Back Matter

Back Matter

Author(s):
International Monetary Fund
Published Date:
January 1982
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    Appendices
    Appendix A. Form of Stand-By Arrangement Under Enlarged Access Policy

    Attached hereto is a letter [, with annexed memorandum,] dated ________ from (Minister of Finance and/or Governor of Central Bank) requesting a stand-by arrangement and setting forth:

    • (a) the objectives and policies that the authorities of (member) intend to pursue for the period of this stand-by arrangement;

    • (b) the policies and measures that the authorities of (member) intend to pursue for the [first year] of this stand-by arrangement; and

    • (c) understandings of (member) with the Fund regarding [a] review[s] that will be made of progress in realizing the objectives of the program and of the policies and measures that the authorities of (member) will pursue for the remaining period of this stand-by arrangement.

    To support these objectives and policies the International Monetary Fund grants this stand-by arrangement in accordance with the following provisions:

    1.103 [For a period of ____ years from _________] [For the period from ________to _______] (member) will have the right to makepurchases from the Fund in an amount equivalent to SDR _______, subject to paragraphs 2, 3, 4, and 5 below, without further review by the Fund.

    2.103 (a) Until (end of first year) purchases under this stand-by arrangement shall not, without the consent of the Fund, exceed the equivalent of SDR ______, provided that purchases shall not exceed the equivalent of SDR ________ until _______, the equivalent of SDR ________ until ______, and the equivalent of SDR ______ until ________.

    (b) The right of (member) to make purchases during the remaining period of this stand-by arrangement shall be subject to such phasing as shall be determined.

    (c) None of the limits in (a) or (b) above shall apply to a purchase under this stand-by arrangement that would not increase the Fund’s holdings of (member’s) currency in the credit tranches beyond 25 per cent of quota or increase the Fund’s holdings of that currency resulting from purchases of supplementary financing or borrowed resources beyond 12.5 per cent of quota.

    3. Purchases under this stand-by arrangement shall be made from …,104 provided that any modification by the Fund of the proportions of ordinary and borrowed resources shall apply to amounts that may be purchased after the date of modification.

    4. (Member) will not make purchases under this stand-by arrangement that would increase the Fund’s holdings of (member’s) currency in the credit tranches beyond 25 per cent of quota or increase the Fund’s holdings of that currency resulting from purchases of supplementary financing or borrowed resources beyond 12.5 per cent of quota:

    • (a) during any period in the first year in which [the data at the end of the preceding period indicate that]105

      • (i) [the limit on domestic credit described in paragraph ____ of the attached letter], or

      • (ii) [the limit on credit to the public sector described in paragraph _____ of the attached letter], or

      • (iii) … [These provisions would incorporate other quantitative performance criteria of the program]

      are not observed, or

    • (b) if (member) fails to observe the limits on authorizations of new public and publicly guaranteed foreign indebtedness described in paragraph _____ of the attached letter; or

    • (c) 106 during the second or third year of this stand-by arrangement until suitable performance criteria have been established in consultation with the Fund as contemplated by paragraph ______ of the attached letter, or after such performance criteria have been established, while they are not being observed;

    • (d) 106 during the entire period of this stand-by arrangement, if (member)

      • (i) imposes [or intensifies] restrictions on payments and transfers for current international transactions, or

      • (ii) introduces [or modifies] multiple currency practices, or

      • (iii) concludes bilateral payments agreements which are inconsistent with Article VIII, or

      • (iv) imposes [or intensifies] import restrictions for balance of payments reasons.

    When (member) is prevented from purchasing under this stand-by arrangement because of this paragraph 4, purchases will be resumed only after consultation has taken place between the Fund and (member) and understandings have been reached regarding the circumstances in which such purchases can be resumed.

    5. (Member’s) right to engage in the transactions covered by this stand-by arrangement can be suspended only with respect to requests received by the Fund after (a) a formal ineligibility, or (b) a decision of the Executive Board to suspend transactions, either generally or in order to consider a proposal, made by an Executive Director or the Managing Director, formally to suppress or to limit the eligibility of (member). When notice of a decision of formal ineligibility or of a decision to consider a proposal is given pursuant to this paragraph 5, purchases under this arrangement will be resumed only after consultation has taken place between the Fund and (member) and understandings have been reached regarding the circumstances in which such purchases can be resumed.

