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Abstract

Appendix I International Reserves

APPENDICES

Appendix I International Reserves

Recent Evolution of Official Reserve Assets

  • Non-Gold Reserves

  • Foreign Exchange Reserves

  • Holdings of Fund-Related Reserve Assets

  • Gold

  • Developments in the First Quarter of 1991

Currency Composition of Reserves

Placement of Official Holdings of Foreign Exchange

Tables in Appendix I

I.1 Official Holdings of Reserve Assets, End of Year 1985-March 1991

I.2 Share of National Currencies in Total Identified Official Holdings of Foreign Exchange, End of Year 1981-90

I.3 Currency Composition of Official Holdings of Foreign Exchange, End of Year 1985-90

I.4 Placement of Official Holdings of Foreign Exchange Reserves, End of Year 1983-90

Appendix II Operations and Financial Transactions of the Fund

Tables in Appendix II

II.1 Summary of Arrangements Approved During the Financial Years Ended April 30, 1953-91

II.2 Arrangements in Effect as of Financial Years Ended April 30, 1953-91

II.3 Stand-By and Extended Fund Facility Arrangements in Effect During the Financial Year Ended April 30, 1991

II.4 Arrangements Under the Structural Adjustment Facility Through Financial Year Ended April 30, 1991

II.5 Arrangements Under the Enhanced Structural Adjustment Facility Through Financial Year Ended April 30, 1991

II.6 Summary of Disbursements, Repurchases, and Repayments, Financial Years Ended April 30, 1948-91

II.7 Purchases from the Fund, Financial Year Ended April 30, 1991

II.8 Repurchases from the Fund, Financial Year Ended April 30, 1991

II.9 Outstanding Fund Credit by Facility and Policy, April 30, 1985-91

II.10 Borrowed Resources and Repayments to Lenders (Excluding the GAB and ESAF), May 29, 1980-April 30, 1991

II.11 Enhanced Structural Adjustment Facility—Contributions as of April 30, 1991

II.12 Summary of Transactions and Operations in SDRs, Financial Year Ended April 30, 1991

II.13 Holdings of SDRs by All Participants and by Groups of Countries as Percent of Their Cumulative Allocations of SDRs and of Their Non-Gold Reserves, Financial Years Ended April 30, 1970-91

II.14 Purchases and Subsidy Payments Under Supplementary Financing Facility, May 29, 1980-April 30, 1991

II.15 Key IMF Rates, May 1, 1990-April 30, 1991

II.16 Members That Have Accepted the Obligations of Article VIII, Sections 2, 3, and 4 of the Articles of Agreement

II.17 Exchange Rate Arrangements as of March 31, 1991

Appendix III Technical Assistance and Training, Relations with International Organizations, and External Relations

Relations with Other International Organizations

External Relations

Executive Directors and Staff

Table in Appendix III

III.1 Publications Issued, Financial Year Ended April 30, 1991

Appendix IV Principal Policy Decisions of the Executive Board

A. Surveillance Over Members’ Exchange Rate Policies

  • (a) Extension of Period for Reviews

  • (b) Review of Implementation of Procedures and 1977 Document

  • (c) Amendment of Procedures

B. Policy on Enlarged Access to the Fund’s Resources

  • (a) Modalities for Financing—Substitution of Ordinary for Borrowed Resources

  • (b) Modalities for Financing—Amendment of Rule 1-6 (4)

  • (c) Amendment of Guidelines on Access Limits

C. Compensatory and Contingency Financing Facility

  • (a) Amendment

  • (b) Amendment—Coverage of Services

  • (c) Amendment—Early Drawing Provision

  • (d) Amendment—Contingency Mechanism

  • (e) Amendment—Compensatory Financing of Fluctuations in Cost of Oil Imports

D. Operational Budget—Method of Allocating Currencies—Operational Guidelines

E. Valuation of SDR

  • (a) SDR Valuation Basket

  • (b) Amendment to Rule 0-1

F. Overdue Financial Obligations—Special Charges—Suspension of Application in General Resources Account

G. Debt-and Debt-Service Reduction Operations—Early Repurchase Expectations—Amendment

H. Fund’s Income Position

  • (a) Rate of Charge as of November 1, 1990

  • (b) Burden Sharing—Implementation in FY 1992

  • (c) Extended Burden Sharing—Review

  • (d) Retroactive Reduction of Rate of Charge for FY 1991

  • (e) Disposition of Net Income for FY 1991

  • (f) Net Income Target and Rate of Charge for FY 1992

I. Structural Adjustment Facility, Enhanced Structural Adjustment Facility, and Enhanced Structural Adjustment Facility Trust

  • (a) Extension of Period for Reviews

  • (b) Review of Operation

J. Structural Adjustment Facility—Amendment

K. Enhanced Structural Adjustment Facility Trust

  • (a) Amendments

  • (b) Review of Access Limits

L. Supplementary Financing Facility Subsidy Account—Additional Subsidy Payments for May 1, 1989 Through June 30, 1989 and Subsidy Payments for July 1, 1989 Through June 30, 1990

Appendix V Press Communiqués of the Interim Committee and the Development Committee

Interim Committee of the Board of Governors on the International Monetary System

  • Thirty-Fifth Meeting, Washington, September 23-24, 1990

  • Thirty-Sixth Meeting, Washington, April 29-30, 1991

Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee)

  • Thirty-Ninth Meeting, Washington, September 24, 1990

  • Fortieth Meeting, Washington, September 27, 1990

  • Forty-First Meeting, Washington, April 30, 1991

Appendix VI Executive Directors and Voting Power on April 30, 1991

Appendix VII Changes in Membership of Executive Board

Appendix VIII Administrative and Capital Budgets

Appendix IX Financial Statements

Report of the External Audit Committee

  • General Department

    • Balance Sheet

    • Statement of Income and Expense

    • Statement of Changes in Reserves and Resources

    • Notes to the Financial Statements

    • Schedule 1

    • Schedule 2

    • Schedule 3

    • Schedule 4

  • SDR Department

    • Statement of Allocations and Holdings

    • Statement of Receipt and Use of SDRs

    • Note to the Financial Statements

  • Supplementary Financing Facility Subsidy Account

    • Balance Sheet

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Trust Fund

    • Balance Sheet

    • Statement of Income and Expense

    • Statement of Changes in Trust Resources

    • Notes to the Financial Statements

  • Enhanced Structural Adjustment Facility Trust

    • Combined Balance Sheet

    • Combined Statement of Income and Expense

    • Combined Statement of Changes in Resources

    • Notes to the Financial Statements

    • Schedule 1

    • Schedule 2

    • Schedule 3

    • Schedule 4

  • Enhanced Structural Adjustment Facility Administered Accounts

    • Balance Sheet

    • Statement of Income and Expense

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Administered Account—Japan

    • Balance Sheet

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Administered Account—Guyana

    • Balance Sheet

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Administered Technical Assistance Account—Japan.

