Chapter

Appendix I. Decision on Compensatory Financing of Export Fluctuations

Author(s):
International Monetary Fund
Published Date:
January 1980
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Decision No. 6224-(79/135), adopted August 2, 1979, supersedes Decision No. 4912-(75/207), adopted December 24, 1975, as amended by Decision No. 5348-(77/33), adopted March 11, 1977. It reads as follows:

1. The financing of deficits arising out of export shortfalls, notably those of primary exporting member countries, has always been regarded as a legitimate reason for the use of Fund resources, which have been drawn on frequently for this purpose. The Fund believes that such financing helps these members to continue their efforts to adopt adequate measures toward the solution of their financial problems and to avoid the use of trade and exchange restrictions to deal with balance of payments problems, and that this enables these members to pursue their programs of economic development with greater effectiveness.

2. The Fund has reviewed its policies to determine how it could more readily assist members, particularly primary exporters, encountering payments difficulties produced by temporary export shortfalls, and has decided that such members can continue to expect that their requests for drawings will be met where the Fund is satisfied that

  • (a) the shortfall is of a short-term character and is largely attributable to circumstances beyond the control of the member; and

  • (b) the member will cooperate with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties.

3. Drawings outstanding under this Decision may amount to 100 per cent of the member’s quota, provided that requests for drawings which would increase the drawings outstanding under this Decision beyond 50 per cent of the member’s quota will be met only if the Fund is satisfied that the member has been cooperating with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties.

4. When a member makes a request under this Decision and if, in the opinion of the Fund, adequate data on receipts from travel and workers’ remittances are available, the member shall specify whether the receipts shall be included or excluded in the calculation of the shortfall. The choice by a member shall continue to apply for a period of five years, except in the case of a member that makes a request under this Decision prior to January 1, 1980 and elects to exclude these services at the time of the request.

5. The existence and amount of an export shortfall for the purpose of any drawing under this Decision shall be determined with respect to the latest 12-month period preceding the drawing request for which the Fund has sufficient statistical data, provided that a member may request a drawing in respect of a shortfall year for which not more than six months of the data on merchandise exports, and 12 months of the data on travel and workers’ remittances, are estimated.

6. In order to identify more clearly what are to be regarded as export shortfalls of a short-term character, the Fund, in conjunction with the member concerned, will seek to establish reasonable estimates regarding the medium-term trend of the member’s exports based partly on statistical calculation and partly on appraisal of export prospects. For the purposes of this Decision, the shortfall shall be the amount by which the member’s export earnings in the shortfall year are less than the geometric average of the member’s export earnings for the five-year period centered on the shortfall year. In computing the five-year geometric average, the Fund, in conjunction with the member, will use an estimate based on a judgmental forecast for the two post-shortfall years. When the Fund allows a member to draw under the proviso in paragraph 5 above, the Fund may use such methods of estimating exports during the period for which sufficient statistical data are not available as it considers reasonable.

7. A member requesting a drawing under the proviso in paragraph 5 above will be expected to represent that, if the amount drawn on the basis of estimated data exceeds the amount that could have been drawn on the basis of actual data for the full 12-month period under paragraph 6 above, the member will make a prompt repurchase in respect of the outstanding drawing, in an amount equivalent to the excess.

8. Whenever the Fund’s holdings of a member’s currency resulting from a drawing under this Decision are reduced by the member’s repurchase or otherwise, the member’s access to this facility, in accordance with its terms, will be restored pro tanto.

9. In order to implement the Fund’s policies in connection with compensatory financing of export shortfalls, the Fund will be prepared to waive the limit on the Fund’s holdings of 200 per cent of quota, where appropriate. In particular, the Fund will be prepared to waive this limit (i) where a waiver is necessary to permit compensatory drawings to be made under this Decision or (ii) to the extent that drawings in accordance with this Decision are still outstanding.

