
was primarily due to a valuation loss of $15.3 billion recorded within the “Special Drawing Right
Holdings” line on the Statements of Net Cost. This is partially offset by $4.5 billion of SDR purchases.
The decline in total assets in FY 2022 also is attributable to an $8.5 billion decrease in Investments in
SPVs, net. These assets primarily consisted of equity investments in SPVs of $17.8 billion and
$25.6 billion as of September 30, 2022, and 2021, respectively. The $7.8 billion decrease in these SPV
investments is primarily driven by a return of excess CARES Act funds in FY 2022 pursuant to the amended
SPV LLC agreement.
Also contributing to the decline in total assets in FY 2022 was a decrease in nonmarketable U.S Treasury
securities, reflecting the utilization of the Nonmarketable U.S Treasury Securities balance to purchase
$4.5 billion of SDRs. The Foreign Currency and FCDAs also decreased by $2.9 billion primarily due to an
exchange rate valuation loss on uninvested yen holdings during FY 2022 and a reduction in German Time
Deposits from the prior fiscal year. Other Investments, net also decreased by $1.5 billion primarily due to a
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
$1.3 billion net exchange rate and fair value loss on the Euro and Yen Bond portfolio during FY 2022.
Total Liabilities
Total liabilities of $172.5 billion at September 30, 2022, primarily included intragovernmental liabilities
comprised of $19.5 billion of intra-governmental Debt, and other-than-intra-governmental liabilities
comprised of $147.4 billion of SDR allocations and related interest and $5.2 billion of SDR certificates
issued to the Federal Reserve Banks. The $22.3 billion (or 11.4 percent) decrease in total liabilities at the
end of FY 2022 over the prior fiscal year primarily reflects a $14.4 billion decrease in SDR Allocations
resulting primarily from a valuation gain due to the strengthening of the exchange rate of the U.S. dollar
against the SDR.
The ESF also experienced a decrease of $4.5 billion in intra-governmental debt, primarily the result of FY
2022 repayments of $8.5 billion of debt utilizing SPV and direct loan program collections and a repayment
of upward re-estimates, partially offset by new borrowings of $4.0 billion to fund downward subsidy re-
estimates and end of year interest expense due to Fiscal Service (see Note 10). Amounts due to the General
Fund also decreased by $3.3 billion, reflecting a decrease in the downward subsidy accrual compared to
FY 2021.
Net Position
The Net Position of $35.5 billion at September 30, 2022 represents the combined total of the ESF’s
unexpended appropriations and cumulative results of operations. The $6.7 billion (or 16.0 percent)
decrease in FY 2022 was primarily related to the $1.4 billion rescission enacted in FY 2022 as part of the
Infrastructure Investment and Jobs Act (P.L. 117-58), along with the changes in transfers to the General
Fund and Total Net Cost of Operations.
Net Cost of Operations
Total Net Cost of Operations as presented on the ESF’s Statements of Net Costs represents the gross costs,
net of earned revenues, the ESF incurred related to both its core exchange stabilization operations and
economic recovery program operations. For FY 2022, the ESF reported net cost of operations totaling
$4.2 billion compared to a net income from operations in the prior fiscal year of $3.5 billion. The
$7.7 billion year-over-year increase in net cost was attributable to a $3.8 billion increase in net cost for
the economic recovery program operations, along with a $3.9 billion increase in net cost for the core ESF
operations.
The Economic Recovery Program reported net income from operations totaling $0.5 billion for the fiscal
year ended September 30, 2022, compared to a net income from operations in the prior fiscal year of
$4.3 billion. The $3.8 billion increase in net cost in FY 2022 was primarily attributable to changes in the
valuation of the program’s assets which reflected $0.6 billion of gains on investments in SPVs and loans
receivables in FY 2022 compared to gains of $4.7 billion in FY 2021.
The ESF core operations reported a net cost from operations of $4.6 billion for the fiscal year ended
September 30, 2022, compared to net cost from operations of $0.7 billion for the prior fiscal year. The
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
$3.9 billion increased net cost in FY 2022 primarily reflects changes in the valuations of both the ESF’s
foreign currency denominated investments and other investments which resulted in valuation losses of
$4.3 billion for FY 2022 compared to losses of $0.7 billion for FY 2021. Also contributing to the change
was a $0.5 billion net loss between the SDR Holdings and SDR Allocations resulting from a valuation
loss due to the strengthening of the exchange rate of the U.S. dollar against the SDR.
Statement of Budgetary Resources
Total Budgetary Resources of $41.5 billion in FY 2022 decreased by $131.2 billion (or 76.0 percent) from
budgetary resources in FY 2021, which totaled $172.7 billion. The decrease was due to the change in
Unobligated Balance, Brought Forward From Prior Year of $597.7 billion related to the CARES Act and
SDR Allocations (refer to Note 13 for additional information), offset by the change to Appropriations of
$476.5 billion related to the recission in FY 2021 of $478.8 billion compared to the FY 2022 recission of
$1.4 billion. The ESF also experienced a $10.6 billion year-to-year decrease in Borrowing Authority
primarily due to a decrease in downward reestimates and modifications.
Agency Outlays, net
ESF reported net collections of $4.6 billion in FY 2022 compared to net collections of $24.5 billion
reported in FY 2021, a year-over-year change of $19.9 billion. This decrease was primarily due to the
ESF experiencing a $9.5 billion year-to-year decrease in FY 2022, in downward reestimates pertaining to
the revaluation of all the economic recovery program investments and receivables that were recorded as
budgetary receipts. These decreases were partially offset by a $0.9 billion decrease in upward subsidy
reestimates, along with a $0.2 billion decrease in CARES Act subsidy outlays for direct loans. As the
authority to obligate and disburse new subsidy outlays have decreased. Additionally, $11.7 billion of ESF
core funds that were previously outlayed in FY 2020 to support two economic recovery programs were
returned to the ESF in FY 2021.
ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE
The ESF’s management is responsible for managing risks and maintaining effective internal control and
financial management systems to meet the objectives of the Federal Managers’ Financial Integrity Act
(FMFIA) and the Federal Financial Management Improvement Act (FFMIA). OMB Circular A-123,
Management’s Responsibility for Enterprise Risk Management and Internal Control provides the
implementing guidance for FMFIA and defines management’s responsibility for establishing and assessing
internal controls. The Circular also requires federal agencies to adhere to the Government Accountability
Office’s (GAO) Standards for Internal Control in the Federal Government, and to evaluate and report on
the effectiveness of the organization’s internal controls to achieve the objectives of: (1) effective and
efficient operations, (2) reliable reporting for internal and external use, and (3) compliance with applicable
laws and regulations (FMFIA Section 2). Additionally, agencies are required to assess whether financial
management systems comply with federal financial management systems requirements (FMFIA Section 4).
The ESF’s internal controls are assessed in accordance with the Treasury Guide for Assessing Internal
Control in Accordance with OMB Circular A-123 Appendix A: Management of Reporting and Data Integrity
Risk, which includes a comprehensive risk-based internal control evaluation plan. This plan includes a
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
methodology that identifies and documents key controls and provides for the assessment and testing of those
controls to obtain reasonable assurance that the controls are designed, implemented, and operating
effectively.
The ESF uses centralized financial management, budget formulation and performance management, and IT
hosting services provided by the Bureau of the Fiscal Service’s (Fiscal Service) Administrative Resource
Center (ARC). The shared service approach enables the ESF to have access to core financial systems
without having to maintain separate technical and system architectures. Using shared services reduces the
need for the ESF to maintain duplicative financial management systems, thereby promoting efficiency and
cost savings while enhancing the quality, timeliness, and accuracy of financial management processes.
The FFMIA requires federal agencies to implement and maintain financial management systems that
substantially comply with federal financial management systems requirements, applicable federal
accounting standards, and the U.S. Standard General Ledger at the transaction level. As a component of the
Department of the Treasury, the ESF assesses its financial management systems annually for conformance
in accordance with OMB Circular A-123, Appendix D, Compliance with the Federal Financial
Management Improvement Act of 1996. The ESF uses ARC’s financial management system as part of a
shared service arrangement and relies on ARC’s Service Organization Control 1-Type 2 report and the Fiscal
Service’s FFMIA Assessment to conduct our review.
Based on the results of the assessments of internal controls and financial management systems referred to
above, the ESF can provide reasonable assurance that, in accordance with Section 2 of the FMFIA, the ESF’s
internal control over operations, reporting, and compliance with laws and regulations were operating
effectively as of September 30, 2022. In addition, the ESF can provide reasonable assurance that, as of
September 30, 2022, our financial management systems are in substantial conformance with the federal
financial management systems requirements of Section 4 of the FMFIA.
OUTLOOK FOR REMAINDER OF 2023
Given Treasury’s limited use of the ESF since the 2000s for foreign currency intervention, Treasury sees
minimal scope for the ESF for currency intervention to stabilize markets and currencies throughout the 2023
fiscal year unless market volatility increases substantially. Treasury will continue to purchase or sell SDRs,
on a case-by-case basis, from other IMF members to promote an orderly system of exchange rates and to
help provide liquidity support to our global partners. In the period from October 1, 2022, through January
25, 2023, Treasury, through the ESF, purchased SDR 1.3 billion of SDRs from other IMF participants
(Ukraine and the Bank for International Settlements) in exchange for about $1.7 billion. These purchases
increased the ESF’s SDR Holdings and decreased the ESF’s Nonmarketable U.S. Treasury Securities, which
were used to fund these purchases. The COVID-19 pandemic and Russia’s invasion of Ukraine continue to
represent a risk to economic growth and recovery.
While CARES Act-authorized Investments in SPVs and loans receivable remain on the ESF’s books as of
September 30, 2022, Treasury no longer has authority to make new loans and investments. Future interim
distributions on the ESF’s Investments in SPVs will take place in November and May of each fiscal year.
Accordingly, in November 2022, the ESF received $2.6 billion in distributions.
10
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2022
The ESF can sometimes play a role in complying with the statutory debt limit. The dollar-balance of the
ESF is invested entirely in special-issue Treasury securities that are subject to the statutory debt limit. The
entire dollar-balance matures daily and is ordinarily reinvested. On January 13, 2023, the Secretary informed
congressional leadership that the outstanding debt of the U.S. is projected to reach the statutory limit. Once
the limit is reached, Treasury will need to start taking certain extraordinary measures to prevent the U.S.
from defaulting on its obligations. Historically, as part of these extraordinary measures, Treasury has
temporarily suspended the daily reinvestment of the dollar-balance of the ESF in order to avoid exceeding
the statutory debt limit. As of now, the extraordinary measures taken by Treasury will not suspend the daily
reinvestment. However, the period of time that extraordinary measures may last is subject to considerable
uncertainty due to a variety of factors, including the challenges of forecasting the payments and receipts of
the U.S. government months into the future.
11
KPMG LLP
Suite 12000
1801 K Street, NW
Washington, DC 20006
Independent Auditors’ Report
Acting Inspector General
Department of the Treasury
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Department of the Treasury’s Exchange Stabilization Fund (ESF),
which comprise the balance sheets as of September 30, 2022 and 2021, and the related statements of net
costs, changes in net position, and combined statements of budgetary resources for the years then ended, and
the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the ESF as of September 30, 2022 and 2021, and its net costs, changes in net position, and
budgetary resources for the years then ended in accordance with U.S. generally accepted accounting
principles.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin
No. 22-01, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards
and OMB Bulletin No. 22-01 are further described in the Auditors’ Responsibilities for the Audit of the Financial
Statements section of our report. We are required to be independent of the ESF and to meet our other ethical
responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance
with U.S. generally accepted accounting principles, and for the design, implementation, and maintenance of
internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not
a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, and OMB
Bulletin No. 22-01 will always detect a material misstatement when it exists. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are
considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence
the judgment made by a reasonable user based on the financial statements.
KPMG LLP, a Delaware limited liability partnership and a member firm of
the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee.
In performing an audit in accordance with GAAS, Government Auditing Standards, and OMB Bulletin
No. 22-01, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and design and perform audit procedures responsive to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the ESF’s internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluate the overall presentation of the financial statements.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control related matters that
we identified during the audit.
Required Supplementary Information
U.S. generally accepted accounting principles require that the information in the Management’s Discussion and
Analysis and Required Supplementary Information sections be presented to supplement the basic financial
statements. Such information is the responsibility of management and, although not a part of the basic financial
statements, is required by the Federal Accounting Standards Advisory Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with GAAS, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audits of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements as of and for the year ended September 30,
2022, we considered the ESF’s internal control over financial reporting (internal control) as a basis for
designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion
on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the ESF’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the ESF’s internal control.
