Front Matter

Front Matter

Author(s):
Norman Humphreys
Published Date:
June 2000
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    HISTORICAL DICTIONARIES OF INTERNATIONAL ORGANIZATIONS SERIES

    Edited by Jon Woronoff

    1. European Community, by Desmond Dinan. 1993

    2. International Monetary Fund, by Norman K. Humphreys. 1993

    3. International Organizations in Sub-Saharan Africa, by Mark W. DeLancey and Terry M. Mays. 1994

    4. European Organizations, by Derek W. Urwin. 1994

    5. International Tribunals, by Boleslaw Adam Boczek. 1994

    6. International Food Agencies: FAO, WFP, WFC, IFAD, by Ross B. Talbot. 1994

    7. Refugee and Disaster Relief Organizations, by Robert F. Gorman. 1994

    8. United Nations, by A. LeRoy Bennett. 1995

    9. Multinational Peacekeeping, by Terry Mays. 1996

    10. Aid and Development Organizations, by Guy Arnold. 1996

    11. World Bank, by Anne C. M. Salda. 1997

    12. Human Rights and Humanitarian Organizations, by Robert F. Gorman and Edward S. Mihalkanin. 1997

    13. United Nations Educational, Scientific and Cultural Organization (UNESCO), by Seth Spaulding and Lin Lin. 1997

    14. Inter-American Organizations, by Larman C. Wilson and David W. Dent. 1997

    15. World Health Organization, by Kelley Lee. 1998

    16. International Organizations, by Michael G. Schechter. 1998

    17. International Monetary Fund, Second Edition, by Norman K. Humphreys. 1999

    Historical Dictionary of the International Monetary Fund

    Second Edition

    Norman K. Humphreys

    Historical Dictionaries of International Organizations, No. 17

    The Scarecrow Press, Inc. Lanham, Maryland, and London 1999

    SCARECROW PRESS, INC.

    Published in the United States of America

    by Scarecrow Press, Inc.

    4720 Boston Way, Lanham, Maryland 20706

    http://www.scarecrowpress.com

    4 Pleydell Gardens, Folkestone

    Kent CT20 2DN, England

    Copyright © 1999 by Norman K. Humphreys

    All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher.

    British Library Cataloguing in Publication Information Available

    Library of Congress Cataloging-in-Publication Data

    Humphreys, Norman K., 1924–

    Historical dictionary of the International Monetary Fund / Norman K. Humphreys. -- 2nd ed.

    p. cm. (Historical dictionaries of international organizations; no. 17)

    Includes bibliographical references (p.)

    ISBN 9781475507249 (cloth: alk. paper)

    1. International Monetary Fund-History Dictionaries. 2. International finance dictionaries. 3. International Monetary Fund-History. I. Title. II. Series: Historical dictionaries of international organizations series: no. 17.

    HG3881.158H86 1999

    332.1’52-dc21 99-24226

    CIP

    The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992.

    Manufactured in the United States of America.

    To our grandchildren—Angela, Carissa, Gavin, Jessica, Nathan, and Robin—wishing them well for their future.

    Editor’s Foreword

    Once a relatively obscure organization, known mainly to bankers and academics, over the past decade or two the International Monetary Fund, more commonly called the IMF, has become better known that it would perhaps wish. It is talked up by some as a “central bank’s central bank” and main savior in the event of serious financial crises. By others it is decried as a villain imposing its will on developing countries and maybe actually being the cause of some of the crises. This debate is far from resolved; if anything it has been fueled by recent events. But what is actually more important than whether the praise and criticism, the hopes and fears are justified today is whether the IMF will be better tomorrow. In studying its history, since it was founded in 1945, the growth and changes are unmistakable. And it is clear that the IMF does learn from its mistakes and is improved and reinforced by crises.

    One can see this in the second edition of the Historical Dictionary of the International Monetary Fund, remarkably different from the first edition less than a decade ago. While not strictly a history, it does present the IMF as it is today and also shows what it was like at earlier stages in its evolution while mentioning proposals for the future. It considers the IMF’s constituent bodies, its policies, programs and rules, its action in crucial member countries, those who have played an important part in managing it, and many of the problems and crises it has gone through. The dictionary entries are supplemented by a handy chronology, a list of abbreviations and acronyms, an explanatory introduction, and a substantial bibliography. The result is a bigger and better volume on an organization that is itself bigger and better … although still far from ideal.

    This second edition was written by the author of the first edition, who has been following events very carefully during his years with the IMF and since his retirement. Norman K. Humphreys, a member of the staff for nearly 23 years, was its chief editor for more than a decade, during which time the IMF experienced a dramatic enhancement of its role. A graduate of the London School of Economics and Political Science, he was a banker and freelance contributor to various financial journals in the City of London for a dozen years, served as resident economist and financial correspondent in Brazil for two years, and joined the staff of the IMF in 1964. This career has provided exceptional insight into the IMF and its workings and contributed to making this volume particularly enlightening.

    Jon Woronoff

    Series Editor

    Acknowledgments

    In updating and preparing the manuscript of this second edition of the Historical Dictionary of the International Monetary Fund. I have again drawn extensively on the published work of others, particularly on the publications of the Fund. Much of the basic material that appeared in the first edition was drawn from the published histories of the Fund prepared by its historians J. Keith Horsefield and, subsequently, Margaret Garritsen de Vries. I have also been able to draw on the works of Sir Joseph Gold, the former general counsel of the Fund, who has written comprehensively on the legal aspects of the Fund and international monetary law.

    Several of my former colleagues have been kind enough to read the manuscript and to make helpful comments on and improvements to the text. These include James Boughton, the current Fund historian, and Joseph Keyes, former assistant director in the African Department. I am also grateful to Ian McDonald, the current Fund’s chief editor, and his colleagues in the Editorial Division for the generous assistance that they gave to me at various critical points in the formulaion of the manuscript. My thanks also go to my wife, Dorothy, for a patient and thoughtful reading of the manuscript in its various stages of gestation and for catching numerous errors and discrepancies.

    It remains to be noted that although the factual material for this volume has been drawn mainly from “official” sources, responsibility for its accuracy and interpretation rests solely with the author.