    • Balance Sheet

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Voluntary Contribution Account—Bolivia

    • Balance Sheet

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Voluntary Contribution Account—Costa Rica

    • Statement of Changes in Resources

    • Notes to the Financial Statements

  • Staff Retirement Plan

    • Report of the External Audit Committee

    • Statement of Accumulated Plan Benefits and Net Assets Available for Benefits

    • Statement of Changes in Accumulated Plan Benefits

    • Statement of Changes in Net Assets Available for Benefits

    • Notes to the Financial Statements

  • Supplemental Retirement Benefit Plan

    • Report of the External Audit Committee

    • Statement of Accumulated Plan Benefits and Assets Available for Benefits

    • Statement of Changes in Accumulated Plan Benefits

    • Statement of Changes in Assets Available for Benefits

    • Notes to the Financial Statements

Appendix I: International Reserves

This appendix reviews recent developments in international reserves and liquidity as represented by (1) the evolution of holdings of official assets; (2) the currency composition and distribution of foreign exchange reserves; and (3) the placement of official holdings of foreign exchange reserves.

Recent Evolution of Official Reserve Assets

In 1990, total international reserves measured in SDR terms increased by 2 percent, to SDR 892 billion, reflecting an increase in the holdings of non-gold reserves partially offset by a significant fall in the market value of official holdings of gold (Table I.1). The growth of non-gold reserves reflected larger holdings of foreign exchange reserves by both industrial and developing countries. At the same time, holdings of Fund-related assets by developing countries declined slightly.

Table I.1.

Official Holdings of Reserve Assets, End of Year 1985-March 19911

(In billions of SDRs)

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Source: International Monetary Fund, International Financial Statistics.

“Fund-related assets” comprise reserve positions in the Fund and SDR holdings of all Fund members and Switzerland. Claims by Switzerland on the Fund are included in the line showing reserve positions in the Fund. The entries under “Foreign Exchange” and “Gold” comprise official holdings of those Fund members for which data are available and certain other countries or areas, including Switzerland.

One troy ounce equals 31.103 grams. The market price is the afternoon price fixed in London on the last business day of each period.

Non-Gold Reserves

Non-gold reserves increased by 8 percent in 1990 to SDR 638 billion at the end of the year. This increase represented a continuation in the expansion of non-gold reserves that has been evident since 1986. The growth of non-gold reserves in 1990 mainly reflected an expansion of such holdings in the industrial countries, which increased at an annual rate of 8 percent. As in 1989, all groups of developing countries also increased their non-gold reserves during 1990. The non-gold reserve holdings of those developing countries that have experienced recent debt-servicing problems rose by 29 percent, a distinctly faster rate of increase than that of previous years. Capital importing developing countries without debt-servicing problems increased their non-gold reserve holdings by 15 percent.

Foreign Exchange Reserves

Foreign exchange reserves increased by 9 percent in 1990 to reach SDR 594 billion by the end of the year. This rise in foreign exchange reserves in 1990 continued the strong growth of the previous three years. While total holdings of foreign exchange reserves grew by SDR 49 billion, the expansion of the holdings of the industrial countries accounted for a substantial part of this increase as their holdings rose by SDR 32 billion, which represented an annual rate of growth of 9 percent. Developing countries also increased their holdings of foreign exchange reserves by 9 percent. This increase continued the process of accumulation of foreign exchange reserves by developing countries initiated in 1987 after successive declines in 1985 and 1986.

Of capital importing developing countries, those without debt problems increased their foreign exchange reserve holdings by 16 percent, while the foreign exchange reserves of those countries with recent debt-servicing problems grew by 29 percent. Indeed, the foreign exchange reserves of the latter group of countries exceeded their 1985 level for the first time in 1990.

Holdings of Fund-Related Reserve Assets

Holdings of Fund-related assets decreased by 4 percent in 1990 to reach SDR 44 billion at the end of the year, reflecting an SDR 2 billion decline in holdings of reserve positions in the Fund. Reserve positions in the Fund, which comprise the reserve tranche position and the creditor position, increased by SDR 16 billion between the end of 1982 and the end of 1984 but then declined by SDR 18 billion in the period 1984-90. Members’ holdings of SDRs remained unchanged in 1990.

Gold

The market value of the global stock of gold reserves declined sharply by 12 percent in 1990, to SDR 255 billion. This decrease reflected almost entirely changes in gold prices although a small decline in the physical stock of official gold reserves also occurred. The physical stock has remained fairly constant since 1972, except for a 9 percent decline in 1979, which occurred mainly because members of the European Monetary System swapped 20 percent of their gold holdings with the European Monetary Cooperation Fund (EMCF) for European currency units (ECUs). Both the physical holdings of gold and its distribution between industrial and developing countries changed very little during the 1980s. Industrial countries held 85 percent and developing countries 15 percent of the total physical stock of gold reserves of 940 million ounces at the end of 1990.

Developments in the First Quarter of 1991

Total international reserves fell by SDR 11 billion in the first quarter of 1991 as an increase in non-gold reserves was more than offset by a decrease in the market value of gold. The larger holdings of non-gold reserves reflected a rise of SDR 3 billion in the foreign exchange reserves of developing countries, while the foreign exchange reserves of industrial countries fell by SDR 1 billion.

The market value of official holdings of gold decreased from SDR 255 billion at the end of 1990 to SDR 240 billion at the end of the first quarter of 1991. Since the total physical holdings of gold changed only slightly, the reduction in the market value of gold was largely due to the fall in the market price of gold from SDR 271 to SDR 255 an ounce over the quarter.

Currency Composition of Reserves

Since the mid-1970s, there has been a continuing diversification of the currency composition of foreign exchange reserves. Whereas that composition had remained relatively stable during 1975-77, the sharp depreciation of the dollar between 1977 and 1980 was accompanied by a decline in the share of the dollar in total foreign exchange reserves from 79 percent at the end of 1977 to 69 percent at the end of 1980. This diversification away from the dollar was partly reversed in the early 1980s, when the dollar appreciated strongly relative to the other major currencies. As a result, the share of the dollar in reserves rose to 71 percent by the end of 1983 (Table I.2). But by 1985, the share had declined by 6 percentage points, as monetary authorities again diversified the currency composition of their foreign exchange reserves and the proportion of foreign exchange reserves denominated in the deutsche mark, the Japanese yen, and, to a lesser extent, sterling increased. The extensive foreign exchange market intervention by some major industrial countries that occurred during 1986 and 1987 was accompanied by a rise in the proportion of reserves held as dollar-denominated assets (to 68 percent in 1987) and, as a counterpart, the shares of the deutsche mark, the Japanese yen, and sterling declined slightly. However, the share of reserves held as dollar-denominated assets fell to 56 percent at the end of 1990. The counterpart of the fall in the share of the dollar was a sharp increase in the share of the deutsche mark (which increased from 15 percent at the end of 1987 to 20 percent at the end of 1990).