We did not test all internal controls relevant to operating objectives as broadly defined by the Federal
Managers’ Financial Integrity Act of 1982.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial
statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet
important enough to merit attention by those charged with governance.
13
Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies
may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the ESF’s financial statements as of and for the year
ended September 30, 2022 are free from material misstatement, we performed tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have
a direct and material effect on the financial statements. However, providing an opinion on compliance with
those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be reported
under Government Auditing Standards or OMB Bulletin No. 22-01.
Purpose of the Reporting Required by Government Auditing Standards
The purpose of the communication described in the Report on Internal Control Over Financial Reporting and
the Report on Compliance and Other Matters sections is solely to describe the scope of our testing of internal
control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
ESF’s internal control or compliance. Accordingly, this communication is not suitable for any other purpose.
Washington, DC
January 25, 2023
14
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
BALANCE SHEETS
As of September 30,
(in thousands) 2022 2021
ASSETS
Intra-Governmental
Fund Balance with Treasury (Note 2) $ 454,693 $ 1,984,276
Nonmarketable U.S. Treasury Securities (Note 3) 18,401,389 22,836,891
Total Intra-Governmental 18,856,082 24,821,167
Other Than Intra-Governmental
Foreign Currency and Other Monetary Assets
Foreign Currency and Foreign Currency Denominated Assets (Note 4) 12,816,009 15,669,159
Special Drawing Right Holdings and Related Interest Receivable (Note 5) 153,595,911 163,884,490
Investments in Special Purpose Vehicles, Net (Note 6) 17,834,802 25,578,448
Loans Receivable, Net (Note 7) 1,045,954 1,310,966
Other Receivables, Net (Note 6) - 462,467
Other Investments, Net (Note 8) 3,796,472 5,265,234
Total Other Than Intra-Governmental 189,089,148 212,170,764
Total Assets $ 207,945,230 $ 236,991,931
The accompanying notes are an integral part of these statements.
15
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
BALANCE SHEETS (Cont.)
As of September 30,
2022 2021
(in thousands)
LIABILITIES
Intra-Governmental
Debt (Note 10) $ 19,477,661 $ 23,997,698
Due to the General Fund (Note 9) 6,106 3,251,365
Other Liabilities (Notes 6 and 7) 370,556 482,935
Total Intra-Governmental 19,854,323 27,731,998
Other Than Intra-Governmental
Special Drawing Right Allocations and Related Interest Payable (Note 5) 147,414,371 161,835,969
Special Drawing Right Certificates Issued to Federal Reserve Banks (Note 5) 5,200,000 5,200,000
Other Liabilities 709 640
Total Other Than Intra-Governmental 152,615,080 167,036,609
Total Liabilities 172,469,403 194,768,607
Commitments and Contingencies (Note 11)
NET POSITION
Unexpended Appropriations
Funds from Dedicated Collections (Consolidated) (Note 12) 200,000 200,000
Funds from Other than Dedicated Collections (Consolidated) 233,420 1,603,868
Total Unexpended Appropriations 433,420 1,803,868
Cumulative Results of Operations
Funds from Dedicated Collections (Consolidated) (Note 12) 35,795,410 40,419,805
Funds from Other than Dedicated Collections (Consolidated) (753,003) (349)
Total Cumulative Results of Operations 35,042,407 40,419,456
Total Net Position 35,475,827 42,223,324
Total Liabilities and Net Position $ 207,945,230 $ 236,991,931
The accompanying notes are an integral part of these statements.
16
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
STATEMENTS OF NET COST
For the Fiscal Years Ended September 30,
(in thousands) 2022 2021
STRATEGIC GOAL 1: EXCHANGE STABILIZATION
Gross Cost
Interest Expense on Special Drawing Rights Allocations and Remuneration $ 870,697 $ 39,270
International Monetary Fund Annual Assessment and Other 2,469 974
Losses on Currency Valuation and Other:
Special Drawing Right Holdings (Note 5) 15,301,214 716,172
Foreign Currency and Foreign Currency Denominated Assets (Note 4) 2,121,923 292,292
Other Investments (Note 8) 2,165,678 397,319
Total Losses on Currency Valuation and Other 19,588,815 1,405,783
Total Gross Cost 20,461,981 1,446,027
Less Earned Revenue
Interest Income:
Nonmarketable U.S. Treasury Securities (Note 3) (141,860) (7,055)
Foreign Currency and Foreign Currency Denominated Assets (Note 4) 7,210 8,923
Special Drawing Right Holdings (Note 5) (902,351) (40,631)
Other Investments (Note 8) 27,073 35,513
Total Interest Income (1,009,928) (3,250)
Gains on Currency Valuation:
Special Drawing Right Allocations (Note 5) (14,827,751) (717,715)
Total Gains on Currency Valuation (14,827,751) (717,715)
Total Earned Revenue (15,837,679) (720,965)
Total Net Cost of Operations – Exchange Stabilization $ 4,624,302 $ 725,062
STRATEGIC GOAL 2: ECONOMIC RECOVERY PROGRAM
Gross Cost
Interest Expense on Debt (Note 10) $ 213,461 $ 606,518
Administrative Expenses 4,822 19,228
Total Gross Cost – Economic Recovery Program 218,283 625,746
Less: Earned Revenue
Interest Income on Uninvested Funds (Note 2) (28,417) (130,334)
Interest Income on Loans Receivable (Note 7) (52,138) (71,573)
Facility Fee Income (Note 6) - (15,021)
Gains on Investments in Special Purpose Vehicles and Loans Receivable (Notes 6 and 7) (589,357) (4,665,198)
Total Earned Revenue – Economic Recovery Program (669,912) (4,882,126)
Total Net Income of Operations – Economic Recovery Program (451,629) (4,256,380)
Total Net Cost (Income) of Operations $ 4,172,673 $ (3,531,318)
The accompanying notes are an integral part of these statements.
17
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
STATEMENT OF CHANGES IN NET POSITION
For the Fiscal Year Ended September 30, 2022
Funds from Other
Funds from
than Dedicated
Dedicated Collections
Collections Consolidated
(in thousands) (Consolidated)
(Consolidated) Total
UNEXPENDED APPROPRIATIONS
Beginning Balance $ 200,000 $ 1,603,868 $ 1,803,868
Appropriations Received - 3,445 3,445
Other Adjustments (Notes 6 and 7) - (1,366,100) (1,366,100)
Appropriations Used (Notes 6 and 7) - (7,793) (7,793)
Net Change in Unexpended Appropriations - (1,370,448) (1,370,448)
Total Unexpended Appropriations 200,000 233,420 433,420
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balance 40,419,805 (349) 40,419,456
Appropriations Used (Notes 6 and 7) - 7,793 7,793
Transfers In/Out without Reimbursement - 62,342 62,342
Imputed Financing Sources - 218 218
Transfers to the General Fund and Other - (1,274,729) (1,274,729)
Total (Net Cost) Income of Operations (4,624,395) 451,722 (4,172,673)
Net Change in Cumulative Results of Operations (4,624,395) (752,654) (5,377,049)
Total Cumulative Results of Operations 35,795,410 (753,003) 35,042,407
NET POSITION $ 35,995,410 $ (519,583) $ 35,475,827
The accompanying notes are an integral part of these statements.
18
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
STATEMENT OF CHANGES IN NET POSITION
For the Fiscal Year Ended September 30, 2021
Funds from Other
Funds from Dedicated
than Dedicated
Collections
Collections
(in thousands) (Consolidated) Consolidated Total
(Consolidated)
UNEXPENDED APPROPRIATIONS
Beginning Balance $ 200,000 $ 480,643,698 $ 480,843,698
Appropriations Received - 906,019 906,019
Other Adjustments (Notes 6 and 7) - (478,796,257) (478,796,257)
Appropriations Used (Notes 6 and 7) - (1,149,592) (1,149,592)
Net Change in Unexpended Appropriations - (479,039,830) (479,039,830)
Total Unexpended Appropriations 200,000 1,603,868 1,803,868
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balance 41,127,295 (458,486) 40,668,809
Appropriations Used (Notes 6 and 7) - 1,149,592 1,149,592
Transfers In/Out without Reimbursement - (483,605) (483,605)
Imputed Financing Sources - 134 134
Transfers to the General Fund and Other - (4,446,792) (4,446,792)
Total (Net Cost) Income of Operations (707,490) 4,238,808 3,531,318
Net Change in Cumulative Results of Operations (707,490) 458,137 (249,353)
Total Cumulative Results of Operations 40,419,805 (349) 40,419,456
NET POSITION $ 40,619,805 $ 1,603,519 $ 42,223,324
The accompanying notes are an integral part of these statements.
19
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
STATEMENT OF BUDGETARY RESOURCES
For the Fiscal Year Ended September 30, 2022
Non-Budgetary
Credit Reform
Budgetary Financing Total
(in thousands) Account
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority, Net (discretionary and
mandatory) (Note 13) $ 37,767,076 $ 309,723 $ 38,076,799
Appropriations (discretionary and mandatory) (1,362,655) - (1,362,655)
Borrowing authority (discretionary and mandatory) - 4,092,974 4,092,974
Spending authority from offsetting collections (discretionary and mandatory) 124,935 551,828 676,763
Total Budgetary Resources $ 36,529,356 $ 4,954,525 $ 41,483,881
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 761,895 $ 4,733,356 $ 5,495,251
Unobligated balance, end of year:
Apportioned, unexpired accounts 227,971 205,927 433,898
Unapportioned, unexpired accounts 35,539,490 15,242 35,554,732
Unobligated balance, end of year (total) 35,767,461 221,169 35,988,630
Total Budgetary Resources $ 36,529,356 $ 4,954,525 $ 41,483,881
OUTLAYS, NET, AND DISBURSEMENTS, NET
Outlays, net (discretionary and mandatory) $ (116,953) $ - $ (116,953)
Distributed offsetting receipts (4,519,989) - (4,519,989)
Agency Outlays, Net (Discretionary and Mandatory) $ (4,636,942) $ - $ (4,636,942)
Disbursements, net (mandatory) $ (4,411,126) $ (4,411,126)
The accompanying notes are an integral part of these statements.
20
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
STATEMENT OF BUDGETARY RESOURCES
For the Fiscal Year Ended September 30, 2021
Non-Budgetary
Credit Reform
Budgetary Financing Total
(in thousands) Account
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority, Net (discretionary and
mandatory) (Note 13) $ 623,474,888 $ 12,289,484 $ 635,764,372
Appropriations (discretionary and mandatory)
(477,890,238) - (477,890,238)
Borrowing authority (discretionary and mandatory)
- 14,713,402 14,713,402
Spending authority from offsetting collections (discretionary and mandatory)
11,654,704 (11,582,981) 71,723
Total Budgetary Resources $ 157,239,354 $ 15,419,905 $ 172,659,259
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 115,083,681 $ 15,039,789 $ 130,123,470
Unobligated balance, end of year:
Apportioned, unexpired accounts
1,591,044 - 1,591,044
Unapportioned, unexpired accounts
40,564,629 380,116 40,944,745
Unobligated balance, end of year (total)
42,155,673 380,116 42,535,789
Total Budgetary Resources $ 157,239,354 $ 15,419,905 $ 172,659,259
OUTLAYS, NET, AND DISBURSEMENTS, NET
Outlays, net (discretionary and mandatory) $ (10,505,119) $ - $ (10,505,119)
Distributed offsetting receipts (14,030,288) - (14,030,288)
Agency Outlays, Net (Discretionary and Mandatory) $(24,535,407) $ - $ (24,535,407)
Disbursements, net (mandatory) $ (63,485,485) $ (63,485,485)
The accompanying notes are an integral part of these statements.
21
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The ESF was originally established by Section 10 of the Gold Reserve Act for the purpose of
stabilizing the exchange value of the dollar. Section 10 has been amended several times since 1934.
This Section currently authorizes the Secretary of the Treasury, with the approval of the President of
the U.S., to deal in gold, foreign exchange, and instruments of credit and securities consistent with
U.S. obligations in the IMF on orderly exchange arrangements and a stable system of exchange rates
(31 U.S.C. 5302(b)).
The FRBNY acts as the fiscal agent for the ESF, as permitted by the Federal Reserve Act. As the
fiscal agent, the FRBNY plays a significant role in the processing of foreign currency transactions
that the Secretary of Treasury (Secretary) authorizes. The manager of the ESF foreign currency
portfolio at the FRBNY consults regularly with the Federal Open Market Committee and Treasury
about the disposition of investments and the status of the portfolio. The level and currency
composition of the ESF foreign currency portfolio are the products of Treasury’s policy
determinations. The ESF management is responsible for the record keeping and investment
decisions for foreign currency transaction activity carried out by the FRBNY.
