FINANCIAL MANAGEMENT: Audit of the Exchange Stabilization Fund’s Financial Statements for Fiscal Years 2023 and 2022
Summary
Department of the Treasury Office of Inspector General Audit Report OIG-24-016, Audit of the Exchange Stabilization Fund's Financial Statements for Fiscal Years 2023 and 2022, dated December 19, 2023. A memorandum from Pauletta Battle to the Under Secretary for International Affairs transmits the audit performed under contract by KPMG LLP (KPMG), a certified independent public accounting firm under OMB Bulletin No. 24-01. 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. It notes that KPMG also issued a management letter dated December 19, 2023 on a deficiency in internal control.
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Audit Report
OIG-24-016
FINANCIAL MANAGEMENT
Audit of the Exchange Stabilization Fund’s Financial
Statements for Fiscal Years 2023 and 2022
December 19, 2023
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
DEPART MENT OF THE TREASURY
W AS H I N GT ON, D.C. 2 0220
December 19, 2023
OFFICE OF
INS PECT OR G EN ER AL
MEMORANDUM FOR JAY SHAMBAUGH
UNDER SECRETARY FOR INTERNATIONAL AFFAIRS
FROM: Pauletta Battle /s/
Deputy Assistant Inspector General for Financial
Management and Transparency Audits
SUBJECT: Audit of the Exchange Stabilization Fund’s Financial
Statements for Fiscal Years 2023 and 2022
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 financial statements of the Exchange Stabilization Fund (ESF) as of
September 30, 2023 and 2022, and 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. 24-01, 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, contracts,
and grant agreements tested.
KPMG also issued a management letter dated December 19, 2023, discussing a
deficiency in internal control over financial reporting that was identified during the
audit but was not required to be included in the auditors’ report. This matter
involved ineffective procedures over the budget and accrual reconciliation. This
letter will be transmitted separately.
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 December 19, 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) 597-1819, or a
member of your staff may contact Ade Bankole, Director, Financial Statement
Audits, at (202) 927-5329.
Attachment
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Financial Statements
September 30, 2023 and 2022
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) .......................................................................53
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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 Nonmarketable U.S. Treasury Securities,
foreign currencies and investments, 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’s (Treasury) 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 2023
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 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.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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 “Promote Equitable
Economic Growth and Recovery.” 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 Nonmarketable
U.S. Treasury Securities; foreign currency holdings of euros, yen, other Foreign Currency Denominated
Assets (FCDAs) and other foreign investments; 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
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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)).”
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.
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 $647.5 billion (SDR
456.5 billion). This SDR Allocation increased the total global stock of SDRs outstanding from about
$289.5 billion (SDR 204.2 billion) to $935.7 billion (SDR 660.7 billion). Of the total August 2021
allocation, the United States received about $112.8 billion (about SDR 79.5 billion).
Occasionally, the ESF is used to purchase SDRs from other countries or institutions through the IMF’s
Voluntary Trading Arrangement Market. In FY 2023, the ESF purchased $3.5 billion (SDR 2.6 billion)
of SDRs from three participants (Ukraine, Uzbekistan, and the Bank for International Settlements).
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
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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
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.
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 $215.0 billion to
Federal Reserve lending facilities—$20.0 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
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.
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.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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).
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 Federal Reserve Bank of Boston (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 -
COVID-19: Investments and Loans Receivable).
In November 2021, the ESF and the Federal Reserve further amended the SPV Limited Liability Company
(LLC) Agreements, which provided for additional interim distributions to the ESF in November and May
of each year. Distributions totaled an aggregate of $4.6 billion in FY 2023 and $8.5 billion in FY 2022.
The interim distributions 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. 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
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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, 2023, as compared to September 30, 2022.
Summary Financial Information (dollars in thousands)
2023 2022 $ Change % Change
Total Assets $ 211,318,919 $ 207,945,230 $ 3,373,689 1.6%
Total Liabilities $ 173,333,141 $ 172,469,403 $ 863,738 0.5%
Total Net Position $ 37,985,778 $ 35,475,827 $ 2,509,951 7.1%
Total Net Cost (Income) - Core Exchange Stabilization $ (1,980,367) $ 4,624,302 $ (6,604,669) (142.8%)
Total Net Cost (Income) - Economic Recovery Program $ (1,700,019) $ (451,629) $ (1,248,390) 276.4%
Total Net Cost (Income) from Operations $ (3,680,386) $ 4,172,673 $ (7,853,059) (188.2%)
Total Budgetary Resources $ 45,904,307 $ 41,483,881 $ 4,420,426 10.7%
Agency Outlays, Net $ (1,231,294) $ (4,636,942) $ 3,405,648 (73.4%)
Financial Overview
The ESF financial performance as of and for the fiscal year ended September 30, 2023, reflects valuation
gains on the foreign asset portfolio held by the Exchange Stabilization component of the ESF due to the
strengthening of the euro, yen, and SDR against the USD. The Foreign Currency and FCDAs and Other
Investments incurred a net valuation gain of $0.6 billion and the SDR Holdings and SDR Allocations,
combined, incurred a net valuation gain of $0.1 billion in FY 2023. In FY 2022, losses were $4.3 billion
and $0.5 billion, respectively. The ESF also collected $1.3 billion of net interest on these assets and its
holding of Nonmarketable U.S. Treasury securities in FY 2023. The Economic Recovery Program
component experienced negative costs on the valuation of the investments in SPVs and loans of
$1.8 billion in FY 2023, as compared to $0.6 billion in FY 2022. The ESF used its collections from its
investments in SPVs and loans to repay debt of $4.7 billion.
Total Assets
Total assets of $211.3 billion as of September 30, 2023, included Fund Balance with Treasury of $0.1
billion, Nonmarketable U.S. Treasury securities of $14.7 billion, Foreign Currency and FCDAs of $13.7
billion, SDR Holdings and related interest receivable of $163.1 billion, loans receivable, net of $0.9
billion, Investments in SPVs, net of $15.1 billion, and other investments of $3.7 billion. The $3.4 billion
(or 1.6 percent) increase in total assets at the end of FY 2023 from the prior fiscal year primarily reflects
an increase in SDR Holdings and related interest receivable of $9.5 billion. This increase was primarily
due to a valuation gain of $12.4 billion recorded within “Gains on Currency Valuation and Other – Special
Drawing Right Holdings” line on the Statements of Net Cost offset with a valuation loss of $8.2 billion
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
within “Losses on Currency Valuation and Other – Special Drawing Right Holdings” line on the
Statements of Net Cost, along with $3.5 billion of SDR purchases.
The increase in SDR Holdings and related interest receivable was offset by a $2.7 billion decrease in
Investments in SPVs. These assets consisted of equity investments in SPVs of $15.1 billion and
$17.8 billion as of September 30, 2023, and 2022, respectively. The $2.7 billion decrease in these SPV
investments was primarily driven by a return of excess CARES Act funds of $4.6 billion in FY 2023
pursuant to the amended SPV LLC agreement, partially offset by $1.9 billion in net valuation gains.