Moreover, the Fund will apply its tranche policies to drawing requests by a member as if the Fund’s holdings of the member’s currency were less than its actual holdings of that currency by the amount of any drawings outstanding under this Decision. When drawings are made under this Decision, the Fund will so indicate in an appropriate manner.

Table 15.Purchases, Repurchases, and Outstanding Balances Under Compensatory Financing Facility, 1963–March 1980(In millions of SDRs)
PurchasesRepurchasesOutstanding

Balance

(End of Period)
1963 decision
19637676
196476
19651187
1966 decision
1966241696
196719818261
19686878251
19691237226
1970297132
19716970132
197229951380
197311334460
197410732535
197523951722
1975 decision
19762,3083172,713
19772401872,756
19785783872,921
1979 (Jan.-July)2793532,848
1979 decision
Aug. 1979–Mar. 19806434982,993
Source: International Monetary Fund.
Source: International Monetary Fund.
Table 16.Compensatory Financing Purchases, 1963–March 1980
Drawing
Date of
CountryPurchaseEnd of

shortfall
In

millions

of SDRs
As per cent

of quota
1963 decision
Brazil6/6312/6260.021.4
Egypt10/636/6316.017.8
Sudan6/6512/6411.2525.0
1966 decision
Afghanistan6/6811/674.816.6
Argentina3/7210/7164.014.5
Argentina12/7510/75110.025.0
Bangladesh12/726/7262.550.0
Burma11/679/677.525.0
Burma9/715/716.510.8
Burma2/749/7315.025.0
Burundi6/7012/692.516.7
Chile12/719/7139.525.0
Chile12/7212/7239.525.0
Colombia3/671/6718.915.1
Colombia4/6812/671.91.5
Dominican Rep.12/669/666.625.0
Ecuador10/697/696.2525.0
Egypt3/6811/6723.015.3
Egypt8/734/7347.025.0
El Salvador12/698/696.2525.0
Ghana11/668/6617.2525.0
Guatemala2/6810/676.2525.0
Guinea3/749/736.025.0
Guyana3/749/735.025.0
Haiti8/672/671.38.7
Haiti12/678/671.06.7
Iceland11/679/673.7525.0
Iceland11/689/683.7525.0
India12/6710/6790.012.0
India2/746/7362.06.6
Iraq11/673/6717.522.0
Jamaica3/7412/7313.2525.0
Jordan11/718/714.519.6
Jordan1/736/722.8512.4
Kampuchea, Dem.3/7212/716.2525.0
Kampuchea, Dem.4/7312/726.2525.0
Lao People’s Dem. Rep.12/759/753.2525.0
New Zealand5/673/6729.218.6
New Zealand7/753/7550.525.0
Peru6/7212/7130.7525.0
Philippines5/7312/7238.7525.0
Sri Lanka3/6711/6619.525.0
Sri Lanka4/681/6819.324.7
Sri Lanka1/729/7119.4519.8
Sri Lanka6/7312/7218.619.0
Sri Lanka2/748/735.96.0
Sudan3/7510/7418.025.0
Syrian Arab Rep.9/676/679.525.0
Syrian Arab Rep.1/729/7112.525.0
Turkey11/756/7537.7525.0
Uruguay2/6810/679.525.0
Uruguay5/722/7217.2525.0
Western Samoa11/7510/750.5025.0
Zaïre7/7212/7128.2525.0
Zambia12/716/7119.025.0
Zambia8/7212/7119.025.0
Zambia11/756/7519.025.0
1975 decision
Argentina3/7612/75110.025.0
Australia7/762/76332.550.0
Bangladesh8/763/7639.131.25
Barbados1/7712/763.526.9
Barbados10/7712/773.023.1
Bolivia7/789/7815.033.3
Cameroon7/7612/7517.550.0