    6. Purchases under this stand-by arrangement shall be made in the currencies of other members selected in accordance with the policies and procedures of the Fund, and may be made in SDRs if, on the request of (member), the Fund agrees to provide them at the time of the purchase.

    7. The value date of a purchase under this stand-by arrangement involving borrowed resources will be normally either the fifteenth day or the last day of the month, or the next business day if the selected day is not a business day. (Member) will consult the Fund on the timing of purchases involving borrowed resources.

    8. (Member) shall pay a charge for this stand-by arrangement in accordance with the decisions of the Fund.

    9. (a) (Member) shall repurchase the outstanding amount of its currency that results from a purchase under this stand-by arrangement in accordance with the provisions of the Articles of Agreement and decisions of the Fund, including those relating to repurchase as (member’s) balance of payments and reserve position improves.

    (b) Any reductions in (member’s) currency held by the Fund shall reduce the amounts subject to repurchase under (a) above in accordance with the principles applied by the Fund for this purpose at the time of the reduction.

    (c) The value date of a repurchase in respect of a purchase financed with borrowed resources under this stand-by arrangement will be normally either the sixth day or the twenty-second day of the month, or the next business day if the selected day is not a business day, provided that repurchase will be completed not later than seven years from the date of purchase.

    10. During the period of the stand-by arrangement (member) shall remain in close consultation with the Fund. These consultations may include correspondence and visits of officials of the Fund to (member) or of representatives of (member) to the Fund. (Member) shall provide the Fund, through reports at intervals or dates requested by the Fund, with such information as the Fund requests in connection with the progress of (member) in achieving the objectives and policies set forth in the attached letter [and annexed memorandum].

    11. In accordance with paragraph _____ of the attached letter (member) will consult the Fund on the adoption of any measures that may be appropriate at the initiative of the government or whenever the Managing Director requests consultation

    Version A

    [because any of the criteria in paragraph 4 above have not been observed or because he considers that consultation on the program is desirable. In addition, after the period of the arrangement and while (member) has outstanding purchases in the upper credit tranches, the government will consult with the Fund from time to time, at the initiative of the government or at the request of the Managing Director, concerning (member’s) balance of payments policies.]

    Version B

    [because he considers that consultation on the program is desirable].

    Appendix B. Form of Extended Arrangement Under Enlarged Access Policy

    Attached hereto is a letter [, with annexed memorandum,] dated _______ from (Minister of Finance and/or Governor of Central Bank) requesting an extended arrangement and setting forth:

    • (a) the objectives and policies that the authorities of (member) intend to pursue for the period of this extended arrangement;

    • (b) the policies and measures that the authorities of (member) intend to pursue for the first year of this extended arrangement; and

    • (c) understandings of (member) with the Fund regarding reviews that will be made of progress in realizing the objectives of the program and of the policies and measures that the authorities of (member) will pursue for the second and third years of this extended arrangement.

    To support these objectives and policies the International Monetary Fund grants this extended arrangement in accordance with the following provisions:

    1. For a period of [three years] from ________ (member) will have the right to make purchases from the Fund in an amount equivalent to SDR _____, subject to paragraphs 2, 3, 4, and 5 below, without further review by the Fund.

    2. (a) Until (end of first year) purchases under this extended arrangement shall not, without the consent of the Fund, exceed the equivalent of SDR ____, provided that purchases shall not exceed the equivalent of SDR _______ until ______, the equivalent of SDR _______ until ________, and the equivalent of SDR ______ until ______.

    (b) Until (end of second year) purchases under this extended arrangement shall not, without the consent of the Fund, exceed the equivalent of SDR ______.

    (c) The right of (member) to make purchases during the second and third years shall be subject to such phasing as shall be determined.

    3. Purchases under this extended arrangement shall be made from …107 provided that any modification by the Fund of the proportions of ordinary and borrowed resources shall apply to amounts that may be purchased after the date of modification.