Partially offsetting the increase in SDR Holdings and related interest receivable was a decrease in
Nonmarketable U.S Treasury securities, which were used to purchase $3.5 billion of SDRs.
Total Liabilities
Total liabilities of $173.3 billion as of September 30, 2023, primarily included Intra-governmental
Liabilities comprised of $14.9 billion of Intra-governmental Debt and $1.1 billion of Other Liabilities and
Other Than Intra-governmental Liabilities comprised of $152.1 billion of SDR Allocations and related
interest and $5.2 billion of SDR certificates issued to the Federal Reserve Banks. The $0.9 billion (or 0.5
percent) increase in total liabilities at the end of FY 2023 primarily reflects a $4.7 billion increase in SDR
Allocations resulting primarily due to a valuation gain of $7.7 billion recorded within “Gains on Currency
Valuation and Other – Special Drawing Right Allocations” line on the Statements of Net Cost offset with
a valuation loss of $11.8 billion within “Losses on Currency Valuation and Other – Special Drawing Right
Allocations” line on the Statements of Net Cost, and by $0.6 billion in related interest payable due to
increased SDR interest rates in FY 2023. Amounts in Other Liabilities increased by $0.7 billion, reflecting
an increase in the Old-Age and Survivor Insurance Trust Fund (OASI) liability.
The ESF also experienced a decrease of $4.6 billion in intra-governmental debt, primarily the result of FY
2023 repayments of $4.7 billion of debt utilizing SPV and direct loan program collections and a repayment
of upward re-estimates, partially offset by new borrowings of $0.2 billion to fund downward subsidy re-
estimates and end of year interest expense due to Fiscal Service (refer to Note 6 - COVID-19: Investments
and Loans Receivable and Note 9 - Debt).
Net Position
The Net Position of $38.0 billion as of September 30, 2023 represents the combined total of the ESF’s
unexpended appropriations and cumulative results of operations. In FY 2023, the $2.5 billion (or
7.1 percent) year-over-year increase reflects the ESF’s $3.7 billion of reported net income partially offset
by a $0.2 billion rescission enacted as part of the Fiscal Responsibility Act of 2023 (P.L. 118-5) (FRA),
and $1.0 billion related to future transfers to the General Fund and OASI for the valuation adjustments to
the Economic Recovery Program investments and loans.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
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 fiscal year ended September 30, 2023, the ESF reported net
income from operations totaling $3.7 billion compared to a net cost of operations in the prior fiscal year
of $4.2 billion. The $7.8 billion (or 188.2 percent) year-over-year increase in net income was attributable
to a $6.6 billion increase in net income for the ESF core operations, along with a $1.2 billion increase in
net income for the ESF Economic Recovery Program.
The ESF core operations reported a net income from operations of $2.0 billion for the fiscal year ended
September 30, 2023, compared to net cost of operations of $4.6 billion for the prior fiscal year. The
$6.6 billion (or 142.8 percent) increase in net income in FY 2023 primarily reflects a net gain of
$0.6 billion for the valuation of the ESF’s foreign currency portfolio (uninvested foreign currency, foreign
currency denominated assets and other investments) due to changes in the foreign currency exchange rates
compared to net losses of $4.3 billion for FY 2022. Similarly, there was a $0.1 billion net gain for SDR
Holdings and SDR Allocations compared to a net loss of $0.5 billion in FY 2022 as a result of increases
in the SDR to USD exchange rates during FY 2023. The remaining $1.3 billion in net income was the
result of increased interest rates on the foreign currency portfolio, SDR Holdings (net of SDR Allocations
interest expense), Nonmarketable U.S. Treasury Securities and Other Investments.
The Economic Recovery Program reported net income from operations totaling $1.7 billion for the fiscal
year ended September 30, 2023, compared to a net cost of operations in the prior fiscal year of $0.5 billion.
The $1.2 billion (or 276.4 percent) increase in net income in FY 2023 was primarily attributable to changes
in the valuation of the program’s assets. The cost associated with these assets in FY 2023 reflected an
overall larger net gain of $1.8 billion on investments in SPVs and loans receivables in FY 2023 compared
to gains of $0.6 billion in FY 2022.
Statement of Budgetary Resources
Total Budgetary Resources of $45.9 billion in FY 2023 increased by $4.4 billion (or 10.6 percent) from
budgetary resources in FY 2022, which totaled $41.5 billion. The increase was primarily due to the change
in “Unobligated Balance, Brought Forward From Prior Year” of $6.6 billion related to $8.0 billion of
valuation increases in the ESF foreign asset portfolio and SDR Holdings, partially offset by the $1.4 billion
rescission of CARES Act Appropriations in FY 2022 (refer to Note 12 - Statement of Budgetary Resources
for additional information). The year-over-year increase was also driven by a decrease in the amount of
“Appropriations” rescinded of $1.2 billion, as $0.2 billion was rescinded in FY 2023 compared to $1.4 billion
in FY 2022, and a $0.6 billion increase in “Spending Authority from Offsetting Collections” led by increased
interest collections on the foreign asset portfolio, SDR Holdings, and Nonmarketable U.S. Treasury Securities.
The ESF also experienced a $4.0 billion year-to-year decrease in “Borrowing Authority” as fewer resources
were needed to fund valuation adjustments for the Econcomic Recovery Program investments and loans.
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DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
Agency Outlays, net
ESF reported net collections (negative outlays) of $1.2 billion in FY 2023 compared to net collections of
$4.6 billion in FY 2022, a year-over-year change of $3.4 billion (or 73.4 percent). This decrease was
primarily due to the ESF experiencing a $4.4 billion year-to-year decrease in budgetary receipts needed
to fund the revaluation adjustments to the Economic Recovery Program investments and loans. These
decreases were partially offset by a $1.1 billion increase in collections, mainly the result of interest
collections reflective of increased interest rates on the ESF foreign portfolio, SDR Holdings, and
Nonmarketable U.S. Treasury Securities.
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 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
10
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Management’s Discussion and Analysis (Unaudited)
Fiscal Year 2023
the Department of the Treasury, the ESF assesses its financial management systems annually for
conformance in accordance with OMB Circular A-123, Appendix D, Management of Financial
Management Systems – Risk and Compliance. The ESF uses ARC’s financial management system as part
of a shared service arrangement and relies on ARC’s System and Organization Controls 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, 2023. In addition, the ESF can provide reasonable assurance
that, as of September 30, 2023, our financial management systems were in substantial conformance with
the federal financial management systems requirements of Section 4 of the FMFIA.
OUTLOOK FOR FY 2024
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
2024 fiscal year unless market volatility increases substantially. Treasury intends to purchase 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, 2023, through
December 19, 2023, Treasury, through the ESF, purchased 372 million of SDRs from Cote d’Ivoire in
exchange for $488 million. 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. Russia’s invasion of
Ukraine continues 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, 2023, Treasury no longer has authority to make new loans and investments. Future
interim distributions collected on the ESF’s remaining Investments in SPVs will take place in November
and May of each fiscal year. Accordingly, in November 2023, the ESF received $3.0 billion in
distributions. In addition, on December 15, 2023, Treasury approved the amended and restated LLC
agreements which will facilitate the wind-down of the Municipal Liquidity Facility (MLF) and Term-
Asset-Backed Securities (TALF) programs in FY 2024.