Central African Rep.2/769/755.139.2
Chad8/7612/756.550.0
Chile6/7612/7579.050.0
Congo2/7712/766.550.0
Cyprus5/7610/7513.050.0
Cyprus1/799/789.929.1
Dominican Rep.9/7612/7621.550.0
Dominican Rep.1/7912/786.010.9
Egypt6/7612/7594.050.0
Ethiopia8/7912/7818.050.0
Fiji7/7712/766.550.0
Gambia, The3/779/763.550.0
Gambia, The11/789/784.550.0
Greece9/762/7658.042.0
Guinea Bissau4/7912/781.128.2
Guyana12/7612/7610.050.0
Guyana7/7812/778.7535.0
Iceland3/7612/7511.550.0
Israel8/7612/7565.050.0
Israel9/786/7872.435.32
Ivory Coast3/7610/7526.050.0
Jamaica9/766/7613.2525.0
Jamaica11/769/7613.2525.0
Jamaica6/786/7815.7521.3
Kenya9/7612/7524.050.0
Korea6/7611/7540.050.0
Lao People’s
Dem. Rep.6/7612/753.2525.0
Malawi8/792/799.550.0
Malaysia8/762/7693.050.0
Mauritania4/7612/756.550.0
Mauritius7/773/7711.050.0
Mexico11/766/76185.050.0
Morocco4/766/7656.550.0
Morocco8/7812/7756.037.3
Nepal7/784/789.550.0
New Zealand4/7611/7550.525.0
New Zealand12/765/7650.525.0
Nicaragua5/791/7917.050.0
Pakistan7/7612/7590.538.5
Pakistan4/7712/7627.011.5
Panama12/767/7618.050.0
Papua New Guinea6/7612/7510.050.0
Peru5/763/7661.550.0
Peru9/786/7861.537.5
Philippines4/7612/7577.550.0
Philippines6/7912/7844.221.0
Portugal7/7612/7558.550.0
Portugal7/7712/7729.2525.0
Romania4/7612/7595.050.0
Romania9/776/7747.525.0
Romania4/7912/7841.2516.8
Senegal11/7812/7821.050.0
Sierra Leone3/7612/757.028.0
Sierra Leone9/767/765.522.0
Solomon Islands4/7912/781.0550.0
South Africa11/768/76160.050.0
Spain2/787/7798.7525.0
Sri Lanka11/766/7615.816.1
Sudan5/7612/7526.737.1
Sudan9/7812/7821.324.2
Tanzania4/7610/7521.050.0
Tanzania5/7912/7820.2536.8
Thailand8/763/7667.050.0
Thailand7/789/7868.7538.0
Togo8/769/767.550.0
Tunisia8/773/7724.050.0
Turkey4/7612/7537.7525.0
Turkey5/783/7874.5037.25
Uganda4/7610/7520.050.0
Uruguay3/7612/7525.937.5
Viet Nam1/776/7631.050.0
Western Samoa11/765/760.525.0
Western Samoa2/7711/760.525.0
Western Samoa11/7812/781.2541.7
Yemen, People’s
Dem. Rep.5/7612/742.58.6
Yugoslavia5/7912/78138.550.0
Zaïre3/7612/7556.550.0
Zaïre5/7712/7628.2525.0
Zambia6/7612/7519.025.0
Zambia4/7712/7619.025.0
Zambia5/783/7848.7534.6
1979 decision
Burundi11/796/799.541.3
Costa Rica10/796/7920.550.0
Dominica12/7912/790.9550.0
Dominican Rep.9/7912/7927.550.0
Ethiopia12/796/7918.050.0
Guyana1/8012/796.2525.0
Jamaica9/7910/7931.7542.9
Kenya10/793/7969.0100.0
Liberia12/796/7920.555.4
Malawi11/795/799.550.0
Mali3/8012/795.118.9
Mauritania1/806/7910.561.8
Nicaragua10/799/7917.050.0
Philippines3/808/7993.344.4
Sudan11/7912/7936.040.9
Uganda8/793/795.010.0
Uganda1/809/7925.050.0
Turkey2/8012/7971.635.8
Yugoslavia2/8012/79138.550.0
Source: International Monetary Fund.
Source: International Monetary Fund.

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