Table I.2.

Share of National Currencies in Total Identified Official Holdings of Foreign Exchange, End of Year 1981-90 1

(In percent)

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The SDR value of ECUs issued against dollars is added to the SDR value of dollars, but the SDR value of ECUs issued against gold is excluded from the total distributed here. Only selected countries that provide information about the currency composition of their official holdings of foreign exchange are included in this table.

This column is for comparison and indicates the currency composition of reserves when holdings of ECUs are treated as a separate reserve asset, unlike the earlier columns as is explained in the preceding footnote. The share of ECUs in total foreign exchange holdings was 12.9 percent for industrial countries and 8.2 percent for all countries.

The residual is equal to the difference between total identified reserves and the sum of the reserves held in the seven currencies listed in the table.

The calculations here rely to a greater extent on Fund staff estimates than do those provided for the group of industrial countries.

In the calculation of these shares, the SDR value of ECUs issued against gold is not counted as part of foreign exchange reserves, but the SDR value of ECUs issued against dollars is counted as part of the holdings of dollars. The overall picture of changes in the trend in the currency composition of foreign exchange reserves is similar if ECUs, which were introduced in 1979 and accounted for 8 percent of total identified official holdings of foreign exchange at the end of 1990, are treated separately. In particular, the share of the dollar (excluding holdings of ECUs) in total identified reserve holdings fell from 56 percent at the end of 1987 to 50 percent at the end of 1990 (Table I.2).

Changes in the SDR value of foreign exchange reserves can also be decomposed into valuation (or price) and quantity changes for each of the major currencies (including the ECU) and for the total of the identified foreign exchange reserves (Table I.3). In 1990, total identified foreign exchange reserves increased by SDR 46 billion as a result of a sharp positive quantity change of SDR 57 billion and a valuation loss of SDR 11 billion.

Table I.3.

Currency Composition of Official Holdings of Foreign Exchange, End of Year 1985-901

(In millions of SDRs)

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The currency composition of foreign exchange is based on the Fund’s currency survey and on estimates derived mainly, but not solely, from official national reports. The numbers in this table should be regarded as estimates that are subject to adjustment as more information is received. Quantity changes are derived by multiplying the changes in official holdings of each currency from the end of one quarter to the next by the average of the two SDR prices of that currency prevailing at the corresponding dates. This procedure converts the change in the quantity of national currency from own units to SDR units of account. Subtracting the SDR value of the quantity change so derived from the quarterly change in the SDR value of foreign exchange held at the end of two successive quarters and cumulating these differences yields the effect of price changes over the years shown.

Each item represents the sum of the eight currencies above.

Include a residual whose currency composition could not be ascertained, as well as holdings of currencies other than those shown.

ECUs are issued by the EMCF to the central banks of the members in exchange for the deposit of 20 percent of the gold holdings and 20 percent of the gross dollar holdings of these institutions. These swaps are renewed every three months, and changes in the member’s holdings of dollars and gold, as well as changes in the market price of gold and the foreign exchange value of the dollar, affect the amount of ECUs outstanding.1 Quantity changes in ECU holdings depend, therefore, partly on the evolution of the two components of the EMCF swap.2 The SDR 2 billion fall in holdings of ECUs that occurred in 1989 resulted from a negative quantity change (SDR 4 billion) and a positive valuation effect (SDR 2 billion).

There are significant differences in the pattern of currency diversification between industrial and developing countries (see Table I.2). During the period 1981-86, the industrial countries experienced greater diversification of reserve holdings than the developing countries. The industrial countries’ share of dollar-denominated reserves decreased by 9 percent during this period, whereas the developing countries’ share fell by 1 percentage point. Since 1986, moreover, the share of the dollar in the total reserve holdings by developing countries has fallen by 1 percentage point, compared with a decrease of 15 points for industrial countries. In addition, while industrial countries increased the share of the deutsche mark and the Japanese yen in their reserve portfolios by 11 and 6 percentage points, respectively, since 1981, developing countries decreased the share of reserves denominated in deutsche mark by 1 percentage point and increased the share of the Japanese yen by 3 percentage points.

Placement of Official Holdings of Foreign Exchange

Total official holdings of foreign exchange reserves increased during 1990 by SDR 47 billion (Table I.4). The increase was largely due to a sharp rise in the residual which could reflect either higher reserves on the part of nonreporting countries or an increase in the reserves of reporting countries held in currencies not listed in the table.

Table I.4.

Placement of Official Holdings of Foreign Exchange Reserves, End of Year 1983-90 1

(In billions of SDRs)

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Sources: International Monetary Fund, International Financial Statistics; U.S. Treasury Department, Bulletin; Bank of England, Quarterly Bulletin; BIS, International Banking and Financial Market Developments.

Official foreign exchange reserves of Fund members and certain other countries and areas, including Switzerland. Beginning in April 1978,, Saudi Arabia holdings exclude the foreign exchange cover against a note issue, which amounted to SDR 4.3 billion at the end of March 1978.

The upward revision in the residual for 1989 and the higher level noted in 1990 reflect a change in compilation procedures to adhere more closely to reported rather than estimated data.

Mainly dollars deposited with the European Monetary Cooperation Fund in connection with the issuance of ECUs, U.S. obligations to official institutions in countries not reporting to the Fund, and U.S. obligations that are not classified as foreign exchange reserves in the reports provided to the Fund by the holders.

Part of this residual occurs because some member countries do not classify all the foreign exchange claims that they report to the Fund. Includes identified official claims on the International Bank for Reconstruction and Development, on the International Development Association, and the statistical discrepancy.

Identified official Eurocurrency holdings apart from Eurodollar reserves showed an increase of SDR 8 billion between 1989 and 1990, representing a 13 percent rise. In addition, official claims on residents of countries other than the United States, denominated in the debtor’s currency, grew by SDR 13 billion from 1989 to 1990, an increase of 12 percent.

APPENDIX II: Operations and Financial Transactions of the Fund

The tables in this appendix supplement the information given in the section on the Fund in 1990/91 on the activities of the Fund during the financial year ended April 30, 1991.

Table II.1.

Summary of Arrangements Approved During the Financial Years Ended April 30, 1953—91

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Amount committed is based on total access to SDA resources of 70 percent of quota.

Includes amounts previously committed under SAF arrangements that were replaced by ESAF arrangements.

Table II.2.

Arrangements in Effect as of Financial Years Ended April 30, 1953-91

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For 1991, the number of arrangements includes three cases where the three-year commitment period has expired but the third annual arrangement remains in effect. The committed amounts exclude these cases.

Includes amounts previously committed under SAF arrangements that were replaced by ESAF arrangements.

Table II.3.

Stand-By and Extended Fund Facility Arrangements in Effect During the Financial Year Ended April 30, 1991

(In millions of SDRs)

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Sources: The World Bank; and Fund staff estimates.

Approved in 1989/90 unless otherwise noted.