    4. (Member) will not make purchases under this extended arrangement:

    • (a) throughout the first year, during any period in which the data at the end of the preceding period indicate that108

      • (i) [the limit on domestic credit described in paragraph ____ of the attached letter], or

      • (ii) [the limit on credit to the public sector described in paragraph ____ of the attached letter], or

      • (iii) … [These provisions would incorporate other quantitative performance criteria of the program]

      are not observed; or

    • (b) if (member) fails to observe the limits on authorizations of new public and publicly guaranteed foreign indebtedness described in paragraph _____ of the attached letter; or

    • (c) throughout the second and third years, if before the beginning of the second year and the beginning of the third year of the extended arrangement suitable performance clauses have not been established in consultation with the Fund as contemplated in paragraph _____ of the attached letter or such clauses, having been established, are not being observed; or

    • (d) throughout the duration of the extended arrangement, if (member)

      • (i) imposes [or intensifies] restrictions on payments and transfers for current international transactions, or

      • (ii) introduces [or modifies] multiple currency practices, or

      • (iii) concludes bilateral payments agreements which are inconsistent with Article VIII, or

      • (iv) imposes [or intensifies] import restrictions for balance of payments reasons.

    When (member) is prevented from purchasing under this extended arrangement because of this paragraph 4, purchases will be resumed only after consultation has taken place between the Fund and (member) and understandings have been reached regarding the circumstances in which such purchases can be resumed.

    5. (Member’s) right to engage in the transactions covered by this extended arrangement can be suspended only with respect to requests received by the Fund after (a) a formal ineligibility, or (b) a decision of the Executive Board to suspend transactions, either generally or in order to consider a proposal, made by an Executive Director or the Managing Director, formally to suppress or to limit the eligibility of (member). When notice of a decision of formal ineligibility or of a decision to consider a proposal is given pursuant to this paragraph 5, purchases under this arrangement will be resumed only after consultation has taken place between the Fund and (member) and understandings have been reached regarding the circumstances in which such purchases can be resumed.

    6. Purchases under this extended arrangement shall be made in the currencies of other members selected in accordance with the policies and procedures of the Fund, and may be made in SDRs if, on the request of (member), the Fund agrees to provide them at the time of the purchase.

    7. The value date of a purchase under this extended arrangement involving borrowed resources will be normally either the fifteenth day or the last day of the month, or the next business day if the selected day is not a business day. (Member) will consult the Fund on the timing of purchases involving borrowed resources.

    8. (Member) shall pay a charge for this extended arrangement in accordance with the decisions of the Fund.

    9. (a) (Member) shall repurchase the amount of its currency that results from a purchase under this extended arrangement in accordance with the provisions of the Articles of Agreement and decisions of the Fund, including those relating to repurchase as (member’s) balance of payments and reserve position improves.

    (b) Any reductions in (member’s) currency held by the Fund shall reduce the amounts subject to repurchase under (a) above in accordance with the principles applied by the Fund for this purpose at the time of the reduction.

    (c) The value date of a repurchase in respect of a purchase financed with borrowed resources under this extended arrangement will be normally either the sixth day or the twenty-second day of the month, or the next business day if the selected day is not a business day, provided that repurchase will be completed not later than seven years from the date of purchase.

    10. During the period of the extended arrangement (member) shall remain in close consultation with the Fund. These consultations may include correspondence and visits of officials of the Fund to (member) or of representatives of (member) to the Fund. (Member) shall provide the Fund, through reports at intervals or dates requested by the Fund, with such information as the Fund requests in connection with the progress of (member) in achieving the objectives and policies set forth in the attached letter [and annexed memorandum].

    11. In accordance with paragraph ______ of the attached letter (member) will consult the Fund on the adoption of any measures that may be appropriate at the initiative of the government or whenever the Managing Director requests consultation because any of the criteria under paragraph 4 above have not been observed or because he considers that consultation on the program is desirable. In addition, after the period of the extended arrangement and while (member) has outstanding purchases under this extended arrangement, the government will consult with the Fund from time to time, at the initiative of the government or at the request of the Managing Director, concerning (member’s) balance of payments policies.

    International Monetary FUND Pamphlet Series

    (All pamphlets have been published in English, French, and Spanish, unless otherwise stated)

    *1. Introduction to the Fund, by J. Keith Horsefield. First edition, 1964. Second edition, 1965. Second edition also in German.

    *2. The International Monetary Fund: Its Form and Functions, by J. Marcus Fleming. 1964. In English only.