The global spread of COVID-19 in early spring of 2020 resulted in a severe global health and
economic crisis. In March 2020, the Federal Reserve Board of Governors (Board) and Congress
took steps to limit the damage caused by the pandemic in the U.S. by helping to reduce the financial
burden on individuals and their families, minimize business and employment losses, and enhance
the liquidity of the U.S. financial system.
Among other things, the Board used its emergency-lending authority under Section 13(3) of the
Federal Reserve Act (Section 13(3) hereafter) authorizing the FRBNY and the FRBB to establish
liquidity lending facilities for the purpose of making loans and purchasing debt and other commercial
paper of eligible entities to support key U.S. financial markets. Additionally, Congress passed the
CARES Act authorizing the Secretary to make certain loans, loan guarantees and other investments
to provide liquidity to eligible businesses, States, and municipalities and appropriating $500.0 billion
to the ESF to carry out such authorities. The ESF played a critical role in supporting and
implementing programs authorized by the Board and Congress. The ESF’s financial statements for
the fiscal years ended September 30, 2022 and 2021 continue to be impacted by the effects of these
transactions and reports them as either Economic Recovery Program or COVID-19.
Pursuant to Section 10 of the Gold Reserve Act, the ESF is not permitted to pay administrative
expenses. The CARES Act, however, provided an exception under its specific authority. Treasury’s
Office of International Affairs has responsibility for managing ESF operations, and Treasury’s
Office of the Deputy Chief Financial Officer provides the recordkeeping and financial reporting
services for the ESF. These Treasury offices bear all administrative expenses of the ESF except for
those authorized by the CARES Act. These authorized administrative expenses are reported on the
Statements of Net Cost and include immaterial imputed costs related to services received from other
federal entities (refer to Note 1L).
22
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
B. Basis of Accounting and Presentation
The accompanying financial statements have been prepared from ESF’s accounting records in
conformity with GAAP for federal entities, and OMB Circular No. A-136, Financial Reporting
Requirements, as revised. Accounting principles generally accepted for federal entities are the
standards prescribed by the Federal Accounting Standards Advisory Board (FASAB). The
American Institute of Certified Public Accountants recognizes FASAB as the official accounting
standards-setting body for the U.S. government. Certain presentations and disclosures may be
modified, if needed, to prevent the disclosure of classified information.
These financial statements consist of the Balance Sheets, the Statements of Net Cost, the Statements
of Changes in Net Position, and the Statements of Budgetary Resources. The statements and the
related notes are prepared in a comparative form to present both fiscal years 2022 and 2021
information. These statements should be read with the understanding that they are for a component
of the U.S. government, a sovereign entity.
Intra-governmental assets and liabilities are those due from or to other federal entities. Intra-
governmental earned revenues are collections or accruals of revenue from other federal entities,
and intra-governmental costs are payments or accruals of expenditures to other federal entities.
C. Fund Balance with Treasury
Fund Balance with Treasury is the aggregate amount of ESF’s accounts with the U.S. government’s
central accounts from which the ESF is authorized to make expenditures and pay liabilities. It is an
asset because it represents ESF’s claim to the U.S. government’s resources. The ESF does not
maintain cash in commercial bank accounts. Treasury processes cash receipts and disbursements.
D. Nonmarketable U.S. Treasury Securities
The ESF may invest dollars in excess of its immediate needs in overnight, nonmarketable U.S.
government securities issued by Treasury. Treasury uses the cash collected for general purposes and
issues securities to the ESF as evidence of the receipts. The securities are assets of the ESF and
liabilities of Treasury. These securities and related accrued interest receivable are reported as intra-
governmental assets on the ESF’s Balance Sheets at amounts that approximate their fair values.
The interest rate earned on the investments is equal to the overnight repurchase agreement rate as
established by the U.S. Treasury Bureau of the Fiscal Service (Fiscal Service). Interest income is
added to the balance and available for repurchasing securities unless authorized by the
Secretary/Congress for another purpose.
23
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
E. Foreign Currency and Foreign Currency Denominated Assets
Foreign Currency and FCDAs represent deposits and investments in foreign government securities
denominated in both euro and yen that have original maturities of three months or less. They are
both readily convertible to known amounts of cash, and so near their maturity that they present
insignificant risk of change in value due to changes in interest rates. Accordingly, these assets and
related accrued interest receivable are reported on the Balance Sheets at amounts that approximate
their fair values. The interest rate earned is based on the constant effective yield as determined by
the FRBNY. Those FCDAs that have original maturities greater than three months are reported
on the Balance Sheets as “Other Investments, Net” (refer to Notes 1(I) and 8). These investments
are recorded at fair value with all realized and unrealized holding gains or losses and reported on the
Statements of Net Cost depending upon the net results by category. For FY 2022 and FY 2021,
these net losses are reported as “Losses on Currency Valuation and Other - Foreign Currency and
Foreign Currency Denominated Assets” on the Statements of Net Cost.
F. Special Drawing Rights
The Special Drawing Right is an international reserve asset created by the IMF to supplement its
member countries’ official reserves. In addition to its role as a supplementary reserve asset, the
SDR serves as a means of payment within the IMF, as well as the unit of account for the IMF and
several other international organizations. Under its Articles of Agreement, the IMF may allocate
SDRs to member countries in proportion to their IMF quotas. The SDR’s value is based on a
weighted average of a basket of key international reserve currencies issued by IMF members (or
monetary unions that include IMF members) which have been determined by the IMF to be freely
usable currencies. These currencies are currently the U.S. dollar, the Euro, the Japanese yen, the
U.K. pound sterling, and the Chinese renminbi. The SDR carries a variable interest rate, calculated
weekly as a weighted average of representative interest rates on short-term debt in the money
markets of the SDR basket currencies. The ESF’s SDR Allocations and Holdings are revalued
monthly, based on the SDR valuation rate calculated by the IMF, and unrealized gains or losses
are recognized upon revaluation. Pursuant to the Special Drawing Rights Act of 1968, as amended,
the ESF holds all SDRs allocated to or otherwise acquired by the U.S.
SDR Holdings and Related Interest Receivable, and SDR Allocations and Related Interest Payable
The ESF records the SDR holdings that are resources to the U.S. as part of “Foreign Currency
and Other Monetary Assets,” and records the SDR allocations as a liability within the “Special
Drawing Right Allocations and Related Interest Payable” line on the Balance Sheets when the
IMF allocates SDRs to the U.S. The SDR allocations are a liability to the ESF since the U.S. is
obligated to repay the allocation amount to the IMF under the following circumstances: (i)
withdrawal by the U.S. from the IMF membership or termination of its position in the SDR
Department of the IMF; (ii) cancellation of the SDRs; or (iii) liquidation of the IMF or SDR
Department of the IMF. SDR holdings primarily increase as a result of IMF SDR allocations. The
ESF records SDR transactions as incurred, and includes acquisitions and sales of SDRs, interest
received on SDR holdings, interest charges on SDRs allocations, and valuation adjustments. The
U.S. government also receives remuneration in SDRs from the IMF based on claims on the IMF
24
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
as represented by the U.S. Reserve Position in the IMF and loans receivable from the supplemental
borrowing arrangement.
SDRs and related accrued interest receivable or payable are revalued to reflect exchange rates in
affect as of the reporting date. Gains or losses related to foreign currency revaluations are
recognized in the period of the fluctuations and reported on the Statements of Net Cost as “Losses
(or Gains) on Currency Valuation and Other,” depending upon the net results of valuation by asset
category.
SDR Certificates Issued to the Federal Reserve Banks
The Special Drawing Rights Act of 1968, as amended, authorizes the Secretary to issue certificates,
not to exceed the value of SDRs held against the certificates, to the Federal Reserve Banks (FRBs)
in return for dollar amounts equal to the face value of certificates issued. The ESF issues
certificates to finance the acquisition of SDRs from other countries or to provide U.S. dollar
resources to finance other ESF operations. Certificates issued are redeemed by the ESF at such
times and in such amounts as the Secretary may determine, and do not bear interest. Certificates
issued to the FRBs are reported on the Balance Sheets at their face value which approximates their
carrying value since, under the terms of the arrangements with the Board, there is no set repayment
date and no interest accrued while certificates remain outstanding.
G. Investments in Special Purpose Vehicles, Net
Pursuant to the CARES Act enacted in FY 2020 in response to the COVID-19 pandemic, the ESF
holds equity investments in Special Purpose Vehicles (SPVs) established by the Board through the
FRBNY and FRBB for the purpose of enhancing the liquidity of the U.S. financial system. The ESF
presents these non-federal investment holdings at their fair value within the “Investments in Special
Purpose Vehicles, Net” line of the Balance Sheets. Subsequent changes in fair value are recognized
as unrealized gains or losses on the Statements of Net Cost. For FY 2022 and FY 2021, these net
gains are reported within “Gains on Investments in Special Purpose Vehicles and Loans Receivable”
on the Statements of Net Cost. Refer to Note 6 for further discussion.
H. Loans Receivable, Net
Loans Receivable, Net relate to direct loans disbursed by the ESF as authorized by the CARES Act.
These direct loans provide liquidity to eligible businesses which incurred losses as a result of
COVID-19, including air carriers and other related businesses, as well as businesses critical to
maintaining national security. The ESF accounts for the direct loans under the provisions of credit
reform accounting pursuant to the Federal Credit Reform Act of 1990 (FCRA). These direct loans
are presented on the Balance Sheets as “Loans Receivable, Net” (refer to Note 7).
The ESF applies the accounting provisions of SFFAS No. 2, Accounting for Direct Loans and Loan
Guarantees, as amended (SFFAS No. 2). SFFAS No. 2 requires measurement of the asset or liability
at the net present value of the estimated future cash flows.
25
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
The primary purpose of the FCRA is to measure the cost of federal credit programs, and to place
the cost of such credit programs on a basis equivalent with other federal spending. FCRA requires
that the ultimate costs of a credit program be calculated and the budgetary resources be obtained
before incurring the direct loan obligations. To accomplish this, the ESF first predicts or estimates
the future performance of direct loans when preparing the annual budget. The ESF re-estimates
the data used for these budgetary estimates at the fiscal year-end to reflect changes in actual loan
performance and actual interest rates in effect when the loans were issued. The re-estimated data
reflects adjustments for market risks, asset performance, and other key variables and economic
factors. The ESF then uses the re-estimated data to report the adjustment to the cost of the direct
loans disbursed. For FY 2022 and FY 2021, these net gains are reported within “Gains on
Investments in Special Purpose Vehicles and Loans Receivable” line on the Statements of Net
Cost.
Cash flows associated with the ESF’s credit programs generally include disbursements,
repayments, repurchases, fees, recoveries, interest, dividends, proceeds from sales of instruments,
borrowings from Treasury, negative subsidy, and the subsidy cost received from the program
account. The ESF draws security-level data and assumptions used as the basis for cash flow model
forecasts and program performance from widely available market sources, as well as information
published by investees. The recorded subsidy cost associated with each of the credit programs
represents the difference between disbursed amounts and the net present value of future cash flows
the ESF anticipates receiving. The subsidy allowance, as initially established by the subsidy cost,
takes into consideration projected repayments and defaults, and the projected cost of borrowings.
The ESF amortizes the allowance to reflect the difference between projected and actual financing
costs.
The ESF’s actions, as well as changes in legislation, may impact estimated future cash flows and
related subsidy costs. The ESF recognizes cost or cost savings of a modification in subsidy costs
when the terms of a program are modified. Workouts are actions taken to maximize repayments
of existing credit programs, and the expected effects on cash flows are included in the original
estimate and re-estimates of the subsidy cost. Subsidy costs are also impacted by re-estimates,
which may occur as a result of updates to the original program subsidy cost estimates to reflect
actual cash flows experience, as well as changes in forecasts of estimated future cash flows
associated with the credit program.
I. Other Investments, Net
Other Investments are FCDAs that have original maturities greater than three months. These
holdings are normally invested in interest-bearing securities issued or held through foreign
governnents or monetary authories. These investments are recorded at fair value with all realized
and unrealized holding gains or losses and reported on the Statements of Net Cost depending upon
the net results by category. For FY 2022 and FY 2021, these net losses are reported as “Losses on
Currency Valuation and Other - Other Investments” on the Statements of Net Cost.
Prior to FY 2022, the ESF classified its Other Investments as either trading or available-for-sale
(AFS) securities. In FY 2022, the ESF reclassified its portfolio of AFS securities to trading to
26
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
introduce operational efficiencies in light of the declining size of the AFS portfolio which resulted
in insignificant impacts on the ESF financial statements.