Total number of stand-by or extended arrangements approved for member since 1953.

First credit tranche arrangement.

Amount decreased from SDR 1,104 million.

Approved in 1988/89, extended from March 31, 1990 and amount decreased from SDR 69.53 million.

Amount decreased from SDR 175.8 million.

Extended from July 12, 1991.

Approved in 1988/89 and extended from October 4, 1989.

Approved in 1988/89, extended from March 27, 1990 and June 30, 1990.

Amount approved includes augmentation for interest support of SDR 466.2 million.

Canceled prior to original expiration date of May 22, 1992.

Approved in 1988/89 and amount decreased from SDR 207.3 million.

Amount approved includes augmentation for interest support of SDR 154 million. Extended from June 22, 1992.

Table II.4.

Arrangements Under the Structural Adjustment Facility Through Financial Year Ended April 30, 1991

(In millions of SDRs)

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All amounts are at the 70 percent access level except those that have been reduced to account for the expiration of the commitment period: Guinea reduced SDR 11.58 million, Guinea Bissau SDR 1.50 million, Haiti SDR 22.05 million, Sierra Leone SDR 28.95 million, Somalia SDR 22.10 million, and Zaïre SDR 58.20 million.

See Table II.6 for undisbursed amounts that were subsequently committed under an ESAF arrangement that replaced the SAF arrangement on date shown as SAF expiration date.

For the Central African Republic, Chad, and Sri Lanka, the three-year commitment period has expired, but the third annual SAF arrangement will not expire until May 24, 1991, May 15, 1991, and October 21, 1991 respectively.

Table II.5.

Arrangements Under the Enhanced Structural Adjustment Facility Through Financial Year Ended April 30, 1991

(In millions of SDRs)

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Financed with drawings under the following ESAF borrowing agreements: Export-Import Bank of Japan (SDR 318.6 million); Caisse Centrale de Cooperation Economique- France (SDR 244.5 million); Bank of Spain (SDR 28.2 million); Canada (SDR 31.2 million); the Bank of Norway (SDR 11.2 million); Korea (SDR 6.8 million); Ufficio Italiano dei Cambi (SDR 17.2 million), and Kreditanstalt fur Wiederaufbau—Germany (SDR 43.1 million). The balance of SDR 110.1 million was financed using resources available under the borrowing agreement with the Swiss Confederation

Table II.6.

Summary of Disbursements, Repurchases, and Repayments, Financial Years Ended April 30,1948-91

(In millions of SDRs)

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Includes reserve tranche purchases.

Includes SDR 351.84 million of SAF resources disbursed under ESAF arrangements.

Table II.7.

Purchases from the Fund, Financial Year Ended April 30, 1991

(In millions of SDRs)

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During 1990/91, no purchases were made under the cereal component of the compensatory and contingency financing facility

Includes reserve tranche of SDR 707.45 million. Purchases excluding reserve tranche total SDR 6,248 million (see Table 2).

First credit tranche stand-by purchase.

Includes purchases of interest support of SDR 154 million and set-asides of SDR 463 million.

Table II.8.

Repurchases from the Fund, Financial Year Ended April 30, 1991

(In millions of SDRs)

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Details may not add due to rounding.

Table II.9.

Outstanding Fund Credit by Facility and Policy, April 30,1985-91

(In millions of SDRs)

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Includes outstanding first credit tranche and emergency purchases.

Details may not add due to rounding.

Table II.10.

Borrowed Resources and Repayments to Lenders (Excluding the GAB and ESAF), May 29,1980-April 30,1991

(In millions of SDRs)

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Composed of agreements with the Bank for International Settlements (BIS) (SDR 675 million), National Bank of Belgium (SDR 50 million), Swiss National Bank, Bank of England, Japan (SDR 150 million each), The Reserve Bank of Australia (SDR 50 million), Bank of Finland (SDR 30 million), and the Central Bank of Ireland (SDR 20 million). Another agreement for SDR 30 million was not drawn upon before it expired in view of lender’s weak balance of payments and reserve position.

Composed of agreements with the BIS, Japan, and the National Bank of Belgium and fully repaid by August 1988.

Agreement has expired and was fully repaid on November 6, 1989.

Fully committed by March 1981.

Table II.11.

Enhanced Structural Adjustment Facility—Contributions as of April 30,19911

(In millions of SDRs)

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Some of the contributions listed are subject to parliamentary approval or completion of other internal procedures.

The subsidy contributions listed take a variety of forms, including grants and the grant element of resources provided for the benefit of the ESAF at concessional rates of interest. Figures indicated are partly staff estimates taking into account information on the likely timing of subsidy contributions in relation to projected operational needs and estimated investment earnings on balances held by or for the benefit of the Subsidy Account. Amounts in parentheses represent estimates of the subsidy value of contributions at concessional interest rates or in the form of grants sufficient to reduce the effective interest rate on accompanying loans to 0.5 percent or less; in general, the calculated subsidy value of these contributions will rise or fall with increases or decreases in interest rates over time. The other amounts listed are based on specific grant amounts indicated by contributors. Contributions expressed in local currency are valued at April 30, 1991 exchange rates.

Loan contributions are provided either at concessional interest rates or on the basis of weighted averages of market interest rates in the five currencies comprising the SDR basket. The interest rate basis for one market-related loan is somewhat higher than for other loans.

Additional loan amounts up to SDR 0.3 billion could be provided by Japan, subject to the availability of further contributions to the Subsidy Account to subsidize those amounts down to 0.5 percent, and to the extent that total loan contributions do not there by exceed SDR 6 billion. With the possibility of this additional loan amount, the total of loan contributions could rise to up to SDR 5.6 billion.

Includes contributions that have not been announced publicly or have been advised but on which discussions are continuing.

Total may not add due to rounding. In addition, the sum of individual contributions has been adjusted downward to take account of the estimated added cost of interest and exchange rate charges.

Table II.12.

Summary of Transactions and Operations in SDRs, Financial Year Ended April 30, 1991

(In thousands of SDRs)

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In June 1990, the Executive Board of the Fund, following the merger of the Yemen Arab Republic and the People’s Democratic Republic of Yemen concluded that the Republic of Yemen is a single member of the Fund. Their positions were consolidated as of that date.

Table II.13.

Holdings of SDRs by All Participants and by Groups of Countries as Percent of Their Cumulative Allocations of SDRs and of Their Non-Gold Reserves, Financial Years Ended April 30,1970-91

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Source: International Monetary Fund, International Financial Statistics, various issues.

This category consists of member countries that are participants in the Fund’s SDR Department. At the end of the financial year 1991, of the total SDRs allocated to participants in the SDR Department (SDR 21.4 billion), SDR 0.72 billion was not held by participants but by the Fund (SDR 0.7 billion) and by prescribed holders (SDR 0.02 billion).

Table II.14.