    Norman K. Humphreys

    Abbreviations and Acronyms

    It is the convention to refer to institutions and organizations, particularly international bodies, by their abbreviations and acronyms. This volume has tried to avoid the resultant “alphabet soup,” but the abbreviations and acronyms in common use for many of these organizations, as well as the facilities, accounts, and organs of the Fund, are listed below.

    ADB

    Asian Development Bank

    AREAER

    Annual Report on Exchange Arrangements and Exchange Restrictions

    ASEAN

    Association of South-east Asian Nations

    BCEAO

    Banque Centrale des Etats de l’Afrique de l’Ouest

    BEAC

    Banque des Etats de l’Afrique Centrale

    BIS

    Bank for International Settlements

    BRSA

    Borrowed Resources Suspense Account

    BSFF

    Buffer stock financing facility

    CCFF

    Compensatory and contingency financing facility

    CRU

    Collective reserve unit

    DC

    Development Committee

    DSBB

    Data Standards Bulletin Board

    EAP

    Enlarged access facility

    EBRD

    European Bank for Reconstruction and Development

    EC

    European Community

    ECB

    European Central Bank

    ECOFIN

    Council of Economic and Finance Ministers

    ECU

    European currency unit

    EFF

    Enhanced structural adjustment facility

    EMS

    European Monetary System

    EMU

    Economic and Monetary Union

    ESAF

    Enhanced structural adjustment facility

    EU

    European Union

    GAB

    General Arrangements to Borrow

    GATT

    General Agreement on Tariffs and Trade

    GDDS

    General Data Dissemination System

    GDP

    Gross domestic product

    GNP

    Gross national product

    GRA

    General Resources Account

    HIPC

    Heavily indebted poor countries

    IBRD

    International Bank for Reconstruction and Development (World Bank)