Interest on investments, amortization of premiums, and accretion of discounts are recognized on an
accrual basis as “Interest Income - Other Investments” on the Statements of Net Cost. Premiums
and discounts are amortized or accreted over the life of the related investment security as an
adjustment to yield using the effective interest method.
J. Debt
Debt represents borrowings payable to the Fiscal Service that were incurred to finance, in part, the
making of investments and loans, as authorized by the CARES Act. Interest costs accrue as an
expense as incurred and are reported as entity costs on the Statements of Net Cost.
K. Commitments and Contingencies
In accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government, the ESF
recognizes material contingent liabilities meeting the following criteria:
• A past event or exchange transaction has occurred;
• A future cash outflow is probable; and
• A future cash outflow is measurable
The estimated liability recorded is either a specific amount or within a range of amounts. If some
amount within the range is a better estimate than any other amount within the range, that amount
is recognized. If no amount within the range is a better estimate than any other amount, the ESF
recognizes the minimum amount in the range, and discloses the range and a description of the
nature of the contingency. The ESF follows this policy in recording a contingent liability, related
to amounts that could become payable to the Federal Old-Age and Survivors Insurance Trust Fund,
pursuant to the CARES Act, in connection with ESF’s Investments in SPVs and loans receviable
that were financed by a combination of appropriations and Fiscal Service debt (refer to Notes 6
and 7), and other loss contingencies that could arise from claims, assessments, litigations, fines,
penalties, and other sources.
If one or more, but not all, of the above criteria for recognition are met, and there is a reasonable
possibility of loss, the ESF will disclose, if material, the nature of the contingent liability, along with
a range of possible loss, if estimable, and a description of the nature of the contingency.
L. Revenue and Other Financing Sources
The ESF’s core exchange stabilization program activities are primarily financed through exchange
revenue the ESF receives from others, including interest received on Nonmarketable U.S. Treasury
Securities, FCDAs, Other Investments, and SDRs. The ESF’s economic recovery program uses
financing sources such as appropriations provided by Congress and borrowings from Fiscal to
finance these activities. The ESF recognizes exchange revenue when earned, i.e., goods are
27
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
delivered or services are rendered. The ESF recognizes appropriations used as financing sources
when related expenses are incurred or assets are purchased.
As a component entity of Treasury, the ESF receives goods and services from other federal entities
or from other entities within Treasury at no cost or as a cost less than the full cost. The ESF
recognizes these subsidized costs on the Statements of Net Cost as “Administrative Expenses” and
recognizes the imputed financing for these costs on the Statements of Changes in Net Position as
“Imputed Financing Sources”. As a result, there is no effect on Net Position.
M. Net Position
Unexpended Appropriations
Unexpended Appropriations represents the amount of spending authorized as of year-end that is
unliquidated or unobligated and has not lapsed, been rescinded, or withdrawn. Appropriations
remain available for upward or downward adjustment of obligations until canceled. The ESF reports
adjustments related to unexpended appropriations, such as cancellations of expired funds or
rescissions, on the Statements of Changes in Net Position.
Cumulative Results of Operations
Cumulative Results of Operations represents the net results of the ESF’s operations not funded by
appropriations or some other source, since inception through the end of the fiscal year. Also included
as a reduction in Cumulative Results of Operations are accruals for which the related expenses
require funding from future appropriations, earnings and assessments. These future funding
requirements include, among others, credit reform cost re-estimates and expenses for contingent
liabilities, if applicable.
N. Funds from Dedicated Collections
The ESF accounts for revenues and other financing sources for Funds from Dedicated Collections
separately from other funds within ESF’s financial statements. Such funds are financed by
specifically identified revenues provided to the U.S. government by non-federal sources, often
supplemented by federal and other financing sources, which remain available over time. Statute
requires the use of these specifically identified revenues and other financing sources for designated
activities, benefits, or purposes. (Refer to Note 12).
The federal government does not set aside assets to pay future benefits or other expenditures
associated with the ESF’s Funds from Dedicated Collections. The dedicated cash receipts from
transactions with the public are deposited into Nonmarketable U.S. Treasury Securities held at the
Fiscal Service, which uses the cash for general government purposes. Treasury securities are issued
to the ESF as evidence of its receipts, and provide the ESF with authority to draw upon Treasury to
make future expenditures. Treasury securities are an asset to the ESF and a liability to Treasury.
28
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
O. Appropriations and Other Budgetary Activity
The ESF records appropriations when authorized by legislation. Incurred obligations of
appropriations are recorded when the ESF places orders or signs contracts for goods and services, or
takes other actions that require the ESF to make payments to the public or another federal entity.
Outlays are recorded when disbursements are made. As of September 30, 2022 and 2021, all
liabilities are covered by budgetary resources except for the immaterial amounts related to unfunded
accrued payroll and other benefits-related accruals.
With respect to credit programs executed in accordance with FCRA, the ESF also has permanent
and indefinite appropriation authority to fund increases in the projected subsidy costs of credit
programs as determined by the re-estimation process required by FCRA (refer to Note 1H above).
P. Tax-Exempt Status
As a component of Treasury, which is an agency of the U.S. government, the ESF is exempt from
all income taxes imposed by any governing body, whether it is a federal, state, commonwealth, local,
or foreign government. Accordingly, no provision for income taxes is recorded.
Q. Fair Value Measurement
The ESF estimates certain of its financial instruments at fair value, a market-based measurement.
For certain assets and liabilities, observable market transactions or market information may be
available. For other assets and liabilities, observable market transactions and market information
may not be available. However, the objective of a fair value measurement in both cases is to estimate
the price at which an orderly transaction to sell an asset or to transfer a liability between market
participants at the measurement date occurs under current market conditions.
When a price for an identical asset or liability is not observable, a reporting entity measures fair
value using another valuation technique that maximizes the use of relevant observable inputs and
minimizes the use of unobservable inputs. Because fair value is a market-based measurement, it is
measured using the assumptions that market participants would use when pricing the asset or
liability, including assumptions about risk.
The fair value measurement of an asset or a liability is categorized with different levels of fair value
hierarchy as follows:
• Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the
reporting entity can access at the measurement date.
• Level 2 - Inputs other than quoted prices included within Level 1 inputs that are observable
for the asset or liability, either directly or indirectly.
• Level 3 - Unobservable inputs for the asset or liability.
The inputs or methodology used for valuing assets and liabilities are not necessarily indicative of the
risks associated with those assets and liabilities.
29
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Valuation of Investments in SPVs, net includes Level 3 inputs. Refer to Note 6 for further
information about these financial assets, including changes in Level 3 financial assets and related
fair value measurements.
The ESF’s FCDAs and Other Investments, Net are Level 1 measurements since these financial assets
are traded in active markets where quoted values are readily available. Refer to Notes 4 and 8.
R. Risks, Uncertainties and Use of Estimates
The ESF faces certain risks and uncertainties as a result of holding foreign currency securities. The
price of the ESF’s holdings of such securities may fluctuate widely as a result of volatility in foreign
currency markets and changes in real and perceived credit risk of ESF’s counterparties.
Credit risk related to the ESF’s holdings has the potential, no matter how remote, for financial loss
from a failure of a borrower or counterparty to perform in accordance with underlying contractual
obligations.
The preparation of financial statements in accordance with GAAP requires management to make
certain estimates and assumptions that affect the reported amounts of assets, liabilities, and
disclosures of contingent assets and liabilities as of the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. Transactions involving
estimates principally include the ESF’s holdings in FCDAs and Investment Securities, as well as the
Investments in SPVs, Loans Receivable and related subsidy costs (refer to Notes 1I and 1H).
Amounts based on estimates involve numerous assumptions subject to varying and potentially
significant degrees of judgment and uncertainty. Therefore, accounting estimates and assumptions
may change over time and actual results could differ materially from those estimates.
S. Disclosure Entities and Related Parties
SFFAS No. 47, Reporting Entity, requires that the financial statements reflect the balances and
activities of consolidation entities, including Treasury bureaus and other reporting entities, meeting
the following “principles for inclusion” when considered as a whole: (i) the entity is included in the
Budget of the U.S. (also known as the President’s Budget), (ii) the U.S. government holds “majority
ownership interest,” (iii) the U.S. government has “control with risk of loss or expectation of
benefit,” or (iv) it would be misleading to exclude such entity. SFFAS No. 47 also provides guidance
for assessing whether an organization meeting the inclusion principles is reported as a disclosure
entity or related party.
A disclosure entity exists when the ESF determines that an entity meets any of the SFFAS No. 47
“principles for inclusion” with respect to the U.S. government but does not meet the characteristics
of a “consolidation entity” included in its principal financial statements and footnotes.
30
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
A related party exists when one party to an established relationship has the ability to exercise
significant influence over another party in making policy decisions. Related parties generally do not
meet the SFFAS No. 47 inclusion principles; however, the ESF reports on any relationship that is of
such significance that it would be misleading to exclude information about that entity.
Disclosure entities and related parties are not considered components of the ESF reporting entity
and, thus, are only disclosed in the notes to the ESF financial statements. Using the principles
prescribed in SFFAS No. 47, the ESF identified the following disclosure entity as of September 30,
2022 and 2021. There were no related parties.
FRB-Managed Special Purpose Vehicles – Liquidity Lending Facilities
In response to the COVID-19 pandemic, the ESF holds equity investments in SPVs established by
the Board through the FRBNY and FRBB for the purpose of enhancing the liquidity of the U.S.
financial system. The ESF’s involvement in these programs represents non-permanent intervention
activities designed to help mitigate the economic impacts of the pandemic. Accordingly, ESF’s
equity interests in these SPVs meet the SFFAS No. 47 criteria for classifying the SPV investments
as disclosure entities. The value of these investments is presented within the “Investments in Special
Purpose Vehicles, Net” line on the Balance Sheets (refer to Note 6).
NOTE 2 – FUND BALANCE WITH TREASURY
Fund Balance is increased: (i) by receiving appropriations, reappropriations, continuing resolutions,
appropriation restorations, and allocations; (ii) when transfers and reimbursements from other
federal agencies are received; (iii) by amounts borrowed from the Fiscal Service; and (iv) by amounts
collected and credited to appropriation or fund accounts.
Fund Balance is reduced: (i) when disbursements are made to pay liabilities or to purchase assets,
goods, and services; (ii) for making investments; (iii) when expired appropriations are canceled, or
the ESF makes transfers and reimbursements to other federal entities, non-federal entities, or to the
General Fund; and (iv) due to sequestration or rescission of appropriations.
Interest income on Fund Balance in the FCRA funds is reported within the “Interest Income on
Uninvested Funds” line on the Statements of Net Cost and is received annually on
September 30. For the fiscal years ended September 30, 2022 and 2021, the ESF recorded interest
income totaling $28 million and $130 million respectively, related to these fund balances. The
accrued interest income was collected in full on September 30, 2022 and 2021.
Fund balance activity for the fiscal years ended September 30, 2022 and 2021, and fund balance
status as of September 30, 2022 and 2021 are presented below.
31
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Fiscal Year Ended
(in thousands) September 30, 2022 September 30, 2021
Balance, beginning of period $ 1,984,276 $ 480,643,983
Rescissions (1,366,100) (478,796,257)
Appropriations Received 3,445 906,018
Transfers to the General Fund (4,569,932) (14,030,287)
Borrowings from (Repayments to) Fiscal Service, Net (4,520,036) (63,104,698)
Disbursements for Loans and Investments - (857,984)
Return of Investment Capital and Collections of Loan Principal 9,079,852 77,670,801
Disbursements for Net Interest, Administrative Costs and Other (156,812) (447,300)
Balance, end of period $ 454,693 $ 1,984,276
As of
(in thousands) September 30, 2022 September 30, 2021
Unobligated Balance:
Available $ 433,898 $ 1,591,044
Unavailable 15,242 380,116
Obligated Balance Not Yet Disbursed 5,553 13,116
Total Status of Fund Balance with Treasury $ 454,693 $ 1,984,276
The Unobligated Balance, both available and unavailable, decreased by a total of $1.5 billion year-
over-year primarily due to the $1.4 billion rescission enacted in FY 2022 as part of the Infrastructure
Investment and Jobs Act. Additionally, $156 million of the $160 million in downward re-estimates
for the Passenger Air Carrier program was financed by Fund Balance with Treasury rather than
borrowing from the Fiscal Service. Portions of the Unobligated Balance include amounts
apportioned and available in anticipation of future payments to the Federal Old-Age and Survivors
Insurance Trust Fund established under Section 201(a) of the Social Security Act. Refer to Notes 6
and 7 and for additional details.