    3. The International Monetary Fund and Private Business Transactions: Some Legal Effects of the Articles of Agreement, by Joseph Gold. 1965.

    4. The International Monetary Fund and International Law: An Introduction, by Joseph Gold. 1965.

    *5. The Financial Structure of the Fund, by Rudolf Kroc. First edition, 1965. Second edition, 1967.

    6. Maintenance of the Gold Value of the Fund’s Assets, by Joseph Gold. First edition, 1965. Second edition, 1971.

    7. The Fund and Non-Member States: Some Legal Effects, by Joseph Gold. 1966.

    8. The Cuban Insurance Cases and the Articles of the Fund, by Joseph Gold. 1966.

    9. Balance of Payments: Its Meaning and Uses, by Poul H0st-Madsen. 1967.

    *10. Balance of Payments Concepts and Definitions. First edition, 1968. Second edition, 1969.

    11. Interpretation by the Fund, by Joseph Gold. 1968.

    12. The Reform of the Fund, by Joseph Gold. 1969.

    13. Special Drawing Rights, by Joseph Gold. First edition, 1969. Second edition, with subtitle Character and Use,1970.

    14. The Fund’s Concepts of Convertibility, by Joseph Gold. 1971.

    15. Special Drawing Rights: The Role, of Language, by Joseph Gold. 1971.

    16. Some Reflections on the Nature of Special Drawing Rights, by J.J. Polak. 1971.

    17. Operations and Transactions in SDRs: The First Basic Period, by Walter Habermeier. 1973.

    18. Valuation and Rate of Interest of the SDR, by J.J. Polak. 1974.

    19. Floating Currencies, Gold, and SDRs: Some Recent Legal Developments, by Joseph Gold. 1976. Also in German.

    20. Voting Majorities in the Fund: Effects of Second Amendment of the Articles, by Joseph Gold. 1977.

    21. International Capital Movements Under the Law of the International Monetary Fund, by Joseph Gold. 1977.

    22. Floating Currencies, SDRs, and Gold: Further Legal Developments, by Joseph Gold. 1977. Concluding section also in German.

    23. Use, Conversion, and Exchange of Currency Under the Second Amendment of the Fund’s Articles, by Joseph Gold. 1978.

    24. The Rise in Protectionism, by Trade and Payments Division. 1978.

    25. The Second Amendment of the Fund’s Articles of Agreement, by Joseph Gold. 1978.

    26. SDRs, Gold, and Currencies: Third Survey of New Legal Developments, by Joseph Gold. 1979. Concluding section also in German.

    27. Financial Assistance by the International Monetary Fund: Law and Practice, by Joseph Gold. First edition, 1979. In English only. Second edition, 1980.

    28. Thoughts on an International Monetary Fund Based Fully on the SDR, by J.J. Polak. 1979.

    29. Macroeconomic Accounts: An Overview, by Poul H0st-Madsen. 1979.

    30. Technical Assistance Services of the International Monetary Fund. 1979.

    31. Conditionality, by Joseph Gold. 1979.

    32. The Rule of Law in the International Monetary Fund, by Joseph Gold. 1980.

    33. SDRs, Currencies, and Gold: Fourth Survey of New Legal Developments, by Joseph Gold. 1980.

    34. Compensatory Financing Facility, by Louis M. Goreux. 1980.

    35. The Legal Character of the Fund’s Stand-By Arrangements and Why It Matters, by Joseph Gold. 1980.

    36. SDRs, Currencies, and Gold: Fifth Survey of New Legal Developments, by Joseph Gold. 1981.

    37. The International Monetary Fund: Its Evolution, Organization, and Activities. First edition, 1981. Fourth edition, 1984.

    38. Fund Conditionality: Evolution of Principles and Practices, by Manuel Guitiân. 1981.

    39. Order in International Finance, the Promotion of IMF Stand-By Arrangements, and the Drafting of Private Loan Agreements, by Joseph Gold. 1982.

    40. SDRs, Currencies, and Gold: Sixth Survey of New Legal Developments, by Joseph Gold. 1983. In English. French and Spanish in preparation.