    IC

    Interim Committee

    ICSID

    International Center for the Settlement of Investment Disputes

    IDA

    International Development Association

    IDB

    Inter-American Development Bank

    IFC

    International Finance Corporation

    IMF

    International Monetary Fund

    ITO

    International Trade Organization

    MERM

    Multilateral exchange rate model

    NAB

    New Arrangements to Borrow

    NGA

    Nongovernmental agencies

    ODA

    Official development assistance

    OECD

    Organization for Economic Cooperation and Development

    OPEC

    Organization of Petroleum Exporting Countries

    PIN

    Press/Public Information Notices

    RAP

    Rights accumulation program

    SAF

    Structural adjustment facility

    SCA

    Special Contingent Account

    SDA

    Special Disbursement Account

    SDDS

    Special Data Dissemination Standard

    SDR

    Special Drawing Right

    SFF

    Supplementary financing facility

    SRF

    Supplemental reserve facility

    SRP

    Staff Retirement Plan

    SSNs

    Social safety nets

    STF

    Systemic transformation facility

    UN

    United Nations

    UNCTAD

    United Nations Commission on Trade and Development

    UNDP

    United Nations Development Program

    UNEP

    United Nations Environmental Program

    VAT

    Value-added tax

    WAEMU

    West African Economic and Monetary Union

    WEO

    World Economic Outlook

    WTO

    World Trade Organization

    Chronology

    1944
    July 1-22The International Monetary and Financial Conference was held at Bretton Woods, New Hampshire, attended by representatives from 44 countries. The Articles of Agreement of the IMF and the World Bank were put in final form.
    1945
    December 27The Fund’s Articles of Agreement entered into force with the signatures of 29 governments, accounting for 80 percent of the original quotas.
    1946
    March 8-18The inaugural meeting of the Board of Governors was held in Savannah, Georgia. It was decided that the Fund’s headquarters would be in Washington, D.C., the By-laws were adopted, and the first Executive Directors were elected.
    May 6The Executive Board held its inaugural meeting, consisting of 12 Executive Directors, five appointed by each of the five members having the largest quotas in the Fund, and seven elected by groups of members. Camille Gutt, of Belgium, became the first Managing Director of the Fund.
    September 27The first Annual Meetings of the Boards of Governors of the Fund and the World Bank opened in Washington, D.C.
    December 18Initial par values were agreed upon for most members and their nonmetropolitan areas.
    1947
    March 1The Fund opened its doors for financial operations.
    May 8The first drawing on the Fund was made by France, for $25 million.
    December 18The Fund circulated a letter to all members, setting out its policies on multiple currency practices.
    1948
    January 25The Fund first exercised its authority over members’ exchange rates by objecting to a proposed change in the par value of the French franc on the grounds that it involved the introduction of a multiple currency practice.
    September 19The pound sterling was devalued, a move that was followed in the next few days by similar devaluations by a number of other members.
    1950
    March 1The first issue of the Annual Report on Exchange Restrictions was published (renamed the Annual Report on Exchange Arrangement and Exchange Restrictions after the par value system collapsed in the 1970s).
    1951
    August 3Ivar Rooth, of Sweden, became the second Managing Director of the Fund.
    1952
    February 13The Fund codified its policies on the use of its resources, establishing the tranche policies. Members were allowed virtually automatic use of their gold tranche. A period of three to five years was established for repayments to the Fund. In addition, a general framework was agreed upon for use of the Fund’s resources under what later came to be known as “stand-by arrangements.”
    March 1In accordance with its Articles, the Fund began annual consultations with members who were maintaining exchange restrictions under Article XIV five years after the Fund began financial operations.
    June 19The Fund entered into its first stand-by arrangement, with Belgium.
    1956
    September 7Per Jacobsson, of Sweden, became the third Managing Director of the Fund.
    October 17The Fund approved drawings and stand-by arrangements for France and the United Kingdom, prompted in part by the loss of revenue from the closing of the Suez Canal. These drawings were the first major use made of the Fund’s resources by advanced industrial countries and served to signal that the Fund would be a significant player in the international financial community.
    1958
    December 29Fourteen Western European countries made their currencies externally convertible for current transactions. Nonresidents were able to freely transfer holdings of one currency into any other currency. It was the first major step toward the multilateral trading system envisioned in the Articles of Agreement.
    1959
    September 9The first general increase in Fund quotas became effective, raising total quotas from $9.2 billion to $14 billion.
    1961
    February 15Nine Western European countries accepted the obligations of Article VIII, thereby making all major currencies convertible.
    1962
    October 24The General Arrangements to Borrow went into effect, whereby the 10 largest industrial members agreed to be on call to lend the Fund the equivalent of $6 billion if needed to prevent a disruption of the international payments system. The participants were Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and the United States. The arrangements were the beginning of the so-called Group of Ten.
    1963
    February 27The compensatory financing facility was established. Under the facility, members experiencing temporary shortfalls in their export earnings could draw on the Fund. It was the first of the facilities established to finance a particular element in a country’s balance of payments, rather than dealing with the balance of payments as a whole. Other later facilities were the oil facilities, the buffer stock financing facility, the emergency assistance facility, the structural adjustment facility, and the systemic transformation facility.
    May 5Per Jacobsson, the Fund’s Managing Director, died in office.
    September 1Pierre-Paul Schweitzer, of France, became the fourth Managing Director.
    September 27The Managing Director announced in his opening address to the Annual Meetings that the question of international liquidity was the business of the Fund and that the Fund would be intensifying its studies on the problem. The announcement was a contradiction of the Group of Ten’s efforts to make international liquidity a matter of concern only to the industrial countries and to limit any scheme for reserve creation to those countries.
    1965
    October 15The Executive Board agreed to a four-year renewal of the General Arrangements to Borrow, as from October 24, 1966. The terms of the arrangements were left unchanged, providing for the Fund to borrow up to the equivalent of $6 billion from 10 members.
    1966
    February 23A second general increase of 25 percent in quotas was agreed to, along with special increases for 16 members. Total quotas in the Fund rose, as a result, from $16 billion to $21 billion.
    March 3The Managing Director proposed to the Executive Board, and then to the Group of Ten, an approach to reserve creation through the Fund that would include distribution of any new reserve assets to all members. It was an approach that would culminate in the Special Drawing Rights (SDRs) scheme three years later.
    September 20The compensatory financing facility, introduced in 1963, was extended and liberalized.
    November 23It was agreed that Executive Directors of the Fund, representing all Fund members, would hold a series of meetings with Deputies of the Group of Ten to discuss reserve creation schemes. These meetings, in effect, brought representatives of Third World countries face-to-face with their counterparts from the industrial countries for the first time in discussing problems of international liquidity.
    November 28-30The first joint meeting of the Executive Directors and Deputies of the Group of Ten, held in Washington, D.C., was a further step toward a universal reserve creation scheme.
    1967
    January 25-26A second meeting of the Executive Directors and the Deputies of the Group of Ten, held in London, began to consider seriously a plan based on SDRs.