Purchases and Subsidy Payments Under Supplementary Financing Facility, May 29,1980-April 30,1991

(In millions of SDRs)

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Members with per capita incomes equal to or below the level of per capita income used to determine eligibility for assistance from the International Development Association (IDA) are eligible for the full rate subsidy (not to exceed 3 percent per annum).

Subsidy paid in respect of Fund holdings in excess of 140 percent of quota under the Fund’s policy on exceptional use.

Subsidy paid in respect of Fund holdings in excess of 200 percent of quota under the Fund’s policy on exceptional use

Members with per capita incomes in excess of the IDA level but not more than the per capita income of the member with the highest per capita income in 1979 that was eligible to receive assistance from the Trust Fund.

Including SDR 2.5 million of subsidies approved but not paid to four members on account of nonpayment of SFF charges by these members

Total may not add up due to rounding.

Table II.15.

Key IMF Rates, May 1,1990-April 30,1991

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The rate of remuneration is adjusted downward in light of overdue charges so as to share the burden of protecting the Fund’s income. These burden-sharing amounts are refundable when overdue charges are paid.

The rate of charge is adjusted upward in light of overdue charges so as to share the burden of protecting the Fund’s income. These burden-sharing amounts are refundable when overdue charges are paid.

Table II.16.

Members That Have Accepted the Obligations of Article VIII, Sections 2, 3, and 4 of the Articles of Agreement

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Table II.17.

Exchange Rate Arrangements as of March 31,19911

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Current information relating to Cambodia is unavailable.

In all cases listed in this column, the U.S. dollar was the currency against which exchange rates showed limited flexibility.

This category consists of countries participating in the exchange rate mechanism of the European Monetary System. In each case, the exchange rate is maintained within a margin of 2.25 percent around the bilateral central rates against other participating currencies, with the exception of Spain and the United Kingdom in which case the exchange rate is maintained within a margin of 6 percent.

Member maintains exchange arrangements involving more than one exchange market. The arrangement shown is that maintained in the major market.

Exchange rates are determined on the basis of a fixed relationship to the SDR, within margins of up to ± 7.25 percent. However, because of the maintenance of a relatively stable relationship with the U.S. dollar, these margins are not always observed.

The exchange rate is maintained within margins of ± 7.5 percent.

The exchange rate is maintained within margins of ± 3.0 percent.

The exchange rate is maintained within margins of ± 5 percent on either side of a weighted composite of the currencies of the main trading partners.

The exchange rate is maintained within margins of ± 2.25 percent.

The exchange rate is maintained within margins of ± 5.0 percent.

The currency of Namibia is the South African rand, pending issuance of Namibia’s own national currency.

The exchange rate, which is pegged to the ECU, is maintained within margins of ± 2.25 percent.

The exchange rate is maintained within margins of ± 1.5 percent.

APPENDIX III: Technical Assistance and Training, Relations with International Organizations, and External Relations

Technical assistance and training are extended by the Fund to members in a wide range of economic and financial areas, either at Fund headquarters or through staff missions to a member country. Staff from almost every department and bureau of the Fund may be provided in response to a member’s request Assistance may relate to a whole range of subjects, including economic policy, balance of payments adjustment programs, legal matters, debt management, exchange and trade issues, financial sector topics, and accounting, statistics, and data processing.

The IMF Institute trains officials of member countries, both at headquarters and overseas, through courses and seminars held in Arabic, English, French, and Spanish. It also organizes briefings for visiting officials and provides lecturing assistance to training programs of member countries and other international organizations in areas of Fund expertise.

During 1990/91, training at headquarters consisted of 13 courses and three seminars for senior officials, attended by 498 participants. The program included two 12-week courses on financial programming and policy, four 10-week courses on techniques of financial analysis and programming, two 8-week courses on programming and policies for medium-term adjustment, and a 16-week course on financial analysis and policy. The financial programming and policy course covered financial programming and adjustment issues for officials with substantial macroeconomic training and practical experience; the course on techniques of financial analysis and programming provided a more elementary review of similar issues; technical and policy aspects of medium-term adjustment programs were emphasized in the course on programming and policies for medium-term adjustment; the long course on financial analysis and policy will not be presented in future years. Eight-week courses were presented on balance of payments methodology, money and banking statistics, and government finance statistics (in collaboration with the Statistics Department) and a 10-week course on public finance (in collaboration with the Fiscal Affairs Department). Seminars for senior officials were held on centrally planned economies in transition, on central banking (in collaboration with the Central Banking Department), and on social aspects of adjustment (in collaboration with the External Relations Department). The latter seminar was attended by officials of UN specialized agencies and regional offices.

The Institute conducted 18 overseas seminars and provided lecturing assistance to six training organizations in 1990/91. Five of these seminars were held in eastern European countries undergoing a transition from planned to market-oriented economies. The Institute also organized 20 briefings at headquarters for a total of 224 visiting officials.

The provision of technical assistance, for long an important part for the Fiscal Affairs Department’s activities, has increased appreciably in recent years. In 1990/91, assistance was provided to 67 countries. There were 111 missions and other short-term assignments by staff, consultants based at headquarters, and panel experts, and 36 long-term assignments by panel experts. Most of these indicators for 1990/91 point to an approximate doubling in technical assistance activity compared with three years earlier. Externally financed assignments, notably by the UN Development Program (UNDP) and the Japan Administered Account, have grown in importance. In 1990/91, they accounted for about 20 percent of the total use of panel experts on short-and long-term assignments.

The department’s technical assistance has continued to be concentrated in the areas of tax policy and administration, including customs, budget preparation and control, and government accounting and treasury management. In all these areas, the design of computerized systems has assumed increasing importance in recent years. Requests for technical assistance have also been diversifying into new areas, including the design of social benefits and social security systems, partly in order to cushion the impact of price reform and other adjustment measures on living standards.

As in previous years, most of the departments technical assistance was provided to support, whether directly or indirectly, countries’ efforts in connection with Fund-supported adjustment programs. The main change in the geographical distribution of the technical assistance in 1990/91 was the strongly increased level of activity in eastern Europe: missions, generally at least two, took place to all Fund member countries in the region. Countries in other parts of the world engaged in similar reorientations of their economic structures have also absorbed considerable assistance. At the same time, the provision of technical assistance to Africa, particularly to recently independent countries, has continued to expand in absolute terms as it has to Latin America. During the year, technical assistance, whether in the form of short-term missions or long-term expert assignments, was provided to all but a handful of the countries of Central and South America.

The Central Banking Department provides technical assistance on central banking and financial sector issues through the assignment of outside experts and through advisory missions involving staff and outside experts. The objective is to strengthen monetary policy management and the regulation and development of the financial system, often as part of structural reforms underlying Fund-supported adjustment programs.

