Abstract

The tables and chart in this appendix supplement the information given in Chapter 3 on the activities of the Fund during the past year. For some aspects of the Fund’s operations, data covering longer periods are included. Apart from Table 1.1 on exchange rates and Tables 1.19, 1.20, and 1.21 setting out the charges on the use of the Fund’s resources, the data in the tables and chart do not go beyond April 30, 1974, the end of the Fund’s fiscal year. The unit of value employed in most of the tables and in the chart is the special drawing right (SDR), which is equivalent to 0.888671 gram of fine gold. This, in turn, is equivalent to one U.S. dollar of the weight and fineness in effect on July 1, 1944, the unit of value that was employed in the Annual Reports prior to 1972.1

APPENDICES

Appendix I. The Fund in 1973/74

The tables and chart in this appendix supplement the information given in Chapter 3 on the activities of the Fund during the past year. For some aspects of the Fund’s operations, data covering longer periods are included. Apart from Table 1.1 on exchange rates and Tables 1.19, 1.20, and 1.21 setting out the charges on the use of the Fund’s resources, the data in the tables and chart do not go beyond April 30, 1974, the end of the Fund’s fiscal year. The unit of value employed in most of the tables and in the chart is the special drawing right (SDR), which is equivalent to 0.888671 gram of fine gold. This, in turn, is equivalent to one U.S. dollar of the weight and fineness in effect on July 1, 1944, the unit of value that was employed in the Annual Reports prior to 1972.1

Exchange Rate Developments

Exchange rate developments from May 1973 to early May 1974 may be summarized as follows:

May 17-June 21, 1973

The Fund agreed to the initial par value proposed by Qatar.

The Fund noted (i) the middle rate for the U. S. dollar communicated by South Africa; (ii) that the South African rand continued to be the currency of Botswana, Lesotho, and Swaziland, and (iii) the exchange rate actions by Finland, Iceland, Malaysia, Morocco, and Singapore not to maintain exchange rates within specified margins.

June 29-August 10, 1973

The Fund noted (iv) the new central rate communicated by the Federal Republic of Germany and the new rate communicated by Austria; (v) central rates communicated by Kenya, Tanzania, Uganda, and Western Samoa; (vi) the circumstances that led Cyprus and Yugoslavia to the decisions not to maintain the spot exchange rates for their currencies within margins hitherto observed; and (vii) the circumstances that led New Zealand to discontinue the fixed exchange rate relationship between the New Zealand and U. S. dollars.

The Fund agreed to the initial par value proposed by Algeria, and concurred in the new par values proposed by Saudi Arabia and Thailand.

September 9-17, 1973

The Fund concurred in the new par value proposed by Australia; it noted (viii) the exchange rate action by New Zealand to appreciate the market rate for the New Zealand dollar by 10 per cent; (ix) the exchange rate action communicated by Fiji to appreciate the Fiji dollar by 5.3 per cent; and (x) the new central rate communicated by the Netherlands.

October 18, 1973-January 14, 1974

The Fund concurred in the new par values proposed by the United States, the Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Liberia, Mexico, Nicaragua, and Panama.

The Fund noted (xi) the circumstances that led Greece to the decision not to maintain the exchange rate for the drachma within margins hitherto observed; (xii) the decision of Malawi to cease to maintain the fixed exchange rate relationship between the kwacha and the pound sterling; and (xiii) the new central rates communicated by Norway, Kenya, Rwanda, Tanzania, and Uganda.

The Fund agreed to the initial par value proposed by the Bahamas.

January 21-23, 1974

The Fund noted (xiv) the circumstances that led France to the decision not to maintain during the next six months and on a provisional basis the exchange rates between the French franc and certain other currencies in the official market within margins hitherto observed; (xv) the circumstances that led Spain to the decision not to maintain for the time being the rate between the peseta and the U. S. dollar within margins hitherto observed; and (xvi) the decision of Tunisia to set the rate between the Tunisian dinar and the French franc by taking account of the daily quotations of the deutsche mark in terms of the commercial franc in the Paris exchange market.

January 21-22, 1974

Foreign exchange markets in Austria, Belgium, Denmark, Finland, Germany, Japan, Luxembourg, the Netherlands, Norway, Spain, and Sweden were closed on January 21, reopening the following day. Exchange markets were open on January 21 in France, Italy, and the United Kingdom.

January 28-April 30, 1974

The Fund agreed to the initial par value proposed by the United Arab Emirates. It concurred in the new par value proposed by Costa Rica.

The Fund noted (xvii) the new central rate communicated by Fiji, and by the United Kingdom for the Cayman Islands; and (xviii) the decisions taken by France and Italy to terminate the dual exchange markets.

The structure of exchange rates of member countries as it existed on July 12, 1974 is shown in Table 1.1. Fund action in 1973/74 with respect to par values and central rates is recorded in Tables 1.2 and 1.3, respectively.