    April 25-26The Executive Directors and Deputies of the Group of Ten met for a third time, in Washington, D.C.
    June 19-21The Executive Directors and Deputies of the Group of Ten met for the fourth time, in London. The SDR scheme began to take final shape.
    August 26The ministers and governors of the Group of Ten met in London and agreed on voting majorities and reconstitution provisions for an SDR facility.
    September 29At the Annual Meetings held in Rio de Janeiro the Board of Governors adopted a resolution, to which was attached an Outline of a Facility Based on Special Drawing Rights in the Fund, requesting the Executive Board to begin drafting appropriate amendments to the Articles of Agreement, incorporating the new facility and other, mostly minor, reforms into the Articles.
    November 19-29The United Kingdom devalued the pound sterling from $2.80 to $2.40 per pound. The Fund approved a stand-by arrangement for the United Kingdom in the amount of $1.4 billion.
    1968
    March 16A two-tier market for gold was established as a result of a decision by the central banks from seven industrial member countries to buy and sell gold at the official price of $35 an ounce only in transactions with monetary authorities. The price at which private transactions in gold were transacted was thus left to be determined by supply and demand.
    March 29-30The ministers and governors of the Group of Ten met in Stockholm, Sweden, to resolve several issues in the proposed first amendment to the Articles of Agreement that were being drafted by the Executive Directors.
    April 16The Executive Board completed its work on the amendment to the Articles and submitted its report to the Board of Governors.
    May 31The Board of Governors approved the proposed first amendment, which was then submitted to members for acceptance and ratification.
    June 4-19Heavy use was made of the Fund’s financial resources when France drew. $645 million and the United Kingdom drew $1.4 billion under stand-by arrangements approved in November 1967.
    September 20Prompted by what they considered to be the favorable terms of the stand-by arrangement approved for the United Kingdom in 1967, Executive Directors representing the developing countries successfully pressed for the adoption of guidelines that would ensure uniform and equitable treatment for all members in the use of the Fund’s financial resources.
    1969
    June 20A new stand-by arrangement, in the amount of $1 billion, was approved for the United Kingdom.
    June 25The buffer stock financing facility was established.
    June 28The first amendment to the Articles of Agreement entered into force, authorizing the establishment of the SDR facility and introducing a number of minor operational reforms.
    August 6The Special Drawing Account was established, setting the stage for a distribution of SDRs in the years 1970-72.
    August 10France devalued the franc by 11.1 percent.
    September 19A stand-by arrangement, for $985 million, was approved for France.
    September 29In the face of persistent surpluses in its balance of payments, the Federal Republic of Germany allowed the rate for the deutsche mark to float.
    October 3The Board of Governors approved the Managing Director’s proposal to make an allocation of SDRs, amounting to SDR 9.3 billion over a basic period of three years, beginning January 1, 1970. This was the first allocation of SDRs.
    October 17The Executive Board approved a second renewal of the General Arrangements to Borrow, under which the Fund could borrow up to the equivalent of $6 billion from its 10 largest industrial members. The renewal was for five years. to begin October 24, 1970.
    October 28The Federal Republic of Germany ended the floating of its currency by revaluing the deutsche mark by 8.39 percent.
    1970
    January 1The first allocation of SDRs was made, for SDR 3.5 billion, distributed among 104 participants, with the largest participant, the United States, receiving SDR 867 million and the participant with the smallest quota, Botswana, receiving SDR 504,000.
    February 9A third general increase in Fund quotas was approved by the Board of Governors, raising total quotas from $21.3 billion to $28.9 billion, an increase of 36 percent.
    November 25The International Tin Agreement became the first commodity agreement for which use of the buffer stock financing facility was authorized.
    1971
    January 1The second allocation of SDRs was for SDR 2.9 billion, distributed among 109 participants.
    May 9-11In the face of heavy capital movements, the Federal Republic of Germany and the Netherlands allowed the rates for their currencies to float. Austria revalued its currency, and Belgium-Luxembourg enlarged their free market for capital transactions.
    July 16The first purchases under the buffer stock financing facility were made by Bolivia and Indonesia.
    August 15The United States announced that it would no longer freely buy and sell gold for the settlement of international transactions, thus suspending the convertibility of the dollar held by official institutions. The announcement, in effect, brought to an end the Bretton Woods system, although there was an attempt to maintain a fixed-rate (i.e., central rate) exchange rate system for another 18 months, before the Bretton Woods system finally collapsed and generalized floating became the norm.
    August 16For the next four months exchange rates were in total disarray, with Fund members introducing various exchange rate arrangements, including floating currencies by some members.
    December 17-18The Group of Ten concluded the Smithsonian agreement, providing for the realignment of the major currencies and an increase in the official price of gold from $35 to $38 an ounce. It was the first time that exchange rates had been negotiated in a multinational conference.
    December 18The Fund formally established a temporary regime of central rates and wider margins, set at 2.25 percent either side of an established central rate, thereby providing for an overall margin of 4.5 percent.
    1972
    January 1The third and final allocation of SDRs, amounting to SDR 2.95 billion, was made for the first basic period.
    March 20The Board of Governors authorized the Fund to express its accounts in terms of the SDR instead of U.S. dollars.
    April 24The European Community’s (EC’s) narrow margins agreement went into effect for six currencies, limiting margins to 2.25 percent, half the margin established under the Fund’s temporary regime of central rates.
    May 8A new par value for the U.S. dollar was established, based on the new price of gold of $38 an ounce agreed at the Smithsonian Institution in December 1971.
    June 23The British authorities announced that the pound sterling would float. This action was the first break in the pattern of rates established by the Smithsonian agreement.
    July 26The Committee of Twenty (formally known as the Committee of the Board of Governors on Reform of the International Monetary System and Related Issues) was established to negotiate a reformed international monetary system.
    September 6The Executive Board published a report, Reform of the International Monetary System, establishing a base for further study and discussion.
    September 28The Committee of Twenty held its inaugural meeting, setting a target of two years to complete its work.
    1973
    January 1A second basic period began, in which no SDRs were allocated.
    January 22-23Italy introduced a free market for capital transactions and Switzerland floated the Swiss franc, further undermining the Smithsonian agreement.
    March 19The EC countries introduced a joint float for their currencies against the U.S. dollar. This marked the beginning of generalized floating and the end of the attempt to maintain an international system of fixed rates.
    March 22-27In view of the final breakdown of a regulated system, the Deputies of the Committee of Twenty embarked with urgency on the drafting of an outline of a reformed system. The Committee, reflecting the desire of the international financial community, reiterated its preference for a new exchange rate regime based on “stable but adjustable par values.”
    May 21-July 31The Deputies of the Committee of Twenty drafted an Outline of Reform, and the Committee of Twenty held its third meeting.
    September 1H. Johannes Witteveen, of the Netherlands, became the fifth Managing Director of the Fund.