11
KPMG LLP
Suite 12000
1801 K Street, NW
Washington, DC 20006
Independent Auditors’ Report
Deputy 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, 2023 and 2022, and the related statements of net
costs, changes in net position, and 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, 2023 and 2022, 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. 24-01, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards
and OMB Bulletin No. 24-01 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. 24-01 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. 24-01, 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,
2023, 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, 2023 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. 24-01.
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, D.C.
December 19, 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) 2023 2022
ASSETS
Intra-Governmental
Fund Balance with Treasury (Note 2) $ 61,442 $ 454,693
Nonmarketable U.S. Treasury Securities (Note 3) 14,700,110 18,401,389
Total Intra-Governmental 14,761,552 18,856,082
Other Than Intra-Governmental
Foreign Currency and Other Monetary Assets
Foreign Currency and Foreign Currency Denominated Assets (Note 4) 13,682,427 12,816,009
Special Drawing Right Holdings and Related Interest Receivable (Note 5) 163,156,630 153,595,911
Loans Receivable, Net (Note 6) 900,978 1,045,954
Other Investments:
Investments in Special Purpose Vehicles (Note 6) 15,114,083 17,834,802
Other Investments (Note 7) 3,703,249 3,796,472
Total Other Than Intra-Governmental 196,557,367 189,089,148
Total Assets $ 211,318,919 $ 207,945,230
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,
(in thousands) 2023 2022
LIABILITIES
Intra-Governmental
Debt (Note 9) $ 14,936,048 $ 19,477,661
Due to the General Fund (Note 8) 45,674 6,106
Other Liabilities (Note 6) 1,080,878 370,556
Total Intra-Governmental 16,062,600 19,854,323
Other Than Intra-Governmental
Special Drawing Right Allocations and Related Interest Payable (Note 5) 152,069,849 147,414,371
Special Drawing Right Certificates Issued to Federal Reserve Banks (Note 5) 5,200,000 5,200,000
Other Liabilities 692 709
Total Other Than Intra-Governmental 157,270,541 152,615,080
Total Liabilities 173,333,141 172,469,403
Commitments and Contingencies (Note 10)
NET POSITION
Unexpended Appropriations
Funds from Dedicated Collections (Note 11) 200,000 200,000
Funds from Other than Dedicated Collections 26,465 233,420
Total Unexpended Appropriations (Consolidated) 226,465 433,420
Cumulative Results of Operations
Funds from Dedicated Collections (Note 11) 37,772,567 35,795,410
Funds from Other than Dedicated Collections (13,254) (753,003)
Total Cumulative Results of Operations (Consolidated) 37,759,313 35,042,407
Total Net Position 37,985,778 35,475,827
Total Liabilities and Net Position $ 211,318,919 $ 207,945,230
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) 2023 2022
STRATEGIC GOAL 1: EXCHANGE STABILIZATION
Gross Cost
Interest Expense on Special Drawing Right Allocations $ 5,225,821 $ 870,697
International Monetary Fund Annual Assessment and Other 2,086 2,469
Losses on Currency Valuation and Other:
Special Drawing Right Holdings (Note 5) 8,214,264 17,059,515
Special Drawing Right Allocations (Note 5) 11,795,270 1,722,010
Foreign Currency and Foreign Currency Denominated Assets (Note 4) 1,768,479 2,548,162
Other Investments (Note 7) 1,001,490 2,546,959
Total Losses on Currency Valuation and Other 22,779,503 23,876,646
Total Gross Cost – Exchange Stabilization 28,007,410 24,749,812
Less Earned Revenue
Interest Income:
Nonmarketable U.S. Treasury Securities (Note 3) (768,558) (141,860)
Foreign Currency and Foreign Currency Denominated Assets (Note 4) (106,706) 7,210
Special Drawing Right Holdings (Note 5) (5,529,219) (902,351)
Other Investments (Note 7) (78,697) 27,073
Total Interest Income (6,483,180) (1,009,928)
Gains on Currency Valuation and Other:
Special Drawing Right Holdings (Note 5) (12,411,386) (1,758,301)
Special Drawing Right Allocations (Note 5) (7,735,419) (16,549,761)
Foreign Currency and Foreign Currency Denominated Assets (Note 4) (2,216,117) (426,239)
Other Investments (Note 7) (1,141,675) (381,281)
Total Gains on Currency Valuation and Other (23,504,597) (19,115,582)
Total Earned Revenue – Exchange Stabilization (29,987,777) (20,125,510)
Total Net Cost (Income) of Operations – Exchange Stabilization $ (1,980,367) $ 4,624,302
STRATEGIC GOAL 2: ECONOMIC RECOVERY PROGRAM
Gross Cost
Interest Expense on Debt (Note 9) $ 154,168 $ 213,461
Administrative Expenses 7,337 4,822
Costs of Investments in Special Purpose Vehicles and Loans Receivable (Note 6) (1,841,198) (586,156)
Total Gross Cost – Economic Recovery Program (1,679,693) (367,873)
Less: Earned Revenue
Interest Income on Uninvested Funds (Note 2) (15,619) (28,417)
Interest Income on Loans Receivable (Note 6) (87,622) (52,138)
Loss (Gains) on Investments in Special Purpose Vehicles and Loans Receivable (Note 6) 82,915 (3,201)
Total Earned Revenue – Economic Recovery Program (20,326) (83,756)
Total Net Cost (Income) of Operations – Economic Recovery Program (1,700,019) (451,629)
Total Net Cost (Income) of Operations $ (3,680,386) $ 4,172,673
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, 2023
Funds from Dedicated Funds from Other than
Collections Dedicated Collections Consolidated Total
(Consolidated) (Consolidated)
(in thousands)
UNEXPENDED APPROPRIATIONS
Beginning Balance $ 200,000 $ 233,420 $ 433,420
Appropriations Received - 4,878 4,878
Other Adjustments (Note 6) - (200,000) (200,000)
Appropriations Used (Note 6) - (11,833) (11,833)
Net Change in Unexpended Appropriations - (206,955) (206,955)
Total Unexpended Appropriations 200,000 26,465 226,465
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balance 35,795,410 (753,003) 35,042,407
Appropriations Used (Note 6) - 11,833 11,833
Transfers In/Out without Reimbursement - (893,905) (893,905)
Imputed Financing - 366 366
Transfers to the General Fund and Other - (81,774) (81,774)
Total (Net Cost) Income of Operations 1,977,157 1,703,229 3,680,386
Net Change in Cumulative Results of Operations 1,977,157 739,749 2,716,906
Total Cumulative Results of Operations 37,772,567 (13,254) 37,759,313
NET POSITION $ 37,972,567 $ 13,211 $ 37,985,778
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 (Cont.)