Special Drawing Account

Summary data on SDR transactions between participants and SDR transactions and operations conducted through the Fund’s General Account for the period from the first allocation on January 1, 1970 to April 30, 1974 are shown in Table 1.4. Movements in the SDR holdings for individual participants during the fiscal year ended April 30, 1974 are summarized in Table 1.5. In addition, Table 1.6 shows the currencies transferred against SDRs in transactions between participants, and Table 1.7 sets out the amounts of SDRs transferred to individual participants from the General Account. The operations and transactions in SDRs during the fiscal year ended April 30, 1974 are discussed in Chapter 3.

Net transfers between participants and the General Account during the fiscal year resulted in a reduction of the General Account’s holdings from SDR 617 million on April 30, 1973 to SDR 499 million on April 30, 1974.

General Account

Tables 1.8 to 1.16 and Chart 1.1 show data on members’ use of the Fund’s resources, on their repurchases of balances of their currency held by the General Account, and on stand-by arrangements approved for members by the Fund.

Table 1.8 provides a comparative statement of members’ creditor positions, presented both by amounts and as percentages of quotas. The table includes 24 members with creditor positions amounting to more than SDR 50,000 on April 30, 1974; during the year the positions of 4 members increased, while those of 11 decreased and 7 remained unchanged. Kenya and New Zealand were added to the list at the end of 1973/74.

Details on members’ purchases and repurchases under the Fund’s compensatory financing facility are set out in Table 1.11. Summary data on stand-by arrangements and on members’ purchases and repurchases, since the inception of the Fund, are shown in Table 1.12 and Table 1.13, respectively. The transactions and operations of the General Account during the fiscal year ended April 30, 1974 are discussed in Chapter 3.

Repurchases Under Article V, Section 7(b)

Article V, Section 1(b), provides that, subject to certain limitations, a member shall repurchase an amount of the Fund’s holdings of its currency equivalent to one half of any increase in the Fund’s holdings of its currency that has occurred during the Fund’s financial year, plus one half of any increase or minus one half of any decrease in the member’s monetary reserves during the same period, or, if the Fund’s holdings of the member’s currency have decreased, one half of any increase in the member’s monetary reserves minus one half of the decrease in the Fund’s holdings of the member’s currency.

On April 30, 1973 the Fund’s holdings of currencies of 62 member countries exceeded 75 per cent of their quotas. Repurchase obligations pursuant to Article V, Section 1(b), were calculated for 19 of these members. Repurchase obligations by the 19 members totaled the equivalent of SDR 482 million payable in gold, SDRs, and convertible currencies as indicated in Table 1.14.

The outstanding balance of repurchase obligations incurred as of April 30, 1971 and April 30, 1972 payable in subsequent financial years amounted to SDR 35 million, of which SDR 16 million was payable as of April 30, 1973, SDR 10 million not later than August 25, 1973, and SDR 9 million in subsequent financial years.2

Article V, Section 7(c), (iv), limits the amounts to be repurchased under Article V, Section 7(b), in any year to 25 per cent of the quota of the member concerned. This limitation applied to the obligations of seven members incurred as of April 30, 1973 and to the outstanding balance of the obligations of one member incurred as of April 30, 1971 and 1972, thus reducing the total amount to be discharged as of April 30, 1973 to SDR 287 million—SDR 271 million in respect of obligations incurred as of April 30, 1973, and SDR 16 million in respect of outstanding balances of obligations incurred as of April 30, 1971 and April 30, 1972. In August 1973

Nigeria agreed with the revised calculation of its repurchase obligation incurred as of April 30, 1972. The obligation payable in convertible currencies equivalent to SDR 20.1 million was discharged in November 1973. Also in August 1973, Iraq discharged the part of its April 30, 1971 and 1972 repurchase obligations payable in convertible currencies equivalent to SDR 6.9 million that was scheduled to be repurchased not later than August 25, 1973.3 The member requested and the Fund agreed to further postponement of the discharge of the balance, equivalent to SDR 3.1 million payable in gold.

During the year four members (Colombia, Iraq, the Philippines, and Turkey) requested postponement of the discharge of that part of their repurchase obligations that was payable in gold, totaling the equivalent of SDR 13.2 million. In permitting the postponements the Executive Directors took note of the reasons advanced by the respective authorities of the members concerned that a payment of gold in present circumstances would present them with serious problems and that they would appreciate postponement pending the clarification of the future role of gold in connection with the reform of the international monetary system. These decisions are subject to further review before October 31, 1974.

In November 1973 the Executive Directors also decided that if a payment due under Article V, Section 1(b), includes an amount of gold equal to less than one standard bar, such amount shall not be collected.

Five members, which in accordance with Article V, Section 7(c) (iv), discharged amounts equivalent to 25 per cent of their respective quotas, also subsequently discharged additional amounts. Indonesia and Peru discharged the balance of their obligations incurred as of April 30, 1973; Nicaragua repurchased the equivalent of SDR 4.25 million, which discharged the balance of the April 30, 1971 repurchase obligation and part of the repurchase obligation incurred as of April 30, 1972; the Philippines repurchased the equivalent of SDR 17.25 million and El Salvador the equivalent of SDR 6,245, which discharged part of the balance of their obligations incurred as of April 30, 1973.