    September 5-24The Deputies of the Committee of Twenty met in Paris and failed to agree on arrangements for a reformed international monetary system. Later, at a meeting of the Committee of Twenty, held in Nairobi in conjunction with the Annual Meeting of the Board of Governors, it became clear that there would be no early agreement on reforming the system.
    October 10-17Six members of the Organization of Petroleum Exporting Countries (OPEC), meeting alone, increased prices for crude oil by about 70 percent. The meeting was a forerunner of future crude oil price increases that would disrupt the world economy throughout the 1970s.
    December 23Six oil exporting countries again announced increases in the prices of crude oil, thus nearly quadrupling prices that had come into effect three months earlier.
    1974
    January 3The Managing Director of the Fund proposed the establishment of a temporary facility in the Fund to finance members’ balance of payments deficits caused by the additional costs of oil imports.
    January 17-18The Committee of Twenty, meeting in Rome, suspended efforts for a full-scale reform of the international monetary system. The Fund staff presented the Committee with its estimate that in 1974 the aggregate balance of payments deficit of developing countries would be of an unprecedented magnitude.
    May 7-9The Deputies of the Committee of Twenty completed a draft of a revised Outline of Reform and discussed the immediate steps required to move existing arrangements forward.
    June 10-11The Deputies of the Committee of Twenty held a final meeting and completed their recommendations.
    June 12-13At its final meeting, the Committee of Twenty agreed on a number of immediate steps to help the international monetary system evolve and on an Outline of Reform that the international monetary authorities should endeavor to work out and implement in the future. The immediate steps included the establishment of an Interim Committee, with advisory powers; the adoption of a method of valuing the SDR based on a basket of 16 currencies; establishment of guidelines for the management of floating exchange rates; establishment of an oil facility in the Fund; provision for members to pledge, on a voluntary basis, not to intensify restrictions; early adoption of an extended facility in the Fund, whereby developing countries could use Fund financing on terms of up to 10 years to address structural changes in their economies; and the establishment of a committee to study the question of the transfer of real resources to developing countries.
    July 1The Fund introduced a new method of valuing the SDR, based on a basket of the 16 currencies most used in world trade instead of gold.
    August 22First use was made of the oil facility.
    September 13An extended facility was established in the Fund to give medium-term assistance to developing member countries.
    September 30The Managing Director proposed that another larger oil facility be established for 1975.
    October 2The Interim Committee of the Fund’s Board of Governors on the International Monetary System was established, as was the Joint Ministerial Committee of the Boards of Governors of the Bank and Fund on the Transfer of Real Resources to Developing Countries (the Development Committee).
    October 23The General Arrangements to Borrow were renewed for the third time, until October 1980.
    1975
    January 15-16The Interim Committee recommended the establishment of an oil facility for 1975 and a Subsidy Account to help the most seriously affected developing countries defray the interest cost of using the facility. It was also agreed that under the sixth general review total quotas should be increased from SDR 29.2 billion to SDR 39 billion, with the quotas of oil exporting members as a group being doubled.
    March 14An oil facility for 1975 was established.
    August 1A Subsidy Account was established to assist the Fund’s most seriously affected members to meet the cost of using the 1975 oil facility.
    August 31The Interim Committee agreed upon the sale of one-sixth of the Fund’s gold (25 million ounces) for the benefit of developing members, the establishment of a Trust Fund, and the restitution of one-sixth of the Fund’s gold to all members.
    November 15-17The first economic summit meeting was held by six industrial nations in Rambouillet, France. The U.S. and French monetary authorities settled their differences on the exchange rate system that was to be incorporated in the amended Articles of Agreement of the Fund.
    December 24The compensatory financing facility, which had been established in 1963 and liberalized in 1966, was further liberalized. The changes included a technical change in the method of calculating export shortfalls so that the shortfalls could be larger than under the previous procedure, and that drawings under the facility would be allowed up to a larger proportion of a member’s quota.
    December 31The United Kingdom drew SDR 1 billion under the 1975 oil facility and the Fund approved a one-year stand-by arrangement for SDR 700 million, in the first credit tranche.
    1976
    January 7-8Meeting in Jamaica, the Interim Committee agreed on an interim reform of the international monetary system, to be legalized in a second amendment to the Articles of Agreement. The Committee’s conclusions included agreement on exchange arrangements, the treatment of gold, establishment of the Trust Fund for developing countries, and the distribution of quota increases among individual members. The quota increases were subject to the second amendment coming into effect, but until that time the Committee agreed to a temporary enlargement of members’ access to the Fund’s resources under existing quotas.
    January 19Following the recommendation by the Interim Committee, the Executive Board extended the size of each credit tranche by 45 percent, enabling members to increase their potential for drawing on the Fund’s regular resources by that amount, pending the coming into effect of the sixth general review of quotas.
    April 30The Board of Governors approved the proposed second amendment to the Articles of Agreement, which was then submitted to member governments for acceptance and ratification.
    May 5The Fund announced a program to dispose of one-third of its gold holdings, one-sixth to be sold by auction over a two-year period and one-sixth to be restituted to members. The Trust Fund was established.
    November 3Participants in the General Arrangements to Borrow agreed that Japan should almost quadruple its commitment under the arrangements, thereby raising the total amount available to about SDR 6.2 billion.
    1977
    January 3The Executive Board approved a two-year stand-by arrangement for the United Kingdom for SDR 3.36 billion, the largest amount ever approved.
    January 25The Fund made the first loans to 12 members from the Trust Fund.
    February 23The Fund completed the first of four annual restitutions of gold to its members, amounting to six million ounces, sold at the official price of SDR 35 an ounce to 112 members in proportion to their quotas.
    April 29The Executive Board took its first decision on how “firm surveillance” of members’ exchange rate policies would be implemented after the second amendment became effective. It agreed on three broad principles: (1) members should avoid manipulating exchange rates to gain unfair advantage; (2) members should intervene in exchange markets to counter disorderly conditions; and (3) members should take into account in their intervention policies the interests of other members.
    August 6The Managing Director invited 14 potential lenders to the Fund to meet in Paris to discuss the amounts and terms on which they would lend to the Fund to establish a supplementary financing facility in the Fund. The borrowed resources would be used to supplement the Fund’s regular resources, enabling members to draw resources from the Fund in excess of their credit tranches, with longer repayment terms.
    August 29The supplementary financing facility was established, to become effective when loan commitments totaling not less than SDR 7.75 billion were in effect.
    1978
    March 13The quota increases resulting from the sixth general review went into effect.
    April 1The second amendment to the Articles of Agreement went into effect, after three-fifths of the membership representing four-fifths of total voting power had accepted the increases. The relevant resolution had been submitted to the membership on April 30, 1976, and its acceptance by the requisite number of members and votes had taken nearly two years.
    April 29-30The Interim Committee, meeting in Mexico City, agreed on a coordinated strategy to regenerate growth in a stagnant world economy.