    41. The General Arrangements to Borrow, by Michael Ainley. 1984. In English. French and Spanish in preparation.

    42. The International Monetary Fund: Its Financial Organization and Activities, by Anand G. Chandavarkar. 1984. In English. French and Spanish in preparation.

    43. The Technical Assistance and Training Services of the International Monetary Fund. In English. French and Spanish in preparation.

    *Out of print. Photographic or microfilm copies of all English editions, including numbers that are out of print, may be purchased direct from University Microfilms International, 300 North Zeeb Road, Ann Arbor, Michigan 48106, U.S.A., or, for those living outside the Western Hemisphere, from University Microfilms Limited, 30/32 Mortimer St., London, WIN 7RA, England.

    Copies (unless out of print) may be requested from:

    External Relations Department, Attention: Publications

    International Monetary Fund, Washington, D.C. 20431, U.S.A.

    Telephone number: 202 623-7430

    Cable address: Interfund

    Notes

    Stand-By Arrangements and Initiative

    Article XXX (b). Joseph Gold, The Legal Character of the Fund’s Stand-By Arrangements and Why It Matters, IMF Pamphlet Series, No. 35 (Washington, 1980). (Hereinafter referred to as Gold, Legal Character of Stand-By Arrangements.)

    Arthur F. Burns, Reflections of an Economic Policy Maker, Speeches and Congressional Statements: 1969-1978, American Enterprise Institute for Public Policy Research (Washington, 1978), pp. 462-63. Cf. Thomas D. Willett, International Liquidity Issues, American Enterprise Institute for Public Policy Research (Washington, 1980), pp. 67-72, 80-81, and Charles Lipson, “The International Organization of Third World Debt,” International Organization, Vol. 35 (Autumn 1981), pp. 603-31.

    Article V, Section 2(a).

    Executive Board Decision No. 102-(52/11), Selected Decisions of the International Monetary Fund and Selected Documents, 9th Issue (Washington, 1981), p. 19. (Hereinafter referred to as Selected Decisions.)

    Executive Board Decisions No. 244-1 to No. 244-4, January 12, 1948, Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972), pp. 175-76, 249-50.

    Executive Board Decision No. 6056-(79/38), March 2, 1979, Selected Decisions, pp. 19-22; Joseph Gold, Conditionality, IMF Pamphlet Series, No. 31 (Washington, 1979). (Hereinafter referred to as Gold, Conditionality.)

    Annual Report of the Executive Board for the Financial Year Ended April 30, 1979 (Washington, 1979), pp. 136-37.

    Manuel GuitiáArticle XII, Section 4 n, Fund Conditionality: Evolution of Principles and Practices, IMF Pamphlet Series, No. 38 (Washington, 1981); Subimal Mookerjee, “New Guidelines for Use of Fund Resources Follow Review of Practice of Conditionality,” IMF Survey, Vol. 8 (March 19, 1979), pp. 82-83.

    Executive Board Decision No. 5392-(77/63), April 29, 1977, Selected Decisions, pp. 10-14.

    Selected Decisions, p. 19.

    Article I (v).

    Official Policy to Encourage Requests

    Charles A. Coombs, The Arena of International Finance (New York, 1976), pp. 118-24, 133-34.

    British Information Services, Policy Statement 1/77, January 11, 1977, and Policy Statement 7/77, February 11, 1977; Bank for International Settlements (BIS), BIS Communiqué, January 10, 1977; IMF Survey, Vol. 6 (January 24, 1977), p. 17.

    BIS Communiqué, February 8, 1977.

    British Information Services, Policy Statement 1/77, January 11, 1977, p. 3.

    Selected Decisions, pp. 119-23.

    Selected Decisions, pp. 105-19.

    Article VII, Section 2 of original Articles (Article VII, Section 1 of present Articles).

    Article V, Section 3(e).

    Hans O. Schmitt, Economic Stabilization and Growth in Portugal, IMF Occasional Paper No. 2 (Washington, 1981), p. 6.

    Bahram Nowzad, Richard C. Williams, and others, External Indebtedness of Developing Countries, IMF Occasional Paper No. 3 (Washington, 1981), pp. 21-29 (hereinafter referred to as Nowzad and Williams, Occasional Paper No. 3).

    Public Law 95-147 (91 Stat. 1227), October 28, 1977.