For the Fiscal Year Ended September 30, 2022
Funds from Dedicated Funds from Other than
Collections Dedicated Collections Consolidated Total
(Consolidated) (Consolidated)
(in thousands)
UNEXPENDED APPROPRIATIONS
Beginning Balance $ 200,000 $ 1,603,868 $ 1,803,868
Appropriations Received - 3,445 3,445
Other Adjustments (Note 6) - (1,366,100) (1,366,100)
Appropriations Used (Note 6) - (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 (Note 6) - 7,793 7,793
Transfers In/Out without Reimbursement - 62,342 62,342
Imputed Financing - 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.
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, 2023
Non-Budgetary
Budgetary Credit Reform Total
Financing Account
(in thousands)
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority, Net
$ 44,484,997 $ 207,197 $ 44,692,194
(discretionary and mandatory) (Note 12)
Appropriations (discretionary and mandatory) (195,122) - (195,122)
Borrowing authority (discretionary and mandatory) - 173,194 173,194
Spending authority from offsetting collections (discretionary and
1,203,136 30,905 1,234,041
mandatory)
Total Budgetary Resources $ 45,493,011 $ 411,296 $ 45,904,307
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 8,629,854 $ 376,412 $ 9,006,266
Unobligated balance, end of year:
Apportioned, unexpired accounts 22,177 24,155 46,332
Unapportioned, unexpired accounts 36,840,980 10,729 36,851,709
Unobligated balance, end of year (total) 36,863,157 34,884 36,898,041
Total Budgetary Resources $ 45,493,011 $ 411,296 $ 45,904,307
OUTLAYS, NET, AND DISBURSEMENTS, NET
Outlays, net (total) (discretionary and mandatory) $ (1,189,088) $ - $ (1,189,088)
Distributed offsetting receipts (42,206) - (42,206)
Agency Outlays, Net (Discretionary and Mandatory) $ (1,231,294) $ - $ (1,231,294)
Disbursements, net (total) (mandatory) $ (4,355,684) $ (4,355,684)
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 (Cont.)
For the Fiscal Year Ended September 30, 2022
Non-Budgetary
Budgetary Credit Reform Total
Financing Account
(in thousands)
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority, Net
$ 37,767,076 $ 309,723 $ 38,076,799
(discretionary and mandatory) (Note 12)
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
124,935 551,828 676,763
mandatory)
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 (total) (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 (total) (mandatory) $ (4,411,126) $ (4,411,126)
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, 2023 and 2022
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, 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 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 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 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, 2023 and
2022 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
22
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
imputed costs related to services received from other federal entities (refer to Note 1 (L) - Summary of
Significant Accounting Policies - Revenue and Other Budgetary Activity ).
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 2023 and 2022 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.
Changes in Financial Reporting: Presentation of Gains and Losses
Paragraph 43 of Statement of Federal Financial Accounting Standards (SFFAS) No. 7, Accounting for
Revenue and Other Financing sources and Concepts for Reconciling Budgetary and Financial Accounting,
states that, “Gross and net cost should be calculated as appropriate to determine the costs of outputs and the
total net cost of operations of the reporting entity. The components of the net cost calculation should
separately include the gross cost of providing goods or services that earned exchange revenue, less the
exchange revenue earned, and the resulting difference. The components of net cost should also include
separately the gross cost of providing goods, services, benefit payments, or grants that did not earn exchange
revenue.”
In the ESF’s Financial Statements for FY 2022, the gains and losses for ESF’s Foreign Currency and
FCDAs, Other Investments, SDR Holdings, SDR Allocations, and gains and losses and revenues and
expenses for Investments in SPVs and Loans Receivable were recorded for each asset or liability as net for
the fiscal year on the Statements of Net Cost. In FY 2023, management updated this presentation to better
align with GAAP and the U.S. Treasury’s Agency Financial Report. Accordingly, the ESF reports the gross
gains and losses for each asset or liability based on the activity recorded each month. Prior year amounts
23
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
for FY 2022 have been reclassified to be consistent and comparative to FY 2023. There was no net impact
to the Total Net Cost (Income) of Operations.
C. Fund Balance with Treasury
Fund Balance with Treasury is the aggregate amount of the 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.
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. FCDAs that have original
maturities greater than three months are reported on the Balance Sheets as “Other Investments” (refer to
Note 1 (I) - Summary of Significant Accounting Policies - Other Investments and Note 7 - Other
Investments). These investments are valued monthly and recorded at the fair value with all realized and
unrealized holding gains or losses reported on the Statements of Net Cost.
F. Special Drawing Rights
The SDR 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
24
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 exchange 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 “Special Drawing Right Holdings
and Related Interest Receivable” and records the SDR Allocations as a liability entitled “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. ESF’s SDR Holdings primarily increase as a result
of the IMF’s allocations of SDRs to the ESF, or when the ESF purchases SDRs from other IMF member
countries. ESF’s SDR transactions include purchases 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 receivables are revalued to reflect exchange rates in effect as of the reporting date. 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.
SDRs and related accrued interest receivable or payable are revalued monthly 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.
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.
25
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
G. Investments in Special Purpose Vehicles
Pursuant to the CARES Act enacted in FY 2020 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 presents these non-federal investment
holdings at their fair value within the “Investments in Special Purpose Vehicles” line of the Balance Sheets
(see the discussion below on “Fair Value Measurement”). The changes in the valuation of these investments
as entity exchange transactions are recorded on the Statements of Net Cost.
The annual valuation of these investments as of September 30 incorporates various forecasts, projections,
and cash flow analyses to develop an estimate of the assets’ fair value. The fair value of the SPV preferred
equity investments is estimated based on a discounted cash flow valuation methodology which calculates
the present value of the projected annual cash flows associated with these investments.
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 6 - COVID-19: Investments and Loans Receivable).
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.
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. These adjustments are reported within “Costs of Investments in
Special Purpose Vehicles and Loans Receivable” 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
26
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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
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 governments or monetary
authorities. The ESF classifies these investments as trading securities, which are bought and held principally
for the purpose of selling them in the near term. These investments are assessed monthly and recorded at
the fair value with realized and unrealized holding gains or losses reported on the Statements of Net Cost.
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
27
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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
OASI, pursuant to the CARES Act, in connection with ESF’s Investments in SPVs and loans receivable that
were financed by a combination of appropriations and Fiscal Service debt (refer to Note 6 - COVID-19:
Investments and Loans Receivable), 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 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.
28
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 11 -
Funds from Dedicated Collections).
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. As
such, the ESF has authority to draw upon Treasury to make future expenditures. Treasury securities are an
asset to the ESF and a liability to Treasury.
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, 2023 and 2022, all liabilities were 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 1 (H) - Summary of Significant
Accounting Policies - Loans, Receivable, Net above).
29
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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.
The valuation of Investments in SPVs includes Level 3 inputs. Refer to Note 6 - COVID-19: Investments
and Loans Receivable 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 are Level 1 measurements since these financial assets are traded
in active markets where quoted values are readily available. Refer to Note 4 - Foreign Currency and Foreign
Currency Denominated Assets and Note 7 - Other Investments.