    June 16-17Jacques de Larosière, of France, succeeded Witteveen as the sixth Managing Director of the Fund.
    September 24The Interim Committee recommended an increase of 50 percent in the overall size of members’ quotas under the seventh general review, raising total quotas from SDR 39 billion to SDR 59.5 billion. The Committee also agreed on an allocation of SDRs of SDR 4 billion in each of the three years 1979, 1980, and 1981, the third basic period.
    December 4-5The European Council agreed to introduce the European Monetary System on January 1, 1979.
    1979
    January 1SDR 4 billion were allocated to 137 Fund members as the first of three annual allocations in the basic period 1979-81.
    February 23The supplementary financing facility became operative after lending commitments had reached SDR 7.5 billion.
    March 2The Executive Board completed a comprehensive review of conditionality attached to the use of the Fund’s financial resources, the first such review since 1968. The review codified and clarified existing guidelines on the use of the Fund’s general resources (i.e., resources not borrowed or held by the Trust Fund).
    March 7The Interim Committee, meeting in Washington, D.C., asked the Executive Board to set up a substitution account that would accept deposits in foreign exchange from members on a voluntary basis in exchange for an equivalent amount of SDR-denominated claims. Such an account had been discussed extensively by the Committee of Twenty and other bodies as part of the reform of the international monetary system. The Interim Committee’s proposal did not come to fruition.
    March 13The European Monetary System came into existence.
    April 12The Tokyo Round of Multilateral Trade Negotiations was concluded.
    June 28The OPEC announced an increase of 24 percent in the price of crude oil. This large increase, which followed smaller increases announced a few months earlier, raised the “marker” price of oil by 42 percent over its 1978 level (i.e., from $12.70 to $18.00 a barrel).
    August 2The compensatory financing facility was further liberalized by, among other things, permitting receipts from travel and from workers’ remittances to be taken into account in calculating shortfalls.
    August 24The General Arrangements to Borrow were renewed, for the fourth time, for another five years, until October 23, 1985.
    December 3The maximum repayment period under the extended facility was increased from eight to 10 years.
    1980
    January 1The Fund allocated SDR 4 billion to 139 members, the second of three annual allocations to be made in the third basic period.
    April 17The People’s Republic of China was recognized as a member of the Fund.
    April 25The Interim Committee, meeting in Hamburg, agreed that the Fund should play a growing role in the adjustment and financing of payments imbalances and the recycling of funds of surplus balance of payments countries to members in balance of payments deficit. It was recognized that further Fund borrowing and longer terms of repayment for members in balance of payments deficit were needed. The Committee, reversing a position that it had taken earlier, concluded that agreement on a substitution account was unlikely in the foreseeable future.
    May 7The gold sales program agreed in August 1975 was completed. Under the program, 25 million ounces of gold had been sold (restituted) to countries that were members of the Fund on August 31, 1975, at the official price of SDR 35 an ounce. In addition, 25 million ounces of gold had been auctioned over a four-year period, raising a total of SDR 4.6 billion, of which $1.3 billion had been distributed directly to 104 developing members and the balance, together with income from investments, had been made available for concessionary loans by the Trust Fund to 62 eligible members.
    September 8China’s quota in the Fund, which had remained at SDR 550 million set in the original Articles, was increased to SDR 1.2 billion.
    September 17The Executive Board took a number of decisions to enhance the attractiveness of the SDR, the most important of which were reducing the basket from 16 to five currencies (U.S. dollar, deutsche mark, French franc, pound sterling, and Japanese yen) and raising the rate of interest on the SDR to the market rate.
    September 27The Interim Committee, meeting in Washington, D.C., recommended that potential Fund assistance to members be enlarged to 200 percent of quota over a three-year period, up to a total of 600 percent, excluding use of the compensatory financing facility and the buffer stock financing facility.
    November 29The increase in quotas under the seventh general review became effective, raising the Fund’s general resources from SDR 39.8 billion to SDR 60.0 billion.
    December 17A subsidy account for the supplementary financing facility was established.
    1981
    January 1The third and final allocation of SDRs, amounting to SDR 4.0 billion, was made to 141 members for the third basic period.
    March 11In accordance with the Interim Committee’s earlier recommendation, the Executive Board introduced a policy of “enlarged access.” Under the new policy, the Fund could approve stand-by or extended arrangements for up to 150 percent of a member’s new quota each year, for a period of three years, with a cumulative limit of 600 percent of quota.
    March 31The final loan disbursement from the Trust Fund, which was established in May 1976, brought total disbursements from the Trust to SDR 3 billion.
    May 6-7After the Executive Board had authorized the Managing Director to borrow from the Saudi Arabian Monetary Agency, the Fund concluded an agreement under which the Agency would lend the Fund SDR 4 billion in the first year of the commitment period and up to SDR 8 billion in the second year of a six-year commitment period. These commitments enabled the enlarged access policy to become operative.
    May 13The compensatory financing facility was again amended to cover financing to members that encountered balance of payments difficulties caused by an excessive rise in the cost of cereal imports that were largely beyond the control of the member. The amendment was expected to be of particular benefit to low-income countries.
    May 21The Interim Committee, meeting in Gabon, emphasized the need for effective adjustment policies among members and urged the Executive Board to work on the eighth general review of quotas.
    May 31The quota for Saudi Arabia was increased from SDR 1 billion to SDR 2.1 billion, in view of its enlarged role in the world economy resulting from the oil price increases in the 1970s.
    June 9As required under the Articles, the Managing Director consulted with participants in the SDR facility and found no consensus in favor of allocations for the fourth basic period, to begin on January 1, 1982.
    August 4The Fund reached agreement with the Bank for International Settlements and with the central banks or monetary agencies of 16 industrial countries to lend the Fund the equivalent of SDR 1.3 billion over a period of two years.
    September 27The Interim Committee, after a two-day meeting in Washington, D.C., again urged industrial countries to reduce inflation and noted concern about the problems of adjustment and financing in non-oil developing countries. While agreeing that the Fund should continue its borrowing efforts, the Committee stressed that the Fund should rely on quota increases as the basic source for its funds and urged that the eighth general review of quotas be expedited.
    1982
    January 13The Executive Board established guidelines for borrowing by the Fund stipulating that total outstanding borrowing, plus unused credit lines, should not exceed 50 to 60 percent of total quotas.
    May 12-13The Interim Committee, meeting in Helsinki, called for quotas to be the primary source of the Fund’s resources, a commitment to complete the eighth general review of quotas, and effective surveillance of exchange rates for all members.
    August 13Mexico closed its foreign exchange market in the face of serious difficulty in servicing its foreign debt. This marked the onset of the debt crisis that was to affect many developing countries in the ensuing years.
    December 23The Fund approved a three-year extended arrangement for Mexico of SDR 3.6 billion to support a medium-term adjustment program.
    1983
    January 1The year opened with a general recognition by the world’s monetary authorities that a major and widespread debt crisis among developing countries was at hand. The Chairman of the Interim Committee called for an early meeting of the Interim Committee.