    31 U.S.C. 822a (a).

    Public Law 94-564 (90 Stat. 2660), October 19, 1976, Section 7.

    Public Law 95-147, Section 4(b) (1).

    U.S. Congress, Senate, Committee on Banking, Housing and Urban Affairs, Amendment of the Bretton Woods Agreements Act and Other International Monetary Matters, Report No. 94-1295 to accompany H.R. 13955 together with supplemental views (94th Congress, 2nd Session, Washington, September 22, 1976), pp. 17-18.

    Private Lenders and Stand-By Arrangements

    International Debt, the Banks, and U.S. Foreign Policy, a staff report prepared for the use of the U.S. Senate, Subcommittee on Foreign Economic Policy of the Committee on Foreign Relations (95th Congress, 1st Session, Washington, August 1977), pp. 63-64.

    Group of Thirty, The Outlook for International Bank Lending, ed. by M.S. Mendelsohn (New York, 1981). (Hereinafter referred to as G-30, Outlook.)

    The nonofficial Group of Thirty was established in 1978 to explore basic problems in the functioning of the international economic system.

    G-30, Outlook, p. 39.

    “Cofinancing with International Institutions,” unpublished address by H.O. Ruding, Managing Director, Amsterdam-Rotterdam Bank N.V., Institut Universitaire International Luxembourg Financial Symposium: A Challenging Future for Banking, Luxembourg, November 12-13, 1981, p. 13.

    Alexander D. Calhoun, Jr., “Eurodollar Loan Agreements: An Introduction and Discussion of Some Special Problems,” The Business Lawyer, Vol. 32 (July 1977), pp. 1789-90 (hereinafter referred to as Calhoun, “Eurodollar Loan Agreements”).

    Article XII, Section 4 (b).

    Selected Decisions, p. 19.

    Irving S. Friedman, The Emerging Role of Private Banks in the Developing World (New York, 1977), p. 82.

    Ibid., p. 53.

    Wilfried Guth, The International Monetary System in Operation, 1977 Per Jacobsson Lecture (Washington, 1977), p. 27. See also pp. 25, 26-28.

    G-30, Outlook.

    G-30, Outlook, pp. 41-42.

    See, for example, remarks by W. Michael Blumenthal, Secretary of the U.S. Treasury, May 25, 1977, at the International Monetary Conference, Tokyo, entitled, “Toward International Equilibrium: A Strategy for the Longer Pull,” Annual Report of the Secretary of the Treasury on the State of the Finances, Fiscal Year 1977 (Washington, 1978), p. 433. See also Victoria E. Marmorstein, “Responding to the Call for Order in International Finance: Cooperation Between the International Monetary Fund and Commercial Banks,” Virginia Journal of International Law, Vol. 18 (Spring 1978), pp. 445-83; Lewis D. Solomon, “Developing Nations and Commercial Banks: The New Dependency,” Journal of International Law and Economics, Vol. 12 (1978), pp. 325-62; and Jessica P. Einhorn, “Cooperation Between Public and Private Lenders to the Third World,” The World Economy, Vol. 2 (May 1979), pp. 229-41.

    G-30, Outlook, pp. 36-37. The survey mentions two special comments of interest. One was that the appropriate channels for making the Fund’s conclusions available in written form to banks would be via central banks and Executive Directors of the Fund; that these channels appeared to be available in major industrialized countries other than the United States; and that in the United States neither the Federal Reserve nor the Treasury had been particularly cooperative in sharing information in written form. The other comment repudiated the implication that more information from the Fund would make banks more receptive to lending; the reverse might sometimes be true.

    Article VIII, Section 5(c).

    G-30, Outlook, p. 36.

    Article XII, Section 8. See International Debt, the Banks, and U.S. Foreign Policy (cited in note 27), pp. 64-65. Note also the implications of Article X, which instructs the Fund to cooperate within the terms of the Articles with general international organizations and with public international organizations having specialized responsibilities in related fields.

    Article IX, Section 2.

    Article VI (dated October 27, 1980).

    Legal Ties Between Stand-By Arrangements and Loan Agreements

    James R. Silkenat, “Eurodollar Borrowings by Developing States: Terms and Negotiating Problems,” Harvard International Law Journal, Vol. 20 (Winter 1979), p. 98.