30
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 Note 1 (I) - Summary of Significant Accounting Policies - Other Investments
and Note 1 (H) - Summary of Significant Accounting Policies - Loans, Receivable, Net).
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.
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
31
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
No. 47, the ESF identified the following disclosure entity as of September 30, 2023 and 2022. 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” line on the Balance Sheets
(refer to Note 6 - COVID-19: Investments and Loans Receivable).
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, 2023 and 2022, the ESF recorded interest income totaling $16 million and $28
million respectively, related to these fund balances. The accrued interest income was collected in full on
September 30, 2023 and 2022.
Fund balance activity and fund balance status for the fiscal years ended September 30, 2023 and 2022, are
presented below, respectively.
32
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
Fiscal Year Ended
(in thousands) September 30, 2023 September 30, 2022
Balance, beginning of period $ 454,693 $ 1,984,276
Rescissions (200,000) (1,366,100)
Appropriations Received 4,878 3,445
Transfers to the General Fund (44,231) (4,569,932)
Borrowings from (Repayments to) Fiscal Service, Net (4,541,615) (4,520,036)
Deposits into OASI (183,248) -
Return of Investment Capital and Collections of Loan Principal 4,657,459 9,079,852
Disbursements for Net Interest, Administrative Costs and Other (86,494) (156,812)
Balance, end of period $ 61,442 $ 454,693
As of
(in thousands) September 30, 2023 September 30, 2022
Unobligated Balance:
Available $ 46,333 $ 433,898
Unavailable 10,729 15,242
Obligated Balance Not Yet Disbursed 4,380 5,553
Total Status of Fund Balance with Treasury $ 61,442 $ 454,693
The “Unobligated Balance,” both available and unavailable, decreased by a total of $0.4 billion year-over-
year. This decrease is primarily due to the $0.2 billion rescission enacted in FY 2023 as part of the FRA,
along with $0.2 billion in payments made to the OASI established under Section 201(a) of the Social
Security Act of 1935 (Social Security Act) in FY 23 from unobligated balances. Refer to Note 6 - COVID-
19: Investments and Loans Receivable 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 overnight market-based investments
had a cost/acquisition value of $14.7 billion and $18.4 billion on September 30, 2023 and 2022,
respectively, which approximated their fair value. In FY 2023, the decrease is primarily the result of
utilizing the Nonmarketable U.S Treasury Securities balance to purchase $3.5 billion of SDRs. Refer to
Note 5 - Special Drawing Rights 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 certain “extraordinary
measures” in the event that the public debt nears the statutory debt limit, and the statutory debt limit has
33
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 issuances
to 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 2023 or 2022. On June 3, 2023, President Biden
signed into law the FRA which suspended the statutory debt limit through January 1, 2025.
NOTE 4 - FOREIGN CURRENCY AND FOREIGN CURRENCY DENOMINATED ASSETS
Foreign currency and FCDAs represent foreign deposit accounts and securities that were valued at $13.7
billion and $12.8 billion as of September 30, 2023 and 2022, respectively. The totals were comprised of
$6.7 billion of foreign currency and $7.0 billion of FCDAs for FY 2023 and $6.9 billion of foreign
currency and $5.9 billion of FCDAs for FY 2022. 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 $1.8 billion and $2.5 billion for FY 2023 and FY 2022, respectively. Gains
related to FCDAs reported on the Statements of Net Cost as “Gains on Currency Valuation and Other -
Foreign Currency and Foreign Currency Denominated Assets” were $2.2 billion and $0.4 billion for FY
2023 and FY 2022, respectively.
NOTE 5 - SPECIAL DRAWING RIGHTS
SDR Holdings and SDR Allocations are reported on the Balance Sheets as an asset and liability,
respectively. 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, 2023 and 2022.
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. ESF received allocations of SDRs from the IMF
34
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
during calendar years 1970, 1971, 1972, 1979, 1980, 1981, 2009, and 2021. As of September 30, 2023,
and 2022, the value of SDR Allocations to the U.S., including related interest payable, was the equivalent
of $152.1 billion and $147.4 billion, respectively. The ESF’s balance in SDR Allocations and related
interest payable increased by $4.7 billion primarily due to a valuation gain of $7.7 billion recorded within
“Gains on Currency Valuation and Other – Special Drawing Right Allocations” line on the Statements of
Net Cost offset with a valuation loss of $11.8 billion within “Losses on Currency Valuation and Other –
Special Drawing Right Allocations” line on the Statements of Net Cost, and by $0.6 billion in related
interest payable due to increased SDR interest rates in FY 2023.
SDR Holdings
During FY 2023, the ESF’s balance in “Special Drawing Right Holdings and Related Interest Receivable”
increased by $9.5 billion primarily due to a valuation gain of $12.4 billion recorded within “Gains on
Currency Valuation and Other – Special Drawing Right Holdings” line on the Statements of Net Cost
offset with a valuation loss of $8.2 billion within “Losses on Currency Valuation and Other – Special
Drawing Right Holdings” line on the Statements of Net Cost. This increase is also due to $3.5 billion of
SDR purchases in FY 2023, from three IMF participants (Ukraine, Uzbekistan, and the Bank for
International Settlements) along with $1.0 billion in remuneration received and $0.7 billion in related
interest receivable due to increased interest rates in FY 2023.
The following schedule reflects the activity related to SDR Holdings during fiscal years 2023 and
2022, by dollar equivalent and SDR:
As of September 30,
(Dollar Equivalent in thousands) 2023 2022
Balance, beginning of period $ 153,175,162 $ 163,874,175
SDR Purchases 3,495,499 4,482,035
Interest Credits on Holdings 4,880,676 479,784
Interest Charges on Allocations (4,630,219) (465,010)
Remuneration 971,129 95,233
IMF Annual Assessment (2,031) (1,973)
Net Gain/(Loss) on Valuation of Holdings 4,167,594 (15,289,082)
Balance, end of period $ 162,057,810 $ 153,175,162
(1)
This amount excludes related interest receivable of $1,099 million and $421 million as of September 30, 2023 and 2022, respectively.
35
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
As of September 30,
(SDRs in thousands) 2023 2022
Balance, beginning of period 119,679,316 116,316,038
SDR Purchases 2,648,196 3,282,336
Interest Credits on Holdings 3,652,344 359,420
Interest Charges on Allocations (3,465,188) (348,319)
Remuneration 726,594 71,308
IMF Annual Assessment (1,508) (1,467)
Balance, end of period(1) 123,239,754 119,679,316
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: (i)
changes in SDR exchange rates between accrual date and transaction date, and (ii) 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 - COVID-19: INVESTMENTS AND LOANS RECEIVABLE
The global spread of the COVID-19 over the past several years 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 and CAA. 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. In addition to
the FY 2022 and 2021 rescissions pursuant to the Infrastructure Investment and Jobs Act, P.L. 117-58
(IIJA) and the CAA, respectively, on June 3, 2023, President Biden signed into law the FRA, which
rescinded certain unobligated funds that were provided by these legislative acts.