    January 18The Group of Ten agreed to a major enlargement of the General Arrangements to Borrow, from SDR 6.4 billion to SDR 17 billion, with additional lenders and revisions in its terms to allow the arrangements to be used for drawings from the Fund by all members.
    January 24The Fund approved a stand-by arrangement and compensatory financing drawing for Argentina totaling SDR 2 billion.
    February 10-11The Interim Committee, meeting in Washington, D.C., recommended an increase in quotas under the eighth general review that would enlarge total quotas from SDR 61 billion to SDR 90 billion.
    February 28The Fund approved an extended arrangement for Brazil for SDR 5 billion.
    May 20A borrowing arrangement with Saudi Arabia, associated with the General Arrangements to Borrow, was approved by the Executive Board in the maximum amount of the equivalent of SDR 1.5 billion.
    September 25The Interim Committee, meeting in Washington, D.C., endorsed the Managing Director’s strategy of adjustment and financing for dealing with the debt problems of developing countries and agreed that the temporary enlarged access policy on Fund resources should be continued and that there should be new access limits under that policy.
    November 30The increased quotas under the eighth general review went into effect.
    1984
    January 6The policy on enlarged access was extended until the end of the year, but access limits were set in terms of the new quotas established under the eighth general review. Thus, annual limits were set at 102 or 125 percent of quota, three-year limits at 306 or 375 percent, and cumulative limits at 408 or 500 percent, depending on the seriousness of the member’s balance of payments need and the strength of its adjustment efforts. Similarly, the limits under the compensatory financing facility were reduced, as were those set for the buffer stock financing facility.
    April 24The Fund concluded four new short-term borrowing agreements, totaling SDR 6 billion, with the Saudi Arabian Monetary Agency, the Bank for International Settlements, Japan, and the National Bank of Belgium.
    November 16The policy of enlarged access was extended to the end of 1985 and access limits were reduced in accordance with the request of the Interim Committee. The new annual limits were set at 95 or 115 percent of quota (instead of 102 or 125 percent), three-year limits at 280 or 345 percent (instead of 306 or 375 percent), and cumulative limits at 408 or 450 percent (instead of 408 or 500 percent), depending on the severity of the member’s balance of payments difficulties and the strength of the adjustment effort.
    December 28The Fund approved a drawing of SDR 1.7 billion for Argentina under a stand-by arrangement and the compensatory financing facility.
    1985
    March 25In its review of surveillance procedures, the Executive Board stressed the need for “evenhandedness” of surveillance of all members and put forward suggestions for improving the surveillance procedures by the Fund.
    April 17-19The Interim Committee, meeting in Washington, D.C., reiterated that adjustment in economic policies of members was essential and unavoidable to correct external imbalances and called for improvements in the effectiveness of surveillance over policies of members.
    May 3The Executive Board extended for four years, until May 1989, the coverage of the compensatory financing facility to cereal imports.
    September 25Members of the Group of Five met in New York and agreed to pursue a policy of coordinated intervention in the foreign exchange markets to reduce the value of the dollar.
    October 6-7The Interim Committee, meeting in Seoul, stressed the need for noninflationary growth policies for industrial countries, for renewed growth in developing countries, and for adequate financing support of developing countries in their adjustment efforts.
    1986
    March 26The structural adjustment facility was established with funds that accumulated in the Special Disbursement Account, and the low-income countries eligible to use the facility were listed.
    July 25The Fund established the principle of “burden sharing,” whereby the rate of charge was increased on the use of the Fund’s resources and the rate of remuneration was reduced on creditor positions in order to strengthen the Fund’s reserve position. A special contingency account was established to supplement the Fund’s general reserve.
    1987
    January 16Michel Camdessus, of France, became the seventh Managing Director of the Fund.
    November 23The General Arrangements to Borrow were renewed for a period of five years from December 26, 1988.
    December 18The enhanced structural adjustment facility was established.
    1988
    April 20The initial maximum limit on access of each eligible member to the enhanced facility was set at 250 percent of quota, with a provision that this limit could be increased to 350 percent of quota in exceptional cases. The interest rate on loans was set at 0.5 percent.
    June 6The mix of ordinary and borrowed resources for purchases under the enlarged access policy was set at the ratio of two to one in the first credit tranche and one to two in the next three credit tranches. Thereafter, purchases were to be made with borrowed resources. Purchases under extended arrangements were to be made with ordinary resources up to 140 percent of quota, and thereafter with borrowed funds.
    1989
    May 19The compensatory and contingency financing facility was established, extending the Fund’s financing to members in balance of payments difficulties for: (1) temporary export shortfalls; (2) adverse external contingencies; (3) excess cost of cereal imports; and (4) temporarily, for excess cost of oil imports.
    1990
    March 16The Managing Director outlined the timetable for dealing with members having overdue obligations to the Fund, leading to compulsory withdrawal from the Fund up to two years after the emergence of arrears.
    June 20The Executive Board adopted the “rights” approach to overdue obligations. A member in arrears to the Fund would be able to earn rights, conditioned on a satisfactory performance under an adjustment program monitored by the Fund, toward a disbursement by the Fund once the member’s overdue obligations had been cleared and upon approval of a successor arrangement by the Fund.
    June 28The Board of Governors adopted a resolution that increased by 50 percent the quotas of members under the ninth general review of quotas; no increase was to become effective until members having not less than either 85 percent or 70 percent (depending on whether the determination was made before or after December 30, 1991) of total quotas had consented to the increase and not before the effective date of the third amendment of the Articles. The proposed third amendment to the Articles of Agreement was also adopted by the Board of Governors on this date.
    October 5The Executive Board reviewed the currencies and their weights making up the SDR basket and determined that the list of currencies and their weights should be as follows: the U.S. dollar (with a weight of 40), the deutsche mark (21), Japanese yen (17), French franc (11), and pound sterling (11).
    December 5In view of the Middle East crisis, the Executive Board took a number of decisions to help members face unexpected economic difficulties. The measures included (1) suspending, until the end of 1991, the lower annual, three-year, and cumulative borrowing limits under the enlarged access policy; (2) increasing the financing under the enhanced structural adjustment policies at the time of midyear reviews for such arrangements and, where necessary, adding a fourth year to those programs due to be completed before November 1992; (3) adding an oil import element to the compensatory and contingency financing facility; and (4) providing for a contingency mechanism to be attached to current Fund arrangements at the time that they come up for review.
    1991
    March 1The Fund published a joint study of the Soviet economy by the Fund, World Bank, Organization for Economic Cooperation and Development, and European Bank for Reconstruction and Development.
    October 14Michel Camdessus, of France, was reappointed Managing Director of the Fund for a term of five years.
    1992
    May 4The Board of Governors approved membership resolutions for Russia and 14 other states of the former Soviet Union.
