This chapter provide details of the proposed Third Amendment of the Articles of Agreement of the IMF. This paper also examines the conditions for the imposition of suspension of voting and related rights of a member, then the consequences of suspension, and finally the conditions and effects of a termination of suspension. The Fund's Articles of Agreement empowers the Fund to declare a member ineligible to use the general resources of the Fund if the member fails to fulfil any of its obligations under the Articles. The commentary in the chapter analyzes the proposed amendment and describes the main aspects of the new power that would be conferred upon the Fund. The chapter also describes the procedure for the adoption of the proposed amendment. It proposes a resolution for adoption by the Board of Governors.
The adequacy of international liquidity became a problem of increasing concern to the international community during the 1960's. In response, the IMF proposed a new facility, based on Special Drawing Rights, which took effect on October 3, 1969. This new facility, referred to in this publication, was established within the Fund as its Special Drawing Account, through which the new supplement to reserve assets, in the form of special drawing rights, could be allocated.
1. Article XXVI, Section 2(a) of the Fund’s Articles of Agreement empowers the Fund to declare a member ineligible to use the general resources of the Fund if the member fails to fulfill any of its obligations under the Articles. Such a declaration may be made by a decision of the Executive Board carried by a majority of the votes cast. Article XXVI, Section 2(b) provides that if the member persists in its failure to fulfill any of its obligations under the Articles, it may be required to withdraw from membership by a decision of the Board of Governors carried by a majority of the Governors having 85 percent of the total voting power.
This Commentary examines, first, the conditions for the imposition of suspension of voting and related rights of a member, then the consequences of suspension, and finally the conditions and effects of a termination of suspension.
1. The procedure for the adoption of modifications in the Articles of Agreement is set forth in Article XXVIII. Under those provisions, a proposed amendment is to be communicated to the Chairman of the Board of Governors for consideration by the Board of Governors. If the proposed amendment is approved by the Board of Governors, the Fund is to ask all members whether they accept it. When three fifths of the members, having 85 percent of the total voting power, have accepted the proposed amendment, the Fund is to certify that fact by a formal communication to all members. Under Article XXVIII(c), an amendment enters into force for every member, whether or not it has accepted the amendment, three months after the date of that communication unless a shorter period is specified. In the case of the amendment now being proposed, the Executive Board recommends that it should enter into force on the date of the formal communication.
Whereas the Interim Committee of the Board of Governors has invited the Executive Board to propose an amendment of the Articles of Agreement of the International Monetary Fund providing for suspension of voting and related rights of members that do not fulfill their obligations under the Articles; and