NOTE 3 – NONMARKETABLE U.S. TREASURY SECURITIES
The interest rate earned on the Nonmarketable U.S. Treasury Securities is equal to the overnight
repurchase agreement rate as established by the Fiscal Service. These market-based investments had
a cost/acquisition value of $18.4 billion and $22.8 billion on September 30, 2022 and 2021,
respectively, which approximated their fair value. In FY 2022, the decrease is primarily the result
of utilizing the Nonmarketable U.S Treasury Securities balance to purchase $4.5 billion of SDRs.
Refer to Note 5 for additional details.
Statutory Debt Limit
The statutory debt limit is the total amount of money that the U.S. government is authorized to
borrow to meet its existing legal obligations, with certain adjustments. The ESF’s Nonmarketable
U.S. Treasury Securities are part of the authorized debt. Treasury has statutory authority to take
32
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
certain “extraordinary measures” in the event that the public debt nears the statutory debt limit,
and the statutory debt limit has not been raised or suspended or otherwise lifted. One such
extraordinary measure is the suspension of new issuances of U.S. Treasury securities to the ESF.
When Treasury discontinues its use of extraordinary measures, Treasury resumes normal debt
management operations. While Treasury may restore the ESF, relevant statutes do not permit
Treasury to pay the ESF interest lost during a period of delay. No suspension of new issuances to
the ESF occurred in 2022 or 2021.
NOTE 4 – FOREIGN CURRENCY AND FOREIGN CURRENCY DENOMINATED
ASSETS
Foreign currency and FCDAs represent foreign deposit accounts and securities were valued at
$12.8 billion and $15.7 billion as of September 30, 2022 and 2021, respectively. The totals were
comprised of $6.9 billion of foreign currency and $5.9 billion of FCDAs for FY 2022 and
$9.5 billion of foreign currency and $6.2 billion of FCDAs for FY 2021. Losses related to FCDAs
reported on the Statements of Net Cost as “Losses on Currency Valuation and Other - Foreign
Currency and Foreign Currency Denominated Assets” were $2.1 billion and $0.3 billion for FY
2022 and FY 2021, respectively.
NOTE 5 – SPECIAL DRAWING RIGHTS
SDR Holdings and SDR Allocations are reported as an asset and liability respectively in the
financial statements of the ESF. The ESF also issued certificates to the Federal Reserve valued at
$5.2 billion which were reported as a liability on the Balance Sheets as of September 30, 2022 and
2021.
SDR Allocations
SDRs, once allocated to the U.S., are permanent resources unless:
• They are canceled by an 85 percent majority decision of the total voting power of the
Board of Governors of the IMF;
• The SDR Department of the IMF is liquidated;
• The IMF is liquidated; or
• The U.S. chooses to withdraw from the IMF or terminate its participation in the SDR
Department.
Due to the fact that the SDRs could be required to be repaid under the limited circumstances above,
the ESF carries a liability related to such allocations.
Except for the payment of interest and charges on SDR Allocations to the U.S., the payment of
ESF’s liability related to the SDR Allocations is conditional on events listed above, in which the
U.S. has a controlling vote or makes a unilateral determination. Allocations of SDRs were made
during calendar years 1970, 1971, 1972, 1979, 1980, 1981, 2009, and 2021. As of September 30,
2022, and 2021, the value of SDR Allocations to the U.S., including related interest payable, was
33
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
the equivalent of $147.4 billion and $161.8 billion, respectively. The ESF’s balance in SDR
Allocations decreased by $14.4 billion primarily due to a valuation gain of $14.8 billion recorded
within the “Gains on Currency Valuation – Special Drawing Right Allocations” line on the
Statements of Net Cost.
SDR Holdings
SDR Holdings represent SDRs held by the ESF resulting from these SDR activities, primarily the
result of IMF allocations. SDR transactions are recorded as incurred, and include acquisitions and
sales of SDRs, interest received on SDR holdings, interest charges on SDRs allocations, and
valuation adjustments. The SDR Holdings and related net accrued interest receivable are revalued
to reflect exchange rates in effect as of the reporting date.
On August 2, 2021, the Board of Governors of the IMF made a general allocation of SDRs, which
included an allocation valued at $112.8 billion to the U.S. government, increasing the ESF’s
balance in SDR Holdings, and a corresponding increase in SDR Allocations, from $51.7 billion as
of September 30, 2020 to $163.9 billion as of September 30, 2021. During FY 2022, the ESF’s
balance in SDR Holdings decreased by $10.7 billion primarily due to a valuation loss of
$15.3 billion recorded within the “Losses on Currency Valuation and Other – Special Drawing
Right Holdings” line on the Statements of Net Cost. This is partially offset by $4.5 billion of SDR
purchases in FY 2022, from ten IMF participants (Ukraine, Paraguay, Jamaica, Serbia, Honduras,
Egypt, Tanzania, Pakistan, Mozambique, and Laos).
The following schedule reflects the activity related to SDR Holdings during fiscal years 2022 and
2021, by dollar equivalent and SDR:
As of September 30,
(Dollar Equivalent in thousands) 2022 2021
Balance, beginning of period $ 163,874,175 $ 51,732,943
SDR Purchases 4,482,035 -
General/Special Allocations - 112,833,910
Interest Credits on Holdings 479,784 37,597
Interest Charges on Allocations (465,010) (36,120)
Remuneration 95,233 22,889
IMF Annual Assessment (1,973) (851)
Net Gain/(Loss) on Valuation of Holdings (15,289,082) (716,193)
Balance, end of period (1) $ 153,175,162 $ 163,874,175
(1) This amount excludes related interest receivable of $421 million and $10 million as of September 30, 2022 and 2021, respectively.
34
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
As of September 30,
(SDRs in thousands) 2022 2021
Balance, beginning of period 116,316,038 36,753,372
SDR Purchases 3,282,336 -
General/Special Allocations - 79,546,208
Interest Credits on Holdings 359,420 26,311
Interest Charges on Allocations (348,319) (25,277)
Remuneration 71,308 16,017
IMF Annual Assessment (1,467) (593)
Balance, end of period 119,679,316 116,316,038
The table above reflects the actual dollar equivalent amount of SDRs received or transferred by the
ESF. Amounts within the financial statements are computed on an accrual basis and will thus differ
due to: 1) changes in SDR exchange rates between accrual date and transaction date, and 2) changes
in related interest receivable balances between beginning and end of year.
Other SDR Activities
The ESF is the only fund within Treasury permitted to transact in SDRs. Such SDRs received as
remuneration become the resources of the ESF, as required by law. The U.S. government also
receives remuneration in SDRs from the IMF based on claims on the IMF as represented by the
U.S. Reserve Position in the IMF and loans receivable from the supplemental borrowing
arrangement. The remuneration is credited to the ESF, which then transfers to the Treasury
General Account (TGA) an equivalent amount of dollars plus nominal interest. The ESF's receipt
of the SDRs and payment of the dollar equivalent to the TGA are not simultaneous. Typically, the
payment is several weeks after the receipt of SDRs from the IMF. Therefore, the ESF must
reimburse the TGA the interest it earned on the dollar equivalent of the SDRs held on behalf of
the TGA during the period which elapsed between the receipt of the SDRs and the dollar payment
to the TGA.
NOTE 6 –INVESTMENTS IN SPECIAL PURPOSE VEHICLES, NET
The global spread of the COVID-19, which commenced in early spring of 2020 and continued
throughout FY 2021 and FY 2022, resulted in a severe global health and economic crisis. In FY
2020 and FY 2021, Congress took steps to limit the damage the pandemic in the U.S. caused by
passing several key statutes, including the CARES Act, CAA, and American Rescue Plan Act of
2021, P.L. 117-2. The relief funding these legislative Acts provided helped reduce the financial
burden on individuals and their families, minimized business and employment losses, and enhanced
the liquidity of the U.S. financial system.
The tables below summarize the ESF’s key budgetary resources and the status of those resources by
program for the fiscal years ended September 30, 2022 and 2021, enacted in response to the COVID-
19 pandemic:
35
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Fiscal Year Ended September 30, 2022
Beginning Rescissions and Remaining
Less:
Available Other Available
Obligations
Budgetary Budgetary
(in thousands) Adjustments(1) Incurred
Resources Resources
Direct Loans to Air Carriers and
$ 1,591,043 $ (1,363,072) $ - $ 227,971
National Security Business
Total CARES Act Authority(2) $ 1,591,043 $ (1,363,072) $ - $ 227,971
(1)
Rescissions and Other Adjustments primarily include a $1,366 million rescission of CARES Act authority related to the Direct Loans to Air Carriers
and National Security Business pursuant to the Infrastructure Investment and Jobs Act (P.L. 117-58).
(2)
Total CARES Act Authority does not include amounts related to the Treasury and the ESF’s program support and oversight of these programs.
Fiscal Year Ended September 30, 2021
Beginning Rescissions and Remaining
Less:
Available Other Available
Obligations
Budgetary Budgetary
(in thousands) Adjustments (1) Incurred
Resources Resources
Section 13(3) Federal Reserve
$ 423,835,009 $ (423,835,009) $ - $ -
Programs - Liquidity Facilities
Direct Loans to Air Carriers and
44,301,242 (42,692,474) (17,725) 1,591,043
National Security Business
Total CARES Act Authority(2) $ 468,136,251 $ (466,527,483) $ (17,725) $ 1,591,043
(1)
Rescissions and Other Adjustments primarily include a total of $478,796 million of CARES Act appropriation authority that was rescinded pursuant
to the CAA. Partially offsetting this amount was a de-obligation of $12,269 million that was to be used to fund the subsidy portion of obligated but
undisbursed CARES Act investments and loans
(2)
Total CARES Act Authority does not include amounts related to the Treasury and the ESF’s program support and oversight of these programs.
Section 13(3) Federal Reserve Programs
In FY 2020, pursuant to its emergency-lending authority under Section 13(3), the FRBNY and FRBB
implemented certain emergency lending facilities through SPVs governed by Limited Liability
Company (LLC) agreements between the ESF and the applicable FRB. The FRBNY and FRBB
established these SPVs for the purpose of making loans and purchasing debt and other commercial
paper of eligible entities affected by COVID-19. The SPVs purchased assets and offered loans
collateralized by corporate bonds, commercial paper, asset-backed securities, and municipal debt
and loans to certain eligible states, municipalities, businesses and non-profit organizations affected
by COVID-19. The FRBNY and FRBB made loans to the SPVs, on a recourse basis, to fund the
SPVs’ purchase of assets from, or loans to, eligible U.S. issuers and businesses with certain assets
as collateral. As the managing member of each SPV, FRBNY or FRBB, as applicable, has the
exclusive right to manage the business of the SPV and has all powers and rights necessary to carry
out the purposes and business of the SPV.
In FY 2020, the ESF disbursed an aggregate total of $102.5 billion in equity to the SPVs (and
committed to future disbursements of an additional $92.5 billion) to protect the FRBNY and FRBB
from potential losses from financing the facilities. The ESF provided this protection by committing
and contributing capital in the form of cash to the SPVs in exchange for a preferred equity interest
in the SPVs. To the extent the FRBNY and FRBB experience losses, the preferred equity accounts
absorb such losses up to the maximum amounts per the terms of the LLC agreements. As a preferred
equity member, the ESF has no voting, consent, or control rights over the SPVs. The managing
member and preferred equity member are the sole members of the SPVs.
36
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Under the initial terms of the LLC agreements, membership interests would not receive periodic or
other distributions during the life of the SPV (except for the interim distribution that occurred
pursuant to the amendments to the LLC agreements, as further discussed below). Distribution of the
SPV’s assets would be made only upon dissolution of the facility, after liabilities and other interests
were paid. Upon dissolution, the ESF will be entitled to an amount equal to the cash balance of the
preferred equity account plus 90 percent of the cash balance in all the other accounts of the SPV.
The applicable FRB is entitled to 10 percent of the cash balance in all the other accounts of the SPV.
The ESF will use the final distribution amount received to repay all costs associated with the
preferred equity investment in the SPV, including the initial subsidy amounts funded by
appropriation and all amounts borrowed from Fiscal Service. In accordance with the CARES Act,
any excess amount of the final distribution after repayment of the appropriations and debt will be
deposited into the Federal Old-Age and Survivors Insurance Trust Fund established under Section
201(a) of the Social Security Act.
In December 2020, Treasury and the Federal Reserve amended the SPV LLC Agreements for each
of the SPVs funded under the CARES Act. The amended agreements provided for the cancellation,
at that time, of undisbursed investment commitments totaling an aggregate of $92.5 billion, which
the ESF de-obligated in FY 2021. The amendment also provided for interim distributions to the
ESF, received in FY 2021, totaling an aggregate of $62.2 billion. In November 2021, Treasury and
the Federal Reserve further amended the SPV LLC Agreements, which provided for additional
interim distributions to the ESF, received in November 2021 and May 2022, totaling an aggregate
of $8.5 billion. The interim distributions in both FY 2022 and FY 2021 represent the amounts by
which funds that were contributed to each facility (and earnings thereon) exceeded the purchase price
of the assets, loans, and/or loan participations, as the case may be, within each facility at such time.