    November 9The Executive Board announced new access limits on the amounts of financing available to members that would apply once the 50 percent increase in quotas under the ninth general review of quotas went into effect. It terminated the enlarged access policy in effect since 1981, under which the Fund supplemented its quota resources with borrowed funds. The new limits, expressed in terms of the new quotas, were intended to maintain members’ access to the Fund’s resources.
    November 11The quota increases under the ninth general review of quotas entered into force, providing for an increase in a member’s quota of nearly 50 percent and for total quotas in the Fund to rise from SDR 97.4 billion to about SDR 145 billion ($200 billion). At the same time, the third amendment to the Articles of Agreement became effective, providing for the removal of voting and other rights of “ineligible” members.
    1993
    April 16The Executive Board approved the creation of the systemic transformation facility—to assist countries facing balance of payments difficulties arising from transformation from a planned to a market economy—to be in place through 1994.
    April 27Tajikistan was the fifteenth and the last of the countries of the former Soviet Union to join the Fund.
    June 30The Fund approved a drawing by Russia amounting to SDR 1.1 billion ($1.5 billion) under the systemic transformation facility.
    1994
    January 12The CFA franc was devalued. The CFA franc zone consisted of seven members of the West African Economic and Monetary Union, six members of the Banque des états de l’Afrique Centrale, and the Comoros. The devaluations were followed in the ensuing weeks by Fund arrangements for 13 of the countries.
    February 23The Executive Board initiated operations under the renewed and enlarged enhanced structural adjustment facility.
    June 6The Fund announced the creation of three Deputy Managing Director posts.
    October 2The Interim Committee adopted the Madrid Declaration calling industrial countries to sustain growth, reduce unemployment, and prevent a resurgence of inflation; developing countries to extend growth; and transition economies to pursue bold stabilization and reform efforts.
    1995
    February 1The Executive Board approved a stand-by arrangement of SDR 12.1 billion for Mexico, the largest financial commitment in the Fund’s history.
    September 12Emergency financing mechanism approved by the Executive Board.
    1996
    March 26The Executive Board approved an SDR 6.9 billion extended Fund facility (EFF) for Russia—the largest EFF in the Fund’s history.
    April 16The Fund established a voluntary special data dissemination standard for member countries having, or seeking, access to international capital markets. A general data dissemination system would be implemented later.
    SeptemberThe Interim and Development Committees endorsed a joint initiative for heavily indebted poor countries.
    1997
    January 27The Executive Board approved New Arrangements to Borrow as the first and principal recourse in the event of a need to provide supplementary resources to the Fund.
    April 25The Executive Board approved the issuance of Press/Public Information Notices (PINs) following the conclusion of members’ Article IV consultations with the Fund—at the request of members—to make the Fund’s views known to the public.
    MayThe Fund reclassified, for statistical purposes, several newly industrialized economies in Asia (Hong Kong SAR, Singapore, and Taiwan Province of China), as well as Israel, in the group of countries classified as industrial countries and renamed this expanded group of countries “advanced economies.” The reclassification reflected the advanced stage of development in these economies and the characteristics that they now shared with the industrial countries.
    May 19The Fund issued its first PIN after concluding its Article IV consultation with the Kingdom of the Netherlands: Aruba. Two additional PINs followed on June 5 for Belize and Tunisia.
    July 2Thailand introduced a managed float for its currency, the baht, followed by a prompt depreciation of the currency of about 20 percent.
    July 11Following increased pressure on its reserves, accentuated by the float of the baht a few days earlier, the Philippine authorities allowed the peso to float.
    August 4The Executive Board adopted guidelines covering the role of the Fund on the issue of governance.
    September 1The Fund opened its Regional Office for Asia and the Pacific in Tokyo.
    September 25The Board of Governors adopted a Resolution approving a special, one-time SDR equity allocation of SDR 21.4 billion that would equalize all members’ ratio of SDRs to quotas at 29.3 percent, and it also agreed on a 45 percent increase in members’ quotas.
    October 11Indonesia adopted the first of its economic programs to cope with the Asian economic and financial crisis.
    November 5The Fund approved an SDR 10 billion three-year stand-by arrangement for Indonesia.
    December 4The Executive Board approved an SDR 21 billion stand-by credit for Korea. Fund assistance was requested by Korea on November 21, and negotiation of the arrangement was concluded with unprecedented speed.
    December 17The Executive Board approved the establishment of the supplemental reserve facility to provide financial assistance to a member country experiencing balance of payments difficulties due to a short-term financing need resulting from a sudden and disruptive loss of market confidence reflected in capital flight.
    1998
    January 15Indonesia adopted a reinforced Fund-supported reform program after Indonesian financial markets had declined sharply, as investors expressed doubts over the country’s commitment to reform.
    February 6The Board of Governors adopted a Resolution proposing an increase of 45 percent in the total Fund quotas to approximately SDR 212 billion (about $288 billion). The increase would only become effective when members having not less than 85 percent of total quotas have consented to the increase in their quotas.
    February 19The Fund and Russia agreed to extend the current SDR 10 billion extended Fund facility credit for an additional year and to augment the Fund’s financial assistance under the program.
    March 24Malaysia introduced a package of measures to strengthen its financial sector and rebalance its macroeconomic policies.
    April 27The Interim Committee adopted a Code of Good Practices on fiscal transparency.
    May 4The Fund-Singapore Regional Training Institute was opened.
    June 24The Indonesian government and the Fund signed a new agreement aimed at halting the deterioration in the Indonesian economy and paving the way for a resumption of international trade.
    June 25The Executive Board completed the seventh review of Russia’s economic and financial program and added a further $670 million to the financial package, bringing the total disbursement under the program to $5.8 billion, out of a total credit of $10.1 billion.
    July 13The Managing Director of the Fund and Russian authorities agreed on a major strengthening of Russia’s economic program with additional financial support from the Fund amounting to SDR 8.5 billion (about $11.2 billion) in 1998, bringing total Fund financing available for Russia in the year to SDR 9.5 billion ($12.5 billion). The new financing was subject to the Russian legislature enacting required reforms and to the approval of the Executive Board.
    July 20The General Arrangements to Borrow were activated for the first time for a nonparticipant and for the first time for 20 years to finance the SDR 6.3 billion augmentation of the extended arrangement for Russia.
    September 30The Fund announced that after the launch of the Economic and Monetary Union (EMU) in Europe on January 1, 1999, the euro will replace the current currency amounts of the deutsche mark and the French 13franc in the SDR valuation basket.
    October 30The Fund announced in Moscow that after a 10-day meeting with the Russian authorities a number of points in the formulation of Russia’s new economic program had been clarified, but necessary measures in important areas needed to be agreed upon, particularly the budget for 1999, before the financial program agreed to in July could be resumed.
    December 2The Executive Board approved a three-year stand-by arrangement for Brazil, with a total financial package from the Fund, other international financial organizations, and bilateral lenders amounting to about $41 billion. The New Arrangements to Borrow was activated for the first time.
    December 22The Fund announced that effective January 1, 1999, the euro will replace the deutsche mark and the French franc in the basket of currencies making up the value of the SDR.
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