    William Tudor John, “Sovereign Risk and Immunity Under English Law and Practice,” in International Financial Law: Lending, Capital Transfers and Institutions, ed. by Robert S. Rendell (London, 1980), p. 83. The latter part of the explanation gives rise to the concern in the U.S. Congress about what is sometimes described as “bailing out” the banks. See Communication from the Chairman, National Advisory Council on International Monetary and Financial Policies transmitting A Special Report on United States Participation in the Supplementary Financing Facility of the International Monetary Fund, House Document No. 95-224 (95th Congress, 1st Session, Washington, September 20, 1977), pp. 12-13. See also U.S. Congress, Senate, IMF Supplementary Financing Facility, Hearing Before the Committee on Banking, Housing and Urban Affairs on S. 2152 (95th Congress, 1st Session, Washington, October 13, 1977), p. 2; U.S. Congress, Senate, The Witteveen Facility and the OPEC Financial Surpluses, Hearings Before the Subcommittee on Foreign Economic Policy of the Committee on Foreign Relations (95th Congress, 1st Session, Washington, September 21, 23, October 6, 7, and 10, 1977), pp. 26, 31, 161-62; and Authorization of U.S. Participation in the Supplementary Financing Facility of the International Monetary Fund, Report No. 95-853 together with Supplemental, Dissenting, and Additional Dissenting Views (95th Congress, 2nd Session, Washington, January 27, 1978), pp. 17-18.

    This policy permits an annual use of up to 150 per cent of quota or a total use of 450 per cent over three years, exclusive of use under the Fund’s compensatory financing and buffer stock financing facilities. A member’s total outstanding use may amount to 600 per cent of quota, exclusive of use under these two policies and outstanding use under the oil facilities of 1974 and 1975, with allowance made for scheduled repurchases. (See IMF Survey, Vol. 10 (January 26, 1981), pp. 17, 21.)

    Joseph Gold, Legal and Institutional Aspects of the International Monetary System: Selected Essays (Washington, 1979), pp. 148-81.

    Article IV, Section 3(b); Executive Board Decisions No. 5392^(77/63), April 29, 1977, No. 6026-(79/13), January 22, 1979, No. 6532-(80/93), June 18, 1980, and No. 6815-(81/52), April 9, 1981, Selected Decisions, pp. 10-16.

    Article V, Section 1(h).

    Article V, Section 8(c).

    Article VII, Section 3(b).

    Article XII, Section 8.

    Article XIX, Section 5(a)(ii).

    Article XXIII, Section 2(a) and (b).

    Article XXVI, Section 2(b).

    Article XXIII, Section 2(f).

    Calhoun, “Eurodollar Loan Agreements,” p. 1796; Gold, Legal Character of Stand-By Arrangements, pp. 41-42.

    Bahram Nowzad, “Managing External Debt in Developing Countries,” Finance & Development, Vol. 17 (September 1980), pp. 24-27. See also Nowzad and Williams, Occasional Paper No. 3.

    Article XXVI, Section 2(a).

    Article V, Section 5. For decisions on the meaning of this provision, see Selected Decisions, pp. 17, 89.

    Article VI, Section 1(a).

    Article XIV, Section 3. See Selected Decisions, p. 235.

    Article XXVI, Section 2(a).

    Article XXIII, Section 2(f).

    Schedule C, par. 8.

    Article V, Section 12(f). Distribution of the proceeds of gold to a developing member under this provision is postponed until its ineligibility under Article V, Section 5 ceases, unless the Fund decides to make the distribution sooner.

    Gold, Conditionality, pp. 27-34. Transactions in the first credit tranche are transactions that raise the Fund’s holdings of a purchasing member’s currency from 100 per cent to 125 per cent of quota, but for the purpose of this calculation holdings obtained by the Fund under certain policies are excluded.

    Extended arrangements are approved under a special policy, the extended facility, and not under the credit tranche policy, although purchases under an extended arrangement exhaust an equivalent amount of the tranches. The conditionality applied under the extended facility is not fundamentally different from the conditionality of the credit tranche policy, although there may be more emphasis on structural change for the purposes of extended arrangements. The point made in the text for stand-by arrangements applies equally to extended arrangements. That is to say, a member’s inability to purchase under an extended arrangement does not prevent it legally from requesting a purchase outside the arrangement.