The ESF used this cash received to repay outstanding debt to the Fiscal Service that was used to
finance the non-subsidized portion of these investment transactions. Future interim distributions will
take place in November and May of each fiscal year in accordance with the terms of the most recent
amended agreements. The ESF cannot use the funds remaining in the SPVs funded under the
CARES Act for further lending, asset purchases, or extensions of credit.
Remaining
Outstanding Outstanding
Equity Equity
Contribution FY 2022 Interim FY 2022 Final Contribution
(in thousands)
9/30/21 Distribution Dissolution 9/30/22(1)
Main Street Facilities $ 16,572,055 $ (2,681,123) $ - $ 13,890,932
Municipal Liquidity Facility 6,276,224 (3,381,532) - 2,894,692
Term Asset-Backed Securities 3,549,073 (2,394,964) - 1,154,109
Total 13(3) Facilities $ 26,397,352 $ (8,457,619) $ - $ 17,939,733
(1)
These amounts exclude cumulative 9/30/22 fair valuations associated with these assets. See table below for such fair valuations.
37
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Remaining
Outstanding Outstanding
Equity Equity
Contribution FY 2021 Interim FY 2021 Final Contribution
(in thousands) 9/30/20 Distribution Dissolution (1) 9/30/21(2)
Corporate Credit Facilities(3) $ 37,500,000 $ (23,618,984) $ (13,881,016) $ -
Main Street Facilities 37,500,000 (20,927,945) - 16,572,055
Municipal Liquidity Facility 17,500,000 (11,223,776) - 6,276,224
Term Asset-Backed Securities 10,000,000 (6,450,927) - 3,549,073
Commercial Paper Funding Facility(3) 10,000,000 - (10,000,000) -
Money Market Mutual Fund Liquidity
1,500,000 - (1,500,000) -
Facility(3)
Total 13(3) Facilities $ 114,000,000 $ (62,221,632) $ (25,381,016) $ 26,397,352
(1)
These amounts exclude residual amounts received in connection with the dissolution of these facilities.
(2)
These amounts exclude cumulative 9/30/21 fair valuations associated with these assets. See table below for such fair valuations.
(3)
The FRBNY or FRBB established these liquidity facilities in FY 2020. During FY 2021, the facilities ceased making loans and extending credit, and
capital contributions (and earnings thereon) were returned to the ESF. The Commercial Paper and Money Market facilities were dissolved in FY 2021
and the Corporate Credit Facility was dissolved in FY 2022.
The following is a description of the remaining liquidity lending facilities. Following these
descriptions is a section entitled, “Investments in Special Purpose Vehicles, Net” which discusses
the accounting treatment for these facilities.
Main Street Facilities LLC
On May 18, 2020, the FRBB established the Main Street Facilities LLC (MSF) SPV to support
lending to small- and medium-sized businesses that were in sound financial condition before the
onset of the COVID-19 pandemic and have good post-pandemic prospects. Through loans from
the FRBB, the SPV purchased 95 percent participations in loans originated by eligible lenders,
while the lender retained five percent. Loans issued under the MSF program have a five-year
maturity, principal payments are deferred for two years, and interest payments are deferred for one
year. The SPV ceased purchasing loan participations on January 8, 2021.
Municipal Liquidity Facility LLC
On May 1, 2020, the FRBNY established the Municipal Liquidity Facility LLC (MLF) SPV to
help state and local governments manage cash flow pressures while continuing to serve households
and businesses in their communities. The FRBNY loaned to the MLF, on a recourse basis, to
allow the facility to purchase short-term notes directly from eligible U.S. states (including the
District of Columbia), counties and cities. The SPV ceased purchasing eligible notes on December
31, 2020.
38
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Term Asset-Backed Securities Loan Facility LLC
FRBNY established the Term Asset-Backed Securities Loan Facility II LLC (TALF) SPV on
March 23, 2020, to support the flow of credit to consumers and businesses to stabilize the U.S.
financial system. The TALF facilitated the issuance of asset-backed securities backed by student
loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration,
commercial mortgages, and certain other assets. No new credit extensions were made after
December 31, 2020.
Investments in Special Purpose Vehicles, Net
As of September 30, 2022 and 2021, the preferred equity investments in the SPVs were valued as
follows:
Cumulative Valuation
Gross Investments
Gain/(Loss) 9/30/22 Fair Value
(in thousands) As of 9/30/22
Main Street Facilities (1) $ 13,890,932 $ (200,338) $ 13,690,594
Municipal Liquidity Facility (1) 2,894,692 44,392 2,939,084
Term Asset-Backed Securities (1) 1,154,109 51,015 1,205,124
Total Investments in SPVs, Net $ 17,939,733 $ (104,931) $ 17,834,802
(1)
In FY 2022, the ESF received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and earnings
thereon) exceeded the purchase price of the assets held within these SPVs.
Cumulative Valuation
Gross Investments
Gain/(Loss) 9/30/21 Fair Value
(in thousands) As of 9/30/21
Main Street Facilities(1) $ 16,572,055 $ (998,749) $ 15,573,306
Municipal Liquidity Facility(1) 6,276,224 176,823 6,453,047
Term Asset-Backed Securities(1) 3,549,073 3,022 3,552,095
Total Investments in SPVs, Net $ 26,397,352 $ (818,904) $ 25,578,448
(1)
In FY 2021, the ESF received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and earnings
thereon) exceeded the purchase price of the assets held within these SPVs.
Budgetary vs. Proprietary Accounting Treatment of SPVs
The CARES Act stipulated that the ESF’s SPV investment transactions, to the extent they involved
the use of the CARES Act appropriation, be funded in accordance with the provisions of FCRA.
For budgetary accounting purposes, the ESF accounted for the initial investment financing and
subsequent activity related to these investments pursuant to FCRA guidelines in accordance with
Section 185 of OMB Circular A-11, Preparation, Submission, and Execution of the Budget.
For proprietary accounting purposes, the ESF accounted for all SPV investments as equity
investments at fair value, rather than as direct loans, as these instruments do not meet the criteria
of SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees. Accordingly, the ESF
records changes in the fair value of these investments as realized or unrealized fair value gains or
39
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
losses on a net basis within the “Gains on Investments in Special Purpose Vehicles and Loans
Receivable” line item of the Statements of Net Cost. The budgetary subsidy cost allowance is
based on cash flows discounted using a Treasury rate to determine the subsidy cost, and the
proprietary fair value adjustment is based on market interest rates to discount projected cash flows.
For the fiscal years ended September 30, 2022 and 2021, the ESF recorded an unrealized fair value
net gain of $0.7 billion and $3.8 billion related to these investments, respectively.
Fair Value Estimation Factors
In determining the fair value of the SPV investments, the ESF uses available market pricing data,
forward interest rates, expected loss rates, historical prepayment rates, and contractual instrument
terms to estimate scenario-specific, expected cash flows for the SPVs. For market pricing data,
the ESF specifically uses: (i) active market prices for the TALF program that owns publicly traded
securities, (ii) Bloomberg estimated prices for the MLF program, which owns securities that do
not have active market prices but have estimated prices in Bloomberg, or (iii) market prices for
baskets of comparable publicly traded bonds for the MSF program, based on relevant bond
attributes, such as instrument credit rating, time to maturity, issuer industry, coupon rate, and call
provisions. The ESF uses contractual instrument terms, active market prices, expected loss rates,
historical prepayment rates, and, where applicable, forward interest rates, to estimate scenario-
specific, expected cash flows, which are discounted using market-based discount rates
In deriving the fair value of the SPV investments, the ESF relied upon market observed prices for
SPV purchased assets and collateral, market prices for comparable assets, asset valuations
performed by third parties, historical asset data, discussions with subject matter experts within
Treasury, and other information pertinent to the valuations. Because the instruments are not
publicly traded, there is no comparable trading information available. The fair valuations rely on
Level 3 inputs that reflect assumptions about the expectations that market participants would use
in pricing.
Transfer of Proceeds Upon Dissolution of SPVs
For those SPVs that the ESF funded through a combination of CARES Act appropriation and
Fiscal Service borrowings in accordance with FCRA guidelines, all proceeds that the ESF realizes
from these investments upon the dissolution of the SPVs are transferred to us to repay all
borrowings and other funding costs incurred from these investments. In accordance with the
CARES Act, the ESF must transfer any remaining excess residual proceeds to the Federal Old-
Age and Survivors Insurance Trust Fund. To the extent that the fair value of the SPV investment
assets also incorporates anticipated realization of excess residual proceeds, the ESF records a
corresponding liability due to the Federal Old-Age and Survivors Insurance Trust Fund. The ESF
recorded a liability of $186 million and $222 million as of September 30, 2022 and 2021,
respectively, within the “Intra-Governmental: Other Liabilities” line of the Balance Sheets .
Entity vs. Non-Entity Exchange Transactions
The SPV preferred equity investments are treated as exchange transactions in that the ESF received
a preferred equity interest in the SPVs in exchange for capital funding of the liquidity facilities.
40
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
All SPV investment assets funded through a combination of CARES Act appropriation and Fiscal
Service borrowings, along with any related income or loss associated with these assets, are treated
as entity transactions, with the exception of that portion of the assets and related income or loss
representing the excess residual proceeds that will be remitted to the Federal Old-Age and
Survivors Insurance Trust Fund, which are treated as non-entity transactions.
NOTE 7 – LOANS RECEIVABLE, NET
The CARES Act authorized Treasury, through the ESF, to make direct loans and loan guarantees
to eligible passenger and cargo air carriers and national security businesses to provide them
liquidity for losses incurred as a result of the COVID-19. Treasury chose to make only direct loans
under this authorization. The ESF disbursed an aggregate total of $2.7 billion between fiscal years
2020 and 2021, of which $858 million was disbursed in FY 2021. As of September 30, 2022 and
2021, there were no remaining loan commitments for which future borrowings could be made
under the CARES Act.
The CARES Act specified that the Secretary determines the terms and conditions of the loans and
stated that the duration of the loans will be no longer than five years. It also mandated that these
loans “shall be at a rate determined based on the risk and the current average yield on outstanding
marketable obligations of the United States of comparable maturity.” As “financial protection of
the Government,” the CARES Act also mandated that the ESF obtains certain financial instruments
including, but not limited to, common stock in the eligible business for the benefit of taxpayers.
The following is a discussion of the ESF’s accounting related to the direct loans.
The ESF presents the direct loans as loans receivable on the Balance Sheets. As of September 30,
2022, the net loans receivable of the passenger airlines and other related businesses programs of
$358 million and $688 million, respectively, included a negative subsidy allowance of
$123 million and a positive subsidy allowance of $91 million, respectively. The other related
businesses include national security, air cargo carriers, ticket agents, and maintenance and repair
businesses. As of September 30, 2021, the loans receivable of the passenger airlines and other
related businesses of $594 million and $717 million, respectively, included a negative subsidy
allowance of $213 million and a positive subsidy allowance of $56 million, respectively. The
negative or positive subsidies at the end of fiscal years 2022 and 2021 reflect the projection as of
those dates that these programs would result in net earnings or net cost to us, respectively, after
accounting for principal loan repayments, interest, and fees. Included in these receivables are the
projected cash flows associated with the common stock warrants, common stock shares, and senior
debt instruments the ESF received in connection with making these direct loans.
The ESF performed a financial statement re-estimate of these credit programs costs. The re-
estimates performed as of September 30, 2022 resulted in a upward re-estimate, or an increase of
$79 million, and a downward re-estimate, or a decrease of $1 million, in the cost of the passenger
airline programs and other related businesses programs, respectively. The upward re-estimate
primarily stemmed from a decline in the value of warrants held by the ESF. The downward re-
estimate stemmed from lower expected losses for outstanding investments, which is partially offset
by a decline in the value of equity held by the ESF. The re-estimates performed as of
41
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
September 30, 2021, resulted in a downward re-estimate, or a decrease of $415 million and
$268 million, in the cost of the passenger airline programs and other related businesses programs,
respectively. This re-estimate stemmed from lower expected losses for the outstanding
investments and collections received during FY 2021, which included several large prepayments.
The FY 2022 and FY 2021 re-estimates recorded by the ESF included the expected Federal Old-
Age and Survivors Insurance Trust Fund liabilities for passenger airlines and other related
businesses.