36
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
The tables below summarize the ESF’s remaining budgetary resources and the status of those resources
by program for the fiscal years ended September 30, 2023 and 2022, enacted in response to the COVID-19
pandemic:
Fiscal Year Ended September 30, 2023
Beginning Available Rescissions and Less: Obligations Remaining Available
Budgetary Resources Other Adjustments(1) Incurred Budgetary Resources
(in thousands)
Direct Loans to Air Carriers and National
Security Business $ 227,971 $ (195,122) $ (10,671) $ 22,178
Total CARES Act Authority(2) $ 227,971 $ (195,122) $ (10,671) $ 22,178
(1)
Rescissions and Other Adjustments primarily include a $200 million rescission of CARES Act authority related to the Direct Loans to Air Carriers and
National Security Business pursuant to the FRA.
(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, 2022
Beginning Available Rescissions and Less: Obligations Remaining Available
Budgetary Resources Other Adjustments(1) Incurred Budgetary Resources
(in thousands)
Direct Loans to Air Carriers and National
Security Business $ 1,591,043 $ (1,363,072) $ - $ 227,971
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 IIJA.
(2)
Total CARES Act Authority does not include amounts related to the Treasury and the ESF’s program support and oversight of these programs.
37
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 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 exchange for a preferred equity
interest in the SPVs. To the extent the FRBNY and FRBB experience losses from financing the facilities,
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.
Upon dissolution of the SPVs, 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
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 OASI established
under Section 201(a) of the Social Security Act.
The SPV LLC Agreements provide for interim distributions to the ESF in November and May of each
fiscal year in accordance with the terms of the most recent amended agreements. During the fiscal years
ended September 30, 2023 and 2022, the ESF received $4.6 billion and $8.5 billion in interim distributions
from the SPVs, respectively, which was used to repay outstanding debt to the Fiscal Service that was
borrowed to finance the non-subsidized portion of these investment transactions. The interim distributions
to the ESF 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 ESF cannot use the funds remaining in the SPVs funded
under the CARES Act for further lending, asset purchases, or extensions of credit.
38
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
Remaining
Outstanding Equity FY 2023 Interim Outstanding Equity
Contribution 9/30/22 Distribution Contribution
(in thousands) 9/30/23(1)
Main Street Facilities $ 13,890,932 $ (4,206,607) $ 9,684,325
Municipal Liquidity Facility 2,894,692 (68,663) 2,826,029
Term Asset-Backed Securities 1,154,109 (306,201) 847,908
Total 13(3) Facilities $ 17,939,733 $ (4,581,471) $ 13,358,262
(1)
These amounts exclude cumulative 9/30/23 fair valuations associated with these assets. See table below for such fair valuations.
Remaining
Outstanding Equity FY 2022 Interim Outstanding Equity
Contribution 9/30/21 Distribution Contribution
9/30/22(1)
(in thousands)
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.
The following is a description of the remaining liquidity lending facilities. Following these descriptions
is a section entitled, “Investments in Special Purpose Vehicles” which discusses the accounting treatment
for these facilities.
• Main Street Facilities LLC (MSF) – established by the FRBB in May 2020 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. Loans issued under this program
have a five-year maturity, principal payments are deferred for two years, and interest payments
and deferred for one year. The SPV ceased purchasing loan participations in January 2021.
• Municipal Liquidity Facility LLC (MLF) – established by the FRBNY in May 2020 to help state
and local governments manage cash flow pressures while continuing to serve households and
businesses in their communities. The facility purchased short-term notes directly from eligible
U.S. states and the District of Columbia, counties and cities. The SPV ceased purchasing eligible
notes in December 2020.
• Term Asset-Backed Securities Loan Facility LLC (TALF) – established by FRBNY in March
2020 to support the flow of credit to consumers and businesses to stabilize the U.S. financial
system. This program facilitated the issuance of asset-backed securities backed by student loans,
auto loans, credit card loans, commercial mortgages, and certain other assets. No new credit
extensions were made after December 2020.
39
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
Investments in Special Purpose Vehicles
As of September 30, 2023 and 2022, the preferred equity investments in the SPVs were valued as follows:
Gross Investments As of Cumulative Valuation
9/30/23 Fair Value
9/30/23 Gain/(Loss)
(in thousands)
Main Street Facilities(1) $ 9,684,324 $ 1,439,602 $ 11,123,926
(1)
Municipal Liquidity Facility 2,826,029 180,824 3,006,853
(1)
Term Asset-Backed Securities 847,909 135,395 983,304
Total Investments in SPVs $ 13,358,262 $ 1,755,821 $ 15,114,083
(1)
In FY 2023, 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.
Gross Investments As of Cumulative Valuation
9/30/22 Fair Value
9/30/22 Gain/(Loss)
(in thousands)
Main Street Facilities(1) $ 13,890,932 $ (200,338) $ 13,690,594
(1)
Municipal Liquidity Facility 2,894,692 44,392 2,939,084
(1)
Term Asset-Backed Securities 1,154,109 51,015 1,205,124
Total Investments in SPVs $ 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.
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 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 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, 2023 and 2022, the ESF recorded an unrealized fair value net
gain of $1.9 billion and $0.7 billion related to these investments, respectively.
40
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 OASI. 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 OASI. The ESF recorded a liability of $952 million and $186 million
as of September 30, 2023 and 2022, 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. 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 OASI, which are treated as non-entity transactions.
41
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
Direct Loans to Air Carriers and Other Related Businesses
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 pandemic. Treasury chose to make only direct loans under
this authorization. As of September 30, 2023 and 2022, 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. 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.
Loans Receivable, Net
The ESF presents the direct loans as loans receivable on the Balance Sheets. As of September 30, 2023,
the net loans receivable of the passenger airlines and other related businesses programs of $901 million,
included a positive subsidy allowance of $70 million. The other related businesses include national
security, air cargo carriers, ticket agents, and maintenance and repair businesses. As of September 30,
2022, the loans receivable of the passenger airlines and other related businesses of $1.0 billion, included
a negative subsidy allowance of $32 million. The negative or positive subsidies at the end of fiscal years
2023 and 2022 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, 2023 resulted in an upward re-estimate, or an increase of $17 million. The
upward re-estimate primarily stemmed from a decline in the value of warrants held by the ESF. The re-
estimates performed as of September 30, 2022, resulted in an upward re-estimate, or an increase of
$78 million in the cost of the passenger airline programs and other related business programs. 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 FY 2023 and FY 2022 re-estimates recorded by the
ESF included the expected OASI 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
42
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
incurred from these direct loans. In accordance with the CARES Act, the ESF must transfer any remaining
excess residual proceeds to the OASI. 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 OASI. 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, 2023 and 2022, a liability was recorded of $128 million and $184 million, due to the
OASI within the “Intra-Governmental: Other Liabilities” line on the Balance Sheets.