In 1990/91, 194 experts and consultants were assigned to executive and advisory positions with central banks and monetary authorities of 65 member countries and four regional organizations, representing 268 assignments and totaling 81 man-years of assistance. Most of this assistance (85 percent) was in the broad areas of research and policy, bank regulation and supervision, and central banking operations. Assistance in central bank accounting, organization and methods, and external debt made up the remaining 15 percent. The first project document for UNDP-supported technical assistance to a member country was signed in April 1990. During the year, a total of 8 UNDP-supported assignments were initiated, equivalent to about 3 man-years. The Government of Japan, through the Japan Administered Account, provided grant funds, which enabled the Central Banking Department to undertake 6 assignments, equivalent to about 2 man-years.

During 1990, the Central Banking Department, in cooperation with the IMF Institute, conducted another Central Banking Seminar in the series of such seminars, with the participation of 30 senior officials from central banks and regional monetary institutions. The main theme was the role and functions of a central bank in a market-based economy. Guest speakers included governors and deputy governors from the central banks of several member countries and several other senior officials of international distinction.

Departmental staff carried out 45 advisory missions in 1990/91, giving advice on a wide range of policy issues including design of monetary instruments, development of money markets, bank regulation and supervision, recapitalization of central banks, the structure of the financial system, and (in cooperation with the Legal Department) banking legislation. In addition, departmental staff participated in one joint Bank-Fund advisory mission. The department became extensively involved in providing assistance to countries in eastern Europe. Policy-oriented research by the department in 1990/91 included completion of papers on issues in developing market-based methods of monetary control; sequencing of financial sector reforms; central bank independence and functions; and financial sector reform in eastern Europe. The department’s computerized data base on banking legislation was continuously updated during the year and is an important source of information for member countries and other departments of the Fund. It now contains the laws of the central banks or monetary authorities of 142 countries, and also the general banking laws of most of them.

The Statistics Department (known as the Bureau of Statistics prior to May 1, 1991) provides technical assistance aimed at improving the basis for macroeconomic analysis and the monitoring of economic developments. The principal areas of statistics covered are balance of payments, government finance, money and banking, and real sector data. In 1990/91, the program of technical assistance continued to focus attention on countries that were actual or prospective users of Fund resources or whose statistical infrastructure was at an early stage of development. Prominent among these were the eastern European countries that were undergoing major economic restructuring.

Technical assistance is primarily provided through staff visits to address methodological and technical issues in specific areas, and increasingly through multi-topic missions that respond to the need to address multiple problems within a consistent macroeconomic framework. From its beginnings in 1989/90, the program of medium-term and long-term technical assistance activities under the Executing Agency Agreement with the UNDP and resources provided from the Japan Administered Account also continued to expand. Specialized training to familiarize national statisticians with statistical methodologies and with their application was provided at headquarters and, in collaboration with the IMF Institute, courses were offered in money and banking, government finance, and balance of payments statistics.

A total of 37 technical assistance missions to 33 countries were undertaken. Of these, 8 were multi-topic missions. Training was provided at headquarters for 10 officials from 4 member countries. A seminar in government finance statistics was held in Australia for participants from the Asian-Pacific region and Statistics Department staff lectured at a seminar on financial statistics that was sponsored by the UNDP in Geneva. Statistics Department staff also lectured on balance of payments statistics at seminars organized by the Arab Monetary Fund and by the Eastern Caribbean Central Bank.

In 1990/91, the services of 4 resident advisors were provided to 3 countries under the Executing Agency Agreement with the UNDP or with financing from the Japan Administered Account. Medium-term and long-term technical assistance projects in 4 additional countries advanced to the implementation stage. The continued development of the program of longer-term technical assistance has made it possible for the Statistics Department to provide a much broader range of technical assistance in statistics and to address problems of institution building and the development of statistical infrastructure in a far more comprehensive manner than previously.

As in the past few years, technical assistance in the area of electronic data processing was restricted by tight budgetary policy, strict interpretation of the electronic data processing mission guidelines, and limited staff resources. The Fund’s management did, however, authorize the Bureau of Computing Services to undertake a few short-term missions to member countries (Jordan, Barbados) in direct support of the economic and financial work of the Fund. These missions provided narrowly focused advice on planning and developing systems for the automation of external debt data, implementation of time-series data bases, and guidance in the computerization of fiscal and administrative policy. Also, recently, in conjunction with Fund mission activities associated with UNDP-funded technical assistance projects for Angola, Myanmar, Namibia, and Viet Nam, the Bureau of Computing Services has been asked to actively assist the functional and area departments in structuring and monitoring the design and implementation of computing systems and automation training programs. The computing efforts will support the Fund technical assistance work program in the areas of central banking operation, tax administration, budget and treasury operations, and policy and planning.

With regard to computer training at headquarters during 1990/91, the Bureau continued to receive a large number of official visitors from 12 member countries and 5 international and regional organizations. Due to the expanding role of technology and the proliferation of microcomputers within member countries, there was particular interest in discussing and learning about the Fund’s experiences in developing and operating economic and financial data systems including data management software, and in electronic data and document access and exchange between member countries and the Fund. Technology training sessions typically consisted of 3-10 days of lectures, briefings, and demonstrations on strategic planning, management of large-scale data bases, statistical analysis and modeling, financial processing and reporting, office automation, and the use of microcomputers for desktop computing. Many country delegations were specifically interested in the hands-on, economist work station/Aremos one-week training session, which focused on data-base management, time-series programming facilities, estimation and modeling, graphics production, and report generation. During the past year, the Fund made available demonstration copies of the Aremos analytical software to ten member countries. Five countries have purchased the software and are now using it under the IMF site license agreement. Visiting officials were also interested in learning about the Fund’s application systems, training curriculum, and support provided for end-users.

Relations with Other International Organizations

Cooperation and maintenance of close relations with other international and regional organizations having related responsibilities or sharing common interests play an important role in enabling the Fund to fulfill its responsibilities with respect to international monetary and financial matters. Close ties are maintained with several organizations, including the United Nations, the Contracting Parties, to the General Agreement on Tariffs and Trade (GATT), the Organization for Economic Cooperation and Development (OECD), the Commission of the European Communities (CEC), and the Bank for International Settlements (BIS).

Liaison with these organizations is the special responsibility of the three offices of the Fund located away from headquarters. The Director of the Fund Office in the United Nations and the Special Representative to the United Nations is responsible for relations with the UN and its subsidiary bodies. The Office in Europe, in Paris, is particularly responsible for the Fund’s relations with the BIS, CEC, and OECD, while the Geneva Office maintains close relations with the GATT, the UN Conference on Trade and Development, and other UN organizations located in Geneva. Liaison activity includes attendance at meetings, participation in seminars and expert groups, and exchange of information and pertinent documents. The work of these offices is supplemented, as necessary, by assignment of staff and technical experts from headquarters, and by staff participation in meetings and seminars, such as those of the regional economic and financial organizations in Africa, Asia and the Pacific, Latin America and the Caribbean, and the Middle East, including the regional development banks.