    Joseph Gold, The Stand-By Arrangements of the International Monetary Fund: A Commentary on Their Formal, Legal, and Financial Aspects (Washington, 1970), p. 159.

    Gold, Conditionality, pp. 34-35.

    Rules and Regulations, Rule O-10.

    The provision is discussed in Joseph Gold, Use, Conversion, and Exchange of Currency Under the Second Amendment of the Fund’s Articles, IMF Pamphlet Series, No. 23 (Washington, 1978), pp. 36-38 (hereinafter referred to as Gold, Use, Conversion, and Exchange).

    Article XXX (f).

    Gold, Use, Conversion, and Exchange, pp. 58-63, 70-71.

    A member requesting a purchase makes a general representation (see Article V, Section 3(b)) and not that the purchase is for a particular purpose.

    Article V, Section 3(e).

    Gold, Use, Conversion, and Exchange, pp. 71-77.

    The Fund’s policy on the sale of SDRs in these transactions is set forth in Executive Board Decision No. 6772-(81/35) G/S, March 5, 1981, Selected Decisions, pp. 84-85.

    Article XIX, Section 5 and Schedule F.

    Article XXIII, Section 2(a).

    Article XXIII, Section 2(b).

    Article XXIII, Section 2(f). The purpose of dissociating ineligibility from suspension of the use of SDRs was to emphasize the character of a member’s SDRs as assets that it owns and is free to use unless it acts in a way that impedes the effective functioning of the Special Drawing Rights Department (see Article XXII).

    Joseph Gold, SDRs, Currencies, and Gold: Fourth Survey of New Legal Developments, IMF Pamphlet Series, No. 33 (Washington, 1980), pp. 7-9, 107-108.

    Transactions in the higher credit tranches are those that raise the Fund’s holdings of a member’s currency above 125 per cent of quota to a maximum of 200 per cent of quota, subject to the exclusion of holdings that have been obtained by the Fund under certain policies. Each tranche is assumed to be equivalent to 25 per cent of quota. Lenders seek the assurance of a member’s ability to make purchases in the higher credit tranches because these purchases are dependent on the observance of performance criteria. Purchases in the first credit tranche are not subject to performance criteria. (See Nowzad and Williams, Occasional Paper No. 3.)

    Article V, Section 3(b).

    Article V, Section 4.

    Article V, Section 1(b). See paragraph 9 of the stand-by arrangement.

    Gold, Legal Character of Stand-By Arrangements, pp. 28-30.

    The G-30 Outlook notes that banks, in their responses to the question about the sharing of information, widely ignored the fact that the Fund’s reports have had broad circulation among commercial and investment banks. The survey declares that usually, but not always, the member has made the reports available (pp. 36-37). The sensitive issues that are raised probably explain the wide neglect of mention of the practice.

    John (cited in note 48), p. 79.

    Members in Balance of Payments Surplus

    Selected Decisions, pp. 19-22; Gold, Conditionality.

    Article IV, Section 3(a).

    Article IV, Section 3(b).

    Executive Board Decision No. 5392-(77/63), April 29, 1977, Selected Decisions, p. 11.

    Ibid., p. 12.

    Summary Proceedings of the Thirty-Fourth Annual Meeting of the Board of Governors, October 2-5, 1979 (Washington, 1979), p. 116.

    Summary Proceedings of the Thirty-Fifth Annual Meeting of the Board of Governors, September 30-October 3, 1980 (Washington, 1980), p. 97.

    Annual Report, 1980, p. 58.

    A Concluding Comment

    Ruding (cited in note 31), p. 14.

    Appendix A

    The text would be adapted for a stand-by arrangement for only one year.

    The text to be added deals with the proportions of ordinary and borrowed resources used to finance transactions and depends on the situation of the member when the stand-by arrangement is approved.

    The performance criteria enumerated here are illustrative only.

    This subparagraph would be adapted in accordance with the period of the stand-by arrangement.

    Appendix B

    The text to be added deals with the proportions of ordinary and borrowed resources used to finance transactions and depends on the situation of the member when the stand-by arrangement is approved.

    The performance criteria enumerated here are illustrative only.

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