NOTE 7 - OTHER INVESTMENTS
Other Investments 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 $3.7 billion
fair value of foreign investments (excluding related interest receivable) held as of September 30, 2023,
$0.4 billion will mature within one year, $2.6 billion will mature after one year but before five years, and
$0.7 billion will mature after five years but before ten years. Losses related to Other Investments reported
on the Statements of Net Cost as “Losses on Currency Valuation and Other - Other Investments” were
$1.0 billion and $2.5 billion for FY 2023 and FY 2022, respectively. Gains related to Other Investments
reported on the Statements of Net Cost as “Gains on Currency Valuation and Other - Other Investments”
were $1.1 billion and $0.4 billion for FY 2023 and FY 2022, respectively. The fair value of these securities
is determined using Level 1 inputs.
As of September 30, 2023, and 2022, Other Investments consisted of the following:
Fair Value as of Fiscal Year Ended September 30,
(in thousands) 2023 2022
Investment Type:
Foreign Investments/Debt Securities:
Euro Bonds & Notes $ 3,700,906 $ 3,794,050
Japanese Government Bonds 2,343 2,422
Total Non-Federal Investments $ 3,703,249 $ 3,796,472
43
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
The following table provides a reconciliation of ESF’s investment activity for the fiscal years ended
September 30, 2023 and 2022:
For the Fiscal Year Ended September 30,
(in thousands) 2023 2022
Balance, beginning of period $ 3,796,472 $ 5,265,234
Valuation Adjustments 291,195 (1,240,697)
Gain/(Loss) on Sales/Dispositions (143,422) (971,155)
Acquisitions of Investments 6,391,003 11,667,980
Sale/Repayment of Investments (6,581,852) (10,804,277)
Change in Accrued Dividend/Interest Income (4,650) (10,105)
Other - Change in Premiums/Discounts (45,497) (110,508)
Balance, end of period $ 3,703,249 $ 3,796,472
NOTE 8 - 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 as of September 30, 2023 and 2022 of $46 million and $6
million, 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” and “Loans Receivable, Net” on the Balance Sheets
(refer to Note 6 - COVID-19: Investments and Loans Receivable). The change in the net cost of the
investments and receivables is reported on the Statements of Net Cost.
As of September 30,
(in thousands) 2023 2022
Credit Reform Downward Subsidy Re-estimates for Investments in SPVs $ - $ (6,106)
Credit Reform Downward Subsidy Re-estimates for Loans Receivable (45,674) -
Total Due to the General Fund $ (45,674) $ (6,106)
NOTE 9 - DEBT
As of September 30, 2023 and 2022, the ESF had outstanding debt of $14.9 billion and $19.5 billion,
respectively. This debt was incurred to finance, in part, the making of investments and loans as authorized
by the CARES Act. Maturity dates for the debt payable to the Bureau of Fiscal Service range from
44
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
September 30, 2024 to September 30, 2026 with effective interest rates ranging from 0.54 percent to 0.88
percent.
The debt decreased by $4.6 billion in FY 2023 primarily due to the repayment of outstanding debt owed
to the Bureau of Fiscal Service in the amount of $4.7 billion, offset with additional borrowings of $39
million to fund loan modifications and downward reestimates and $134 million to finance the scheduled
payment of interest expense on the outstanding principal borrowings with the Bureau of Fiscal Service.
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, 2023 and 2022, the ESF recorded interest expense totaling $154
million and $214 million, respectively, related to this debt. The accrued interest expense was paid in full
on September 30, 2023 and 2022.
All debt and related interest costs are intra-governmental and covered by budgetary resources. See
additional details on borrowing authority in Note 12 - Statement of Budgetary Resources.
NOTE 10 - 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 other foreign currency denominated
exchange stabilization agreements as of September 30, 2023 and 2022.
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 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, 2023, and 2022.
45
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
NOTE 11 - 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:
BALANCE SHEETS
As of September 30,
(in thousands) 2023 2022
ASSETS
Nonmarketable U.S. Treasury Securities $ 14,700,110 $ 18,401,389
Foreign Currency and Other Monetary Assets
Foreign Currency and Foreign Currency Denominated Assets 13,682,427 12,816,009
Special Drawing Right Holdings and Related Interest Receivable 163,156,630 153,595,911
Other Investments 3,703,248 3,796,472
Total Assets $ 195,242,415 $ 188,609,781
LIABILITIES AND NET POSITION
LIABILITIES
Special Drawing Right Allocations and Related Interest Payable $ 152,069,848 $ 147,414,371
Special Drawing Right Certificates Issued to Federal Reserve Banks 5,200,000 5,200,000
Total Liabilities 157,269,848 152,614,371
NET POSITION
Total Unexpended Appropriations 200,000 200,000
Total Cumulative Results of Operations 37,772,567 35,795,410
Total Net Position 37,972,567 35,995,410
Total Liabilities and Net Position $ 195,242,415 $ 188,609,781
46
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
STATEMENTS OF NET COST
Fiscal Year Ended September 30,
(in thousands) 2023 2022
Gross Cost of Operations $ 28,010,620 $ 24,749,905
Earned Revenue (29,987,777) (20,125,510)
Total Net Cost (Income) of Operations $ (1,977,157) $ 4,624,395
STATEMENT OF CHANGES IN NET POSITION
Fiscal Year Ended September 30,
(in thousands) 2023 2022
UNEXPENDED APPROPRIATIONS $ 200,000 $ 200,000
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balance 35,795,410 40,419,805
Total (Net Cost) Income of Operations 1,977,157 (4,624,395)
Total Cumulative Results of Operations 37,772,567 35,795,410
NET POSITION $ 37,972,567 $ 35,995,410
NOTE 12 - 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, 2023 and 2022
consisted of the following:
As of
(in thousands) September 30, 2023 September 30, 2022
Unobligated Balance, Brought Forward From Prior Year $ 35,988,630 $ 42,535,789
Adjustments to Budgetary Resources Made During Current Year
Downward Adjustments of Prior Year Undelivered Orders 2,899 6,776
Downward Adjustments of Prior Year Delivered Orders and Other Adjustments 8,700,665 (4,465,766)
Unobligated Balance From Prior Year Budget Authority, Net (Discretionary and
Mandatory) $ 44,692,194 $ 38,076,799
The decrease in “Unobligated Balance, Brought Forward From Prior Year” is primarily the result of the FY
2022 rescission of $1.4 billion of CARES Act appropriation received in FY 2020. The increase in the
Downward Adjustments of Prior Year Delivered Orders and Other Adjustments primarily reflects the valuation
losses on SDR Allocations due to the weakening of the USD.
47
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 $4 million as of September 30, 2023 were all unpaid, of which $2
million involved both federal entities and non-federal entities, respectively. 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.
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 fiscal year.
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 0.54 percent to 0.88 percent. No borrowing authority remained as of September 30, 2023 and
2022, as resources are no longer needed for the SPV investments and direct loan commitments which were de-
obligated pursuant to the CAA (refer to Note 6 - COVID-19: Investments and Loans Receivable).