The Fund and the World Bank enjoy a unique relationship, and collaboration between the two institutions has assumed a variety of forms, such as joint participation in missions, periodic attendance at each other’s Executive Board meetings, regular exchange of documents and information, and attendance at and participation in conferences and seminars. Fund staff attend a number of aid coordination meetings held under the auspices of the World Bank, including Aid Groups, Consultative Groups, and Donors Conferences.

As part of the long-standing cooperative arrangements with the GATT, the Fund provides pertinent documents and participates in meetings held by the GATT for consultations with common member countries on trade restrictions imposed for balance of payments purposes. In addition, meetings of the GATT Council of Representatives, as well as the annual session of the Contracting Parties to the GATT, are attended by Fund staff. Progress within the Uruguay Round of multilateral trade negotiations continues to be closely monitored by the Geneva Office and through staff attendance at meetings of many of the trade negotiating groups. Reflecting the importance to the Fund of the GATT’s work in this area, the Managing Director addressed the Ministerial Level Meeting of the Uruguay Round of Trade Negotiations Committee in Brussels on December 4, 1990.

The past year has witnessed a dramatic change in the orientation of the economies of central and eastern Europe, and the Fund has deepened its involvement with a number of international organizations that are currently engaged in, or actively considering, support for the reform efforts under way in the region. Staff members were involved in the preparation of a detailed study of the economy of the U.S.S.R., which was issued in December 1990. The study was prepared jointly by Fund staff and the staffs of the World Bank and OECD, and by consultants to the designated President of the European Bank for Reconstruction and Development.

The Managing Director participated in a number of meetings sponsored by various international and regional organizations, most notably the United Nations, where he attended regular meetings of the Administrative Committee on Coordination (ACC) and the Economic and Social Council (ECOSOC). On July 11, 1990, he addressed the second regular session of ECOSOC in Geneva. The Managing Director also addressed the UN Conference on Least Developed Countries in Paris, on September 11, 1990, and the Second Committee of the UN General Assembly in New York, on October 22, 1990. On April 18, 1991, he attended the inaugural ceremonies of the European Bank for Reconstruction and Development (EBRD) in London.

External Relations

Public interest in the work of the Fund continued to grow during 1990/91, and the Fund further broadened its efforts to explain its work and policies to a wider audience.

The increased level of attention given to the Fund, both by the media and the general public, was stimulated by events in the Middle East, and the Fund’s response; the evolving reform process in eastern Europe; the IMF-convened study on the economy of the Soviet Union; the completion of work on the Ninth General Review of Quotas and the move toward adoption of the Third Amendment to the Articles of Agreement; the Fund’s continuing role in the debt strategy; and the addition of new members. To help satisfy this expanding interest, the Managing Director and senior staff delivered speeches on a broad range of economic issues at both international and national forums. Staff members also delivered papers and participated in a wide variety of conferences, seminars, and symposiums. The seminar program for nonofficials continued to play an important part in the Fund’s external relations efforts. Two seminars were held: one in San Jose, Costa Rica, in November 1990, and one in Baden, Austria, in April 1991. Also, a high-level symposium for African central bank governors, academics, and others took place in Gaborone, Botswana, in February 1991.

The Fund developed its contacts with the international news media during the financial year. Management and senior staff played an active role in expanding these contacts through interviews, press conferences, and briefings for the press to explain major issues and developments, and by participating in seminars for the media designed to broaden knowledge about the institution and its functions. At headquarters and during information missions, the external relations staff gave presentations on the role and work of the Fund to representatives of the press and to academic, business, financial, labor, and political groups from Africa, Asia, Europe, Latin America and the Caribbean, and North America.

In the audio-visual field, work was completed during the financial year on a film series entitled “One World—One Economy.” This series consists of four separate films. An introductory film examines the myths and realities surrounding the Fund and clarifies its role as consultant, advisor, monitor, and lender to its member countries. The other three are country studies on Poland, Ghana, and Mexico. The series is available in a number of languages and broadcast standards and, together with an instructor’s guide, is being distributed worldwide to television stations, schools, and universities, as well as to the general public.

The IMF Visitors’ Center continued to be active in the organization of events for the local community and international visitors, with an increase in the number of seminars on international economic issues held within the Economic Forum and the International Seminar series. The Center hosted cultural events, such as art exhibitions, film screenings, and concerts, with an increase in the participation of embassies and Washington-based international organizations.

The active publications program of the Fund is a significant means of disseminating information about its work and about those international monetary and financial topics that relate to the Fund’s concerns. As has been the pattern of recent years, during 1990/91 the number of titles and the range of subject matter continued to expand. A number of publication series were redesigned during the year to enhance their appeal to the public. Following a survey of the audience for statistical publications, changes have been made in the frequency and content of some of these publications. In addition, plans were made to market International Financial Statistics data in CD-ROM form; the first test marketing was made in June 1991. Effective with the May 1990 issue, the biannual World Economic Outlook was published in French and Spanish, as well as in English. Both it, and the other publications in the World Economic and Financial Surveys and Occasional Papers series, attracted wide attention. A complete list of publications issued during the financial year appears in Table III.1

Table III.1

Publications Issued, Financial Year April 30, 1991

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Executive Directors and Staff

A list of Executive Directors and their voting power on April 30, 1991, is given in Appendix VI. The changes in membership of the Executive Board during 1990/91 are shown in Appendix VII.

In the financial year ended April 30, 1991, there were 138 appointments to the Fund’s regular staff and 106 separations. At the end of the financial year, the staff numbered 1,763 and was drawn from 104 countries.

APPENDIX IV: Principal Policy Decisions of the Executive Board

A. Surveillance Over Members’ Exchange Rate Policies
(a) Extension of Period for Reviews

In Decision No. 8857-(88/64)1 and in Decision No. 8858-(88/64),2 as amended, “June 30, 1990” shall be replaced by “July 31, 1990.”

Decision No. 9492-(90/107) July 3, 1990

(b) Review of Implementation of Procedures and 1977 Document

1. The Executive Board has reviewed the general implementation of the Fund’s surveillance over members’ exchange rate policies, as required by paragraph VI of Procedures for Surveillance contained in the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63),3 adopted April 29, 1977, as amended, including the procedures for the conduct of consultations under Article IV, which in principle shall comprehend the regular consultations under Article VIII and Article XIV, and approves the modifications of the procedures as described [in the staff paper], in the light of the Managing Director’s summing up, until the next review, which shall be conducted not later than July 11, 1992.

2. The Executive Board also has reviewed the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63),3 adopted April 29, 1977, as amended, as required by paragraph 2 of that decision. The next review of the document shall be conducted not later than July 11, 1992.

Decision No. 9499-(90/111)

July 11, 1990

(c) Amendment of Procedures

The fourth sentence of Section II of Procedures for Surveillance contained in the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63),3 adopted April 29, 1977, as amended, shall be amended to read as follows:

Not later than three months after the termination of discussions between the member and the staff, the Executive Board shall reach conclusions and thereby complete the consultation under Article IV, Section 3, provided that an interim consultation shall be completed without conclusions unless, within two weeks after the date of the circulation of the staff report to the Board, an Executive Director requests discussion by the Executive Board of the staff report or the Managing Director places the staff report for discussion on the agenda of the Executive Board.