The outstanding balance of repurchase obligations incurred as of April 30, 1971, 1972, and 1973 amounted to SDR 156 million, of which SDR 81 million was payable as of April 30, 1974, SDR 13 million after expiry of postponement, and SDR 62 million in subsequent financial years.

During the fiscal year 1973/74, repurchases in discharge of obligations incurred under Article V, Section 1(b), totaled SDR 381 million. Of this total, SDR 3 million was payable in gold, SDR 4 million in special drawing rights, and SDR 374 million in convertible currencies (Table 1.15). Of the amount payable in convertible currencies, the equivalent of SDR 297 million was calculated in currencies that the Fund could not accept or could accept only up to a limited amount in repurchases as of April 30, 1972 and April 30, 1973; this resulted from the limitation imposed by Article V, Section 7(c) (iii), providing that repurchases shall not be carried to a point at which the Fund’s holdings of any currency required to be used are above 75 per cent of the quota of the member concerned. In accordance with Schedule B, paragraph 1(d), of the Fund Agreement and paragraph 1 of Executive Board Decision No. 3049-(70/44),4 other convertible currencies were selected in substitution for these currencies.

The sum of SDR 381 million repurchased in discharge of obligations incurred under Article V, Section 1(b), of the Fund Agreement represented 57 per cent of total repurchases during the fiscal year 1973/74. Of this amount, SDR 8 million and SDR 30 million related to obligations incurred as of April 30, 1971 and April 30, 1972, respectively; the remainder, SDR 343 million, was in discharge of obligations incurred as of April 30, 1973.

Gold

The Fund’s transactions and operations in gold over the last three fiscal years are covered in Table 1.17.

Income and Expenses

Table 1.18 shows a summary of income and expenses of the General Account over the last ten fiscal years. Details are provided in Chapter 3.

The Fund’s schedule of charges on balances in excess of quota that was in effect from May 1, 1963 to June 30, 1974 is shown in Table 1.19. New schedules of charges that came into effect on July 1, 1974 are shown in Tables 1.20 and 1.21.

Administrative Budget and Audit

The administrative budget approved by the Executive Directors for the period May 1, 1974 to April 30, 1975 is presented in Appendix V. Comparative income and expense figures for the fiscal years ended April 30, 1972, 1973, and 1974 appear in Appendix VI. Appendix VII gives the Opinions of the Audit Committee, together with the audited Balance Sheets of the General Account and Special Drawing Account as at April 30, 1974, the Statement of Income and Expenses, the Statement of Reserves, the Statement of Source and Use of Special Drawing Rights, and the audited Balance Sheet of the Staff Retirement Fund as at April 30, 1974.

Article VIII

A list of the member countries that had accepted the obligations of Article VIII, Sections 2, 3, and 4, by April 30, 1974 is presented in Table 1.22.

Publications

Table I.23 lists publications issued by the Fund during the past fiscal year.

Table I.1.

Exchange Rates, July 12, 1974

(Currency units per unit listed)

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The member is availing itself of wider margins in accordance with Executive Board Decision No. 3463-(71/126), as amended by Executive Board Decision No. 4083-(73/104), adopted November 7, 1973.

Rates other than market rates as notified to the Fund.

Representative rates for the currencies of Austria, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Norway, South Africa, Spain, Sweden, and the United Kingdom. Other rates are selling rates in New York.

Belgium, Denmark, Germany, Luxembourg, the Netherlands, Norway, and Sweden maintain maximum margins of 2¼ per cent for exchange rates in transactions in the official markets between their currencies and those of the other countries in this group. Rates shown are central rates established under Executive Board Decision No. 4083-(73/104), expressed in terms of SDRs.

Member maintains multiple currency practice and/or dual exchange market.

The member has notified the Fund that its currency is not being maintained within specified margins.

The rate at which the Fund computes its holdings of lei.

Table I.2.

Par Values Established or Changed, Fiscal Year Ended April 30, 1974

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This was a central rate, February 16 to October 26, 1973.

This was a central rate, February 20 to October 25, 1973.

This was a central rate, February 23 to November 15, 1973.

Table I.3.

Central Rates Established or Changed in Accordance with Executive Board Decision No. 3463-(71/126), as Revised by Decision No. 4083-(73/104), Fiscal Year Ended April 30, 1974

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Central rate.

Par value.

Table I.4.

Transfers of Special Drawing Rights, January 1, 1970-April 30, 1974

(In Millions of SDRs)

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Under Article XXV, Sections 2(b)(ii) and 7(e).

Under Article XXVI, Section 5.

Table I.5.

Summary of Transactions and Operations in Special Drawing Rights, Fiscal Year Ended April 30, 1974

(In thousands of SDRs)

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