Reconciliation of the President’s Budget
The Budget of the U.S. (also known as the President’s Budget), with actual numbers for FY 2023, was
not published at the time that these financial statements were issued. The ESF expects OMB to publish
the FY 2025 President’s Budget in February 2024, and be available from the U.S. Government Publishing
Office. The FY 2024 President’s Budget was reconciled to the ESF’s SBR amounts reported for FY 2022.
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
48
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
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 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 13 - 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. The accrual basis includes information about costs arising from the consumption of assets and the
incurrence of liabilities. 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, 2023 and 2022, 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, 2023 and 2022
Fiscal Year Ended September 30, 2023
Other Than
Intra-
Intra- 2023 Total
Governmental
(in thousands) Governmental
Total Net Cost (Income) of ESF Operations $ (624,686) $ (3,055,700) $ (3,680,386)
Components of Net Operating Cost Not Part of Budgetary Outlays:
Unrealized Valuation Gain (Loss) on Investments (Notes 4, 6 and 7) - 586,592 586,592
Unrealized Valuation Gain (Loss) on Special Drawing Rights (Note 5) - 135,942 135,942
Year-end Credit Reform Subsidy Accrual Re-Estimates - 33,041 33,041
Adjustments to Prior Year Credit Reform Re-Estimates - 747,520 747,520
Loan Modification Adjustment Transfers - (356) (356)
Increase/(Decrease) in Assets:
Foreign Currency and Foreign Currency Denominated Assets (Note 4) - 2,246 2,246
Special Drawing Right Holdings Interest Receivable (Note 5) - 678,071 678,071
Other Investments (Note 7) - (2,445) (2,445)
(Increase)/Decrease in Liabilities:
Special Drawing Right Allocations Interest Payable (Note 5) - (623,825) (623,825)
Other Liabilities 34 (39) (5)
Other Financing Sources:
Imputed Costs (366) - (366)
Total Components of Net Operating Cost Not Part of Budgetary Outlays (332) 1,556,747 1,556,415
Components of Budgetary Outlays That Are Not Part of Net Cost
Effect of Prior Year Credit Reform Subsidy Reestimate - (1,228) (1,228)
Other Financing Sources:
Transfers (In)/Out Without Reimbursement 893,905 - 893,905
Total Components of Budgetary Outlays That Are Not Part of Net Cost 893,905 (1,228) 892,677
Agency Outlays, Net $ (1,231,294)
50
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
Fiscal Year Ended September 30, 2022
Other Than
Intra-
Intra- 2022 Total
Governmental
(in thousands) 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 Gain (Loss) on Investments (Notes 4, 6 and 7) - (4,282,590) (4,282,590)
Unrealized Valuation Gain (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 Right Holdings Interest Receivable (Note 5) - 410,434 410,434
Other Investments (Note 7) - (10,105) (10,105)
Other Assets (3,245,259) - (3,245,259)
(Increase)/Decrease in Liabilities:
Special Drawing Right Allocations Interest Payable (Note 5) - (394,437) (394,437)
Other Liabilities - (69) (69)
Other Financing Sources:
Imputed Costs (218) - (218)
Total Components of Net Operating Cost Not Part of Budgetary Outlays (3,245,477) (4,282,241) (7,527,718)
Components of Budgetary Outlays That Are Not Part of Net Cost
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 Cost (1,274,729) - (1,274,729)
Other Reconciling Items
Other Reconciling Items (7,168) - (7,168)
Total Other Reconciling Items (7,168) - (7,168)
Agency Outlays, Net $ (4,636,942)
51
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Notes to the Financial Statements
September 30, 2023 and 2022
NOTE 14 – SUBSEQUENT EVENTS
The following event transpired after September 30, 2023 but prior to the issuance date of this report:
In December 2023, Treasury and the Federal Reserve Bank of New York amended the limited liability
company agreements for MLF and TALF to facilitate the wind-down of these facilities in FY 2024.
Upon dissolution of the SPVs, the ESF will receive 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 each SPVs (refer to Note 6
- COVID-19: Investments and Loans Receivable).
52
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Required Supplementary Information (Unaudited)
September 30, 2023 and 2022
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Combining Statement of Budgetary Resources by Major Budget Account
The SBR for the fiscal years ended September 30, 2023 and 2022 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 11 - Funds from Dedicated Collections) that supports Exchange Stabilization,
(ii) the program fund for FCRA-budgeted Investments in SPVs and Loans Receivable (refer to Note 6 -
COVID-19: Investments and Loans Receivable), and (iii) the non-budgetary financing account for FCRA-
budgeted Investments in SPVs and Loans Receivable.
53
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Required Supplementary Information (Unaudited)
September 30, 2023 and 2022
For the Year Ended September 30, 2023
Exchange
COVID-19 Non-
Stabilization COVID-19
Budgetary
Program Budgetary Total
Financing
Budgetary Account
Account
Account
(in thousands)
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority,
Net (discretionary and mandatory) (Note 12) $ 44,253,925 $ 231,072 $ 207,197 $ 44,692,194
Appropriations (discretionary and mandatory) - (195,122) - (195,122)
Borrowing authority (discretionary and mandatory) - - 173,194 173,194
Spending authority from offsetting collections
(discretionary and mandatory) 1,203,136 - 30,905 1,234,041
Total Budgetary Resources $ 45,457,061 $ 35,950 $ 411,296 $ 45,904,307
STATUS OF BUDGETARY RESOURCES
New obligations and upward adjustments $ 8,616,081 $ 13,773 $ 376,412 $ 9,006,266
Unobligated balance, end of year:
Apportioned, unexpired accounts - 22,177 24,155 46,332
Unapportioned, unexpired accounts 36,840,980 - 10,729 36,851,709
Unobligated balance, end of year 36,840,980 22,177 34,884 36,898,041
Total Budgetary Resources $ 45,457,061 $ 35,950 $ 411,296 $ 45,904,307
OUTLAYS, NET, AND DISBURSEMENTS, NET
Outlays, net (discretionary and mandatory) $ (1,200,931) $ 11,843 $ - $ (1,189,088)
Distributed offsetting receipts (3,209) (38,997) - (42,206)
Agency Outlays, Net (Discretionary and Mandatory) $ (1,204,140) $ (27,154) $ - $ (1,231,294)
Disbursements, net (mandatory) $ (4,355,684) $ (4,355,684)
54
DEPARTMENT OF THE TREASURY
EXCHANGE STABILIZATION FUND
Required Supplementary Information (Unaudited)
September 30, 2023 and 2022
For the Year Ended September 30, 2022
Exchange
COVID-19 Non-
Stabilization COVID-19
Budgetary
Program Budgetary Total
Financing
Budgetary Account
Account
Account
(in thousands)
BUDGETARY RESOURCES
Unobligated balance from prior year budget authority,
Net (discretionary and mandatory) (Note 12) $ 36,169,257 $ 1,597,819 $ 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 $ 36,294,192 $ 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 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 Mandatory) $ (125,029) $ (4,511,913) $ - $ (4,636,942)
Disbursements, net (mandatory) $ (4,411,126) $ (4,411,126)
55
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