Decision No. 9637-(91/15)

February 8, 1991

B. Policy on Enlarged Access to the Fund’s Resources
(a) Modalities for Financing—Substitution of Ordinary for Borrowed Resources

1. Whenever the Fund has disbursed all resources borrowed for the financing of purchases under the Enlarged Access Policy, ordinary resources shall be substituted for borrowed resources in financing purchases made under arrangements under the Enlarged Access Policy that have been approved prior to, or will be approved after, the date of this decision, provided that this decision shall only apply to arrangements approved not later than the date on which the requirement for the effectiveness of increases in quotas under the Ninth General Review of Quotas specified in paragraph 3 of the Resolution of the Board of Governors No. 45-2 has been fulfilled, or December 31, 1991, whichever is earlier.

2. In Decision No. 6783-(81/40),4 adopted March 11, 1981, as amended, borrowed resources shall be deemed to include ordinary resources of the Fund that are substituted for borrowed resources (“substituted resources”), except in paragraphs 10(b) and 14 of that decision. The Fund will state, for each purchase involving substituted resources, the amount of substituted resources used in such purchase.

3. The Fund will review this decision at the same time as it reviews Decision No. 6783-(81/40),4 adopted March 11, 1981, as amended.

Decision No. 9546-(90/145)

September 17, 1990

(b) Modalities for Financing—Amendment of Rule 1-6(4)

In Rule 1-6(4), the following shall be added in the introductory paragraph after “(Executive Board Decision No. 8955-(88/126)),”:

or (vii) of resources substituted for borrowed resources under the Policy on Enlarged Access (Executive Board Decision No. 6783-(81/40), as amended) pursuant to Executive Board Decision No. 9546-(90/145), adopted September 17, 1990.

Decision No. 9547-(90/145)

September 17, 1990

(c) Amendment of Guidelines on Access Limits

The third sentence of paragraph (a) of Decision No. 7600-(84/3),5 adopted January 6, 1984, as amended, shall be amended to read as follows:

Access by members to the Fund’s general resources under arrangements approved under Decision No. 6783-(81/40)4 during 1986, 1987, 1988, 1989, and the period until the date on which the requirement for the effectiveness of increases in quotas under the Ninth General Review of Quotas specified in paragraph 3 of the proposed Resolution of the Board of Governors on the Ninth General Review of Quotas,6 attached to Decision No. 9436-(90/79), adopted by the Executive Board on May 21, 1990, has been fulfilled shall be subject to annual limits of 90 or 110 percent of quota, three-year limits of 270 or 330 percent of quota, and cumulative limits of 400 or 440 percent of quota net of scheduled repurchases, depending on the seriousness of the member’s balance of payments needs and the strength of its adjustment effort, provided that, through December 31, 1991, the annual, three-year, and cumulative limits shall be 110 percent of quota, 330 percent of quota, and 440 percent of quota net of scheduled repurchases, respectively.

Decision No. 9584-(90/161)

November 15, 1990

C. Compensatory and Contingency Financing Facility
(a) Amendment

The following paragraphs of Decision No. 8955-(88/126),7 as amended, establishing the Compensatory and Contingency Financing Facility, shall be amended to read as follows:

12. (a) Subject to the provisions of subparagraphs (b) and (c) below, a member may expect that its request for a purchase on account of an export shortfall under this Section or Section IV will be met immediately, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

(i) 40 percent of the member’s quota, if the Fund is satisfied that the member will cooperate with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties; and

(ii) 65 percent of the member’s quota, if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which performance is broadly satisfactory, or if the Fund approves such an arrangement for the member at the time of the request, or if the member’s current and prospective policies are such as would, in the Fund’s view, meet such criteria.

(b) If the Fund considers that the record of the member’s cooperation with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties had not been satisfactory, the member may expect that its request for a purchase on account of an export shortfall under this Section or Section IV will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

(i) 20 percent of the member’s quota, if the Fund is satisfied that the member has taken action that gives, prior to submission of the request, a reasonable assurance that policies corrective of the member’s balance of payments problem will be adopted;

(ii) 40 percent of the member’s quota, if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which performance is broadly satisfactory, or if the Fund approves such an arrangement for the member at the time of the request, or if the member’s current and prospective policies are such as would, in the Fund’s view, meet such criteria; and

(iii) 65 percent of the member’s quota, if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which a review is completed by the Fund at the time of the request, or if the member’s policies in the recent past, as well as its current and prospective policies, are such as would, in the Fund’s view, continue to meet such criteria.

(c) Notwithstanding subparagraphs (a) and (b) above, if a member’s balance of payments position apart from the effects of the export shortfall is satisfactory, such member may expect that its request for a purchase on account of an export shortfall under this Section or Section IV will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed 83 percent of the member’s quota.

(d) Approval in principle of a Fund arrangement shall be deemed to fulfill the conditions in subparagraphs (a)(i) and (b)(i) above.

17. When approving a Fund arrangement, or when completing its review of an annual program supported by a multiyear Fund arrangement, the Fund will be prepared to decide, at the request of the member and subject to the provisions of this decision, that, should unfavorable deviations in the member’s balance of payments due to adverse external contingencies occur during the period of the program supported by the arrangement, it will provide to the member external contingency financing in association with the arrangement.

18. (a) Such external contingency financing will only be provided in association with a Fund arrangement, generally on the basis of a review by the Executive Board, to a member facing unanticipated deviations from the baseline projections of key external variables of the member’s current account that are highly volatile and easily identifiable and that relate to the specified external contingencies during the period of the projections (hereinafter called the “baseline period”), if:

(i) the deviations from the baseline projections are outside of the control of the member;

(ii) the member’s performance under the associated Fund arrangement is satisfactory; and

(iii) the member is prepared to adapt its adjustment policies as may be necessary to ensure the viability of the program supported by the associated arrangement through a mix of adjustment and financing appropriate to the circumstances of the member.

(b) The need for financing to be provided on account of external contingencies pursuant to this Section will be established after taking into account the extent to which the effects of unanticipated deviations in external contingencies affecting the member’s current account that have not been specified pursuant to paragraph 19(a)(i) largely offset the effects of deviations in the external contingencies that have been so specified.

(c) Such financing will be limited to the extent that the amount of the member’s balance of payments deficit that exists at the time of the member’s request for a contingency purchase exceeds the corresponding amount specified in the member’s then current program supported by the associated Fund arrangement.

19.(a) When the Fund approves an arrangement, or when the Fund completes its review of an annual program supported by a multiyear Fund arrangement, in association with which external contingency financing is to be provided under this Section, it will specify for the arrangement:

(i) the external contingