Abstract

The stand-by arrangements of the Fund are arrangements under which the Fund assures a member that it will be able to use the Fund’s resources up to a prescribed amount during a specified period and usually subject to certain conditions.93 These arrangements are now very frequent in Fund practice, and a large proportion of the Fund’s financial transactions is covered by them. Almost invariably, a stand-by arrangement consists of two documents, one of which sets forth largely standard terms that are intended on the whole to fit the operation into the Articles and the Fund’s unique form of financing. The second document is an attachment in the form of a letter or memorandum, usually signed by the Minister of Finance or Governor of the central bank of the member for whose benefit the arrangement is made, or by both. This document, frequently referred to as a letter of intent, sets out, often in some detail, the policies that the member will follow. The general objective of these policies is to ensure that the member’s use of the Fund’s resources under the stand-by arrangement will be consistent with the purposes and provisions of the Articles and with the policies adopted by the Fund under them. By means of appropriate provisions in the covering document, the observance of certain features of the member’s letter of intent is made a condition of its continued ability to use the Fund’s resources under the stand-by arrangement.