The ESF treats net loans receivable, including loan principal repayments, interest, fees, and
proceeds from common stock sales, as entity exchange transactions since the ESF will use all such
future proceeds that are realized from the net loans receivable to repay all of the borrowing and
other funding costs that are incurred from these direct loans. In accordance with the CARES Act,
the ESF must transfer any remaining excess residual proceeds to the Federal Old-Age and
Survivors Insurance Trust Fund. Accordingly, to the extent that the net loans receivable also
incorporates anticipated realization of excess residual proceeds, the ESF will record a
corresponding liability due to the Federal Old-Age and Survivors Insurance Trust Fund. Hence,
the ESF’s net loans receivable, including loan principal repayments, interest, fees, and proceeds
from common stock sales are treated as entity transactions, with the exception of any excess
residual amounts owed to this trust fund, which are treated as non-entity transactions. As of
September 30, 2022 and 2021, the ESF recorded a liability of $184 million and $261 million,
respectively, due to the Federal Old-Age and Survivors Insurance Trust Fund within the “Intra-
Governmental: Other Liabilities” line on the Balance Sheets.
NOTE 8 – OTHER INVESTMENTS, NET
Other Investments, Net include foreign currency holdings that the ESF typically invests in interest-
bearing securities issued or held through foreign governments or monetary authorities. Of the total
$3.8 billion fair value of foreign investments (excluding related interest receivable) held at
September 30, 2022, $0.3 billion will mature within one year, $2.4 billion will mature after one
year but before five years, and $1.1 billion will mature after five years but before ten years. Losses
related to Other Investments, Net reported on the Statements of Net Cost as “Losses on Currency
Valuation and Other - Other Investments” were $2.2 billion and $0.4 billion for FY 2022 and FY
2021, respectively. The fair value of these securities is determined using Level 1 inputs.
As of September 30, 2022, and 2021, Other Investments, Net consisted of the following:
Fair Value as of Fiscal Year Ended September 30,
(in thousands) 2022 2021
Investment Type:
Foreign Investments/Debt Securities:
Euro Bonds & Notes $ 3,794,050 $ 5,258,942
Japanese Government Bonds 2,422 6,292
Total Non-Federal Investments $ 3,796,472 $ 5,265,234
42
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
The following table provides a reconciliation of ESF’s investment activity for the fiscal years ended
September 30, 2022 and 2021:
For the Year Ended September 30,
(in thousands) 2022 2021
Balance, beginning of period $ 5,265,234 $ 5,801,436
Valuation Adjustments (1,240,697) (267,902)
Gain/(Loss) on Sales/ Dispositions (971,155) (245,077)
Acquisition of Investments 11,667,980 9,185,047
Sale/Repayment of Investments (10,804,277) (9,199,200)
Change in Accrued Dividend/Interest Income (10,105) (9,070)
Other – Change in Premiums/Discounts (110,508) -
Balance, end of period $ 3,796,472 $ 5,265,234
NOTE 9 – DUE TO THE GENERAL FUND
The General Fund consists of assets and liabilities used to finance the daily and long-term operations
of the U.S government. It also includes accounts used in the management of the Budget of the U.S.
Government.
The ESF’s Due to the General Fund liability at September 30, 2022 and 2021 of $6 million and
$3.3 billion, respectively, represents the amount of accrued downward subsidy re-estimates to be
returned to the General Fund. These re-estimates reflect changes in the valuation of assets budgeted
under FCRA and reported as “Investments in Special Purpose Vehicles, Net” (refer to Note 6) and
“Loans Receivable, Net” (refer to Note 7) on the Balance Sheets. The change in the net cost of the
investments and receivables is reported within “Gains on Investments in Special Purpose Vehicles
and Loans Receivable” on the Statements of Net Cost.
As of September 30,
(in thousands) 2022 2021
Credit Reform Downward Subsidy Re-estimates for Investments in SPVs $ (6,106) $ (2,859,532)
Credit Reform Downward Subsidy Re-estimates for Loans Receivable - (391,833)
Total Due to the General Fund $ (6,106) $ (3,251,365)
NOTE 10 – DEBT
As of September 30, 2022 and 2021, the ESF had outstanding debt of $19.5 billion and $24.0 billion,
respectively. The maturity dates for the debt payable to the Fiscal Service range from September 30,
2024 to September 30, 2026. Effective interest rates range from 0.53 percent to 0.88 percent.
During FY 2021, the ESF disbursed $858 million for direct loans under CARES Act authority which
the ESF financed with $642 million of Fiscal Service borrowings and the remainder with the CARES
Act appropriated funding. All disbursements ended in FY 2021. Subsequently, for the fiscal years
43
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
ended September 30, 2022 and 2021, the ESF borrowed an additional $3.9 billion and $14.0 billion
to fund modifications and downward re-estimates.
During FY 2022 and FY 2021, the ESF repaid $8.7 billion and $78.1 billion of debt, respectively.
In January 2021, the FRB returned an aggregate of $62.2 billion of excess funds to Treasury (through
the ESF) from four SPV credit facilities. The ESF used the cash received to repay outstanding debt
to the Fiscal Service initially incurred under the CARES Act authority. In September 2021, the FRB
returned an additional $13.9 billion of the remaining equity contributions for one of these SPV credit
facilities, of which $13.6 billion was used to repay its remaining outstanding debt. In November
2021, the FRB returned an aggregate $5.6 billion of excess funds to Treasury (through the ESF) from
four SPV credit facilities (refer to Note 6), of which $5.1 billion was used to repay outstanding debt
to the Fiscal Service. Additionally, the Passenger Air Carrier program in February 2022 received a
loan payoff of $150 million from the remaining airline, of which $110 million was used to repay
debt to the Fiscal Service. In May 2022, the FRB returned an aggregate $3.3 billion of excess funds
to Treasury (through the ESF) from the remaining three SPV credit facilities. The ESF used the
$3.3 billion to repay outstanding debt to the Fiscal Service in September 2022.
During FY 2022 and FY 2021, the ESF borrowed $180 million and $290 million, respectively, to
finance the scheduled payment of interest due to the Fiscal Service on outstanding principal
borrowings. Interest expense on the outstanding debt is accrued and reported within the “Economic
Recovery Program - Interest Expense on Debt” line on the Statements of Net Cost and paid annually
on September 30. For the fiscal years ended September 30, 2022 and 2021, the ESF recorded interest
expense totaling $214 million and $607 million, respectively, related to this debt. The accrued
interest expense was paid in full on September 30, 2022 and 2021.
All debt and related interest costs are intra-governmental and covered by budgetary resources. See
additional details on borrowing authority in Note 13.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Foreign Currency Denominated Agreements
Foreign currency denominated agreements that exist between Treasury and foreign entities or
governments provide for drawings of dollars by those entities or governments and drawings of
foreign currencies by Treasury. Treasury enters into these agreements through the ESF. Under
these agreements, the ESF receives repayment of an agreed-upon amount in dollars regardless of
currency fluctuations. With the exception of the Mexico agreement noted below, there were no
foreign currency denominated exchange stabilization agreements as of September 30, 2022 and
2021.
Exchange Stabilization Agreement
The North American Framework Agreement (NAFA), which was signed in 1994 and is renewed
annually, is implemented by Treasury through the Exchange Stabilization Agreement (ESA) with
Mexico. Treasury, through the ESF, offers Mexico a swap line with drawings contingent on certain
conditions being met. Effective November 30, 2018, an amended and restated ESA increased the
44
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
potential size of the swap line from $3.0 billion to $9.0 billion. The amounts and terms (including
the assured source of repayment) of any swap arrangement under the NAFA and/or the ESA will
have to be negotiated and agreed to before any actual drawing can occur. There were no drawings
outstanding on the ESF swap line as of September 30, 2022, and 2021.
NOTE 12 – FUNDS FROM DEDICATED COLLECTIONS
Pursuant to Section 10 of the Gold Reserve Act, as amended, the Secretary, with the approval of
the President, through the ESF, may deal in gold, foreign exchange, and other instruments of credit
and securities the Secretary considers necessary, consistent with U.S. obligations in the IMF on
orderly exchange arrangements and a stable system of exchange rates. The ESF core exchange
stabilization program (Treasury Account Symbol 020X4444) accounts for and reports its holdings
to the Fiscal Service on the Standard Form 224, “Statement of Transactions,” and provides other
reports to Congress. Interest on SDRs in the IMF, investments in Treasury securities, and
investments in foreign currency assets are the ESF’s primary sources of revenue. The ESF’s earnings
and realized gains, or losses, on SDRs and foreign currency assets represent resources, or uses, to
the U.S. government.
The following tables reflect condensed total assets, total liabilities, net cost of operations and net
position of the core fund established to support the ESF’s core exchange stabilization program
activities:
45
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
BALANCE SHEETS
As of September 30,
(in thousands) 2022 2021
ASSETS
Nonmarketable U.S. Treasury Securities $ 18,401,389 $ 22,836,891
Foreign Currency and Other Monetary Assets 166,411,920 179,553,649
Other Investments, Net 3,796,472 5,265,234
Total Assets $ 188,609,781 $ 207,655,774
LIABILITIES AND NET POSITION
LIABILITIES
Special Drawing Right Allocations and Related Interest Payable $ 147,414,371 $ 161,835,969
Special Drawing Right Certificates Issued to Federal Reserve Banks 5,200,000 5,200,000
Total Liabilities 152,614,371 167,035,969
NET POSITION
Total Unexpended Appropriations 200,000 200,000
Total Cumulative Results of Operations 35,795,410 40,419,805
Total Net Position 35,995,410 40,619,805
Total Liabilities and Net Position $ 188,609,781 $ 207,655,774
STATEMENTS OF NET COST
Fiscal Year Ended September 30,
(in thousands) 2022 2021
Gross Cost of Operations $ 20,462,074 $ 1,446,027
Earned Revenue (15,837,679) (738,537)
Total Net Cost (Income) of Operations $ 4,624,395 $ 707,490
STATEMENTS OF CHANGES IN NET POSITION
Fiscal Year Ended September 30,
(in thousands) 2022 2021
UNEXPENDED APPROPRIATIONS $ 200,000 $ 200,000
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balance 40,419,805 41,127,295
Total (Net Cost) Income of Operations (4,624,395) (707,490)
Total Cumulative Results of Operations 35,795,410 40,419,805
NET POSITION $ 35,995,410 $ 40,619,805
46
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
NOTE 13 – STATEMENT OF BUDGETARY RESOURCES
The Statement of Budgetary Resources (SBR) presents information about total budgetary resources
available to the ESF and the status of those resources.
Net Adjustments to Unobligated Balance, Brought Forward, October 1
Net adjustments to unobligated balance, brought forward, October 1 as of September 30, 2022 and
2021 consisted of the following:
As of
(in thousands) September 30, 2022 September 30, 2021
Unobligated Balance, Brought Forward From Prior Year $ 42,535,789 $ 489,238,112
Adjustments to Budgetary Resources Made During Current Year
Downward Adjustments of Prior Year Undelivered Orders 6,776 126,369,654
Borrowing Authority Withdrawn - (93,290,516)
General Allocation of SDRs - 112,833,910
Downward Adjustments of Prior Year Delivered Orders and Other
Adjustments (4,465,766) 613,212
Unobligated Balance From Prior Year Budgetary Authority, Net
(Discretionary and Mandatory) $ 38,076,799 $ 635,764,372
The decrease in Unobligated Balance, Brought Forward From Prior Year is primarily the result of the
FY 2021 rescission of $478.8 billion of CARES Act appropriation received in FY 2020, partially offset
by $12.5 billion in loan subsidy de-obligations and the $20.0 billion de-obligation associated with
commitment from existing ESF assets to support Federal Reserve lending facilities. The decrease in
Downward Adjustments of Prior Year Undelivered Orders is driven by undisbursed SPV investment
and direct loan commitments which were de-obligated pursuant to the CAA in December 2020 (refer
to Notes 6 and 7), as well as direct loan repayments and commitment expirations in FY 2021. The
decrease in Borrowing Authority Withdrawn reflects the reduction in resources that are no longer
needed for the SPV investments and direct loan commitments which were de-obligated pursuant to the
CAA (refer to Notes 6 and 7). The decrease in General Allocation of SDRs reflects the FY 2021
general allocation of SDRs to the U.S. government by the IMF valued at $112.8 billion, which
increased the ESF’s balance in SDR Holdings, and the balance in SDR Allocations (refer to Note 5).
The Downward Adjustments of Prior Year Delivered Orders and Other Adjustments primarily reflects
the valuations losses on SDR Holdings and the foreign currency portfolio due to the strengthening of
the USD, partially offset by gains on the SDR Allocations.
Undelivered Orders
Undelivered orders represent goods and services ordered and obligated which have not been received.
This includes any orders for which the ESF has paid in advance, but for which delivery or performance
has not yet occurred. Undelivered orders totaling $5 million as of September 30, 2022 were all unpaid,
of which $2 million and $3 million involved federal and non-federal entities, respectively. Undelivered
47
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
orders totaling $13 million as of September 30, 2021 were all unpaid, of which $2 million and
$11 million involved federal and non-federal entities, respectively. The decrease in Undelivered
Orders – Unpaid as of September 30, 2022, primarily resulted from the de-obligation of administrative
related expenses totaling $7.4 million.
Terms of Borrowing Authority Used
The FCRA provides indefinite borrowing authority to financing accounts to fund the unsubsidized
portion of direct loans and to satisfy obligations in the event the financing account’s resources are
insufficient. OMB Circular No. A-11 defines repayment requirements. Interest expense due is
calculated based on the beginning balance of borrowings outstanding and the borrowings/repayments
activity that occurred during the FY. Undisbursed borrowings earn interest at the same rate as the
financing account pays on its debt owed to the Fiscal Service. In the event that principal and interest
collections exceed the interest expense due, the ESF receives the excess payment. If principal and
interest do not exceed interest expense due, the ESF will borrow the difference. The ESF makes
periodic principal repayments based on the analysis of cash balances and future disbursement needs.
All interest on borrowings is due on September 30. Interest rates on FCRA borrowings range from
0.53 percent to 0.88 percent. No borrowing authority remained as of September 30, 2022 or
September 30, 2021 respectively, as resources were no longer needed for the SPV investments and
direct loan commitments which were de-obligated pursuant to the CAA (refer to Notes 6 and 7).
Reconciliation of the President’s Budget
The FY 2024 Budget of the U.S. (also known as the President’s Budget), with actual numbers for
FY 2022, was not published at the time that these financial statements were issued. The FY 2024
President’s Budget is expected to be published by OMB in late-March 2023 and will be available
from the U.S. Government Publishing Office. The FY 2023 President’s Budget was reconciled to
the ESF’s SBR amounts reported for FY 2021. The only differences between the two documents
were due to rounding.
Legal Arrangements Affecting Use of Unobligated Balances
The use of the ESF’s unobligated balances made available to the ESF by the CARES Act is governed
by Section 1003(a)(2)(C) of the CAA, which provides that such funds may be used (i) to pay costs
for modifications and the exercise of existing rights, as well administrative expenses, associated with
existing loans, loan guarantees, and other investments authorized by the CARES Act, (ii) for the
Office of the Special Inspector General for Pandemic Recovery to carry out the purposes of the
CARES Act, and (iii) for reimbursement of certain expenses of the Congressional Oversight
Commission under the CARES Act. Any such funds remaining on January 1, 2026 will be
transferred to the General Fund to be used for deficit reduction.
The rest of the ESF’s unobligated balances is governed by Section 10 of the Gold Reserve Act, as
amended, codified at 31 U.S.C. 5302, except that (i) pursuant to the CARES Act, as amended, the
ESF may not be used for any program or facility established under Section 13(3) of the Federal
Reserve Act that is the same as any such program or facility in which the Secretary made an
48
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
investment pursuant to the CARES Act other than the TALF SPV and (ii) pursuant to the Emergency
Economic Stabilization Act of 2008, the ESF may not be used to establish future guarantee programs
for the U.S. money market mutual fund industry. The ESF’s unobligated balances governed by
Section 10 is the dollar value of cash and cash equivalents, investment securities and SDR Holdings
in amounts that are not encumbered by any existing obligations of the ESF, are available for use by
the Secretary consistent with the relevant statutory requirements and are available without fiscal year
limitation.
NOTE 14 – RECONCILIATION OF NET COST OF OPERATIONS TO
BUDGETARY OUTLAYS, NET
The Reconciliation of Net Cost of the ESF’s Operations to the ESF’s Outlays, Net (referred to as
“Net Outlays” for purposes of this note) depicts the difference between proprietary information and
budgetary accounting information. Proprietary financial accounting information is intended to depict
the U.S. government’s financial operations and financial position presented on an accrual basis in
accordance with GAAP, which includes the recognition of assets and liabilities for which collections
and payments, respectively, have or have not been made. In contrast, budgetary accounting
information is used for planning and control purposes and includes net outlays that reflect both the
receipt and use of cash, as well as reporting of the federal deficit. The reconciliation of Net Cost
(presented on an accrual basis) and Net Outlays (presented on a budgetary basis) reflects the
relationship between proprietary accounting and budgetary information. The reconciliation serves
not only to identify costs paid in the past and those that will be paid in the future, but also to assure
integrity between financial and budgetary accounting.
For the fiscal years ended September 30, 2022 and 2021, the Reconciliation of Net Cost of the ESF’s
Operations to the ESF’s Outlays, Net consisted of the following:
49
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Fiscal Year Ended September 30, 2022
Other Than
Intra-
(in thousands) Intra- 2022 Total
Governmental
Governmental
Total Net Cost (Income) of ESF Operations $ 522 $ 4,172,151 $ 4,172,673
Components of Net Operating Cost Not Part of Budgetary Outlays:
Unrealized Valuation (Loss) on Investments (Notes 4 and 8) - (4,282,590) (4,282,590)
Unrealized Valuation (Loss) on Special Drawing Rights (Note 5) - (473,047) (473,047)
Year-end Credit Reform Subsidy Accrual Re-Estimates - (746,292) (746,292)
Adjustments to Prior Year Credit Reform Re-Estimates - 1,163,413 1,163,413
Loan Modification Adjustment Transfers 50,037 50,037
Increase/(Decrease) in Assets:
Foreign Currency and Foreign Currency Denominated Assets (Note 4) - 415 415
Special Drawing Rights Holdings and Related Interest Receivable
- 410,434 410,434
(Note 5)
Other Investments, Net (Note 8) - (10,105) (10,105)
Other Intragovernmental Assets (3,245,259) - (3,245,259)
(Increase)/Decrease in Liabilities:
Special Drawing Rights Allocations and Related Interest Payable
- (394,437) (394,437)
(Note 5)
Other Liabilities - (69) (69)
Other Financing Sources:
Imputed Costs (218) - (218)
Total Components of Net Operating Cost Not Part of Budgetary
(3,245,477) (4,282,241) (7,527,718)
Outlays
Other Financing Sources:
Transfers (In)/Out Without Reimbursement (1,274,729) - (1,274,729)
Total Components of Budgetary Outlays That Are Not Part of Net
(1,274,729) - (1,274,729)
Cost
Other Reconciling Items
Other Reconciling Items (7,168) - (7,168)
Total Other Reconciling Items (7,168) - (7,168)
Agency Outlays, Net $ (4,636,942)
50
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2022 and 2021
Fiscal Year Ended September 30, 2021
Other Than
Intra-
(in thousands) Intra- 2021 Total
Governmental
Governmental
Total Net Cost (Income) of ESF Operations $ 474,132 $ (4,005,450) $ (3,531,318)
Components of Net Operating Cost Not Part of Budgetary
Outlays:
Unrealized Valuation (Loss) on Investments (Notes 6) - (314,415) (314,415)
Unrealized Valuation Gain on Special Drawing Rights (Note 5) - 1,540 1,540
Year-end Credit Reform Subsidy Accrual Re-Estimates - (9,125,350) (9,125,350)
Increase/(Decrease) in Assets:
Special Drawing Rights Holdings and Related Interest Receivable
- 112,836,965 112,836,965
(Note 5)
COVID-19 Other (Note 6) - (118,699) (118,699)
Other Investments, Net (Note 8) - (9,071) (9,071)
(Increase)/Decrease in Liabilities:
Special Drawing Rights Allocations and Related Interest Payable
- (112,837,165) (112,837,165)
(Note 5)
Other Liabilities (482,903) (48) (482,951)
Other Financing Sources:
Imputed Costs (134) - (134)
Total Components of Net Operating Cost Not Part of Budgetary
(483,037) (9,566,243) (10,049,280)
Outlays
Components of Budgetary Outlays That Are Not Part of Net Cost
Sale of COVID Investments (Note 6) - (10,000,000) (10,000,000)
Sale of COVID-19 Other (Note 6) - (1,500,000) (1,500,000)
Other Financing Sources:
Transfers (In)/Out Without Reimbursement 483,605 - 483,605
Total Components of Budgetary Outlays That Are Not Part of Net
483,605 (11,500,000) (11,016,395)
Cost
Other Reconciling Items
Other Reconciling Items - 61,586 61,586
Total Other Reconciling Items - 61,586 61,586
Agency Outlays, Net $ (24,535,407)
51
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)
REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)
Combining Statement of Budgetary Resources by Major Budget Account
The Statement of Budgetary Resources as of September 30, 2022 and 2021 presents total budgetary
resources and the status of resources by each major budget account within the ESF: (i) the fund
reporting Dedicated Collections (refer to Note 12) that supports Exchange Stabilization, (ii) the
program fund for FCRA-budgeted Investments in SPVs, net (refer to Note 6) and Loans Receivable
(refer to Note 7), and (iii) the non-budgetary financing account for FCRA-budgeted Investments in
SPVs and Loans Receivable.
For the Year Ended September 30, 2022
Exchange
Stabilization COVID-19
Program COVID-19 Non-Budgetary
Budgetary Budgetary Financing
Account Account Account
(in thousands) Total
BUDGETARY RESOURCES
Unobligated balance from prior year budget
authority, Net (discretionary and mandatory) $ 36,169,257 $ 1,597,819 $ 309,723 $ 38,076,799
(Note 13)
Appropriations (discretionary and mandatory) - (1,362,655) - (1,362,655)
Borrowing authority (discretionary and
- - 4,092,974 4,092,974
mandatory)
Spending authority from offsetting collections
124,935 - 551,828 676,763
(discretionary and mandatory)
Total Budgetary Resources $ 36,294,192 $ 235,164 $ 4,954,525 $ 41,483,881
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 754,701 $ 7,194 $ 4,733,356 $ 5,495,251
Unobligated balance, end of year:
Apportioned, unexpired accounts - 227,971 205,927 433,898
Unapportioned, unexpired accounts 35,539,490 - 15,242 35,554,732
Unobligated balance, end of year 35,539,490 227,971 221,169 35,988,630
Total Status of Budgetary Resources $ 36,294,191 $ 235,165 $ 4,954,525 $ 41,483,881
OUTLAYS, NET, AND
DISBURSEMENTS, NET
Outlays, net (discretionary and mandatory) $ (124,935) $ 7,982 $ - $ (116,953)
Distributed offsetting receipts (94) (4,519,895) - (4,519,989)
Agency Outlays, Net (Discretionary and
$ (125,029) $ (4,511,913) $ - $ (4,636,942)
Mandatory)
Disbursements, net (mandatory) $ (4,411,126) $ (4,411,126)
52
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)
For the Year Ended September 30, 2021
Exchange
Stabilization COVID-19
Program COVID-19 Non-Budgetary
Budgetary Budgetary Financing
Account Account Account
(in thousands) Total
BUDGETARY RESOURCES
Unobligated balance from prior year budget
authority, Net (discretionary and mandatory) $ 143,048,969 $ 480,425,919 $ 12,289,484 $ 635,764,372
(Note 13)
Appropriations (discretionary and mandatory) - (477,890,238) - (477,890,238)
Borrowing authority (discretionary and
- - 14,713,402 14,713,402
mandatory)
Spending authority from offsetting collections
11,654,704 - (11,582,981) 71,723
(discretionary and mandatory)
Total Budgetary Resources $ 154,703,673 $ 2,535,681 $ 15,419,905 $ 172,659,259
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 114,139,044 $ 944,637 $ 15,039,789 $ 130,123,470
Unobligated balance, end of year:
Apportioned, unexpired accounts - 1,591,044 - 1,591,044
Unapportioned, unexpired accounts 40,564,629 - 380,116 40,944,745
Unobligated balance, end of year 40,564,629 1,591,044 380,116 42,535,789
Total Status of Budgetary Resources $ 154,703,673 $ 2,535,681 $ 15,419,905 $ 172,659,259
OUTLAYS, NET, AND
DISBURSEMENTS, NET
Outlays, net (discretionary and mandatory) $ (11,654,704) $ 1,149,585 $ - $ (10,505,119)
Distributed offsetting receipts (1) (14,030,287) - (14,030,288)
Agency Outlays, Net (Discretionary and
$ (11,654,705) $ (12,880,702) $ - $ (24,535,407)
Mandatory)
Disbursements, net (mandatory) $ (63,485,485) $ (63,485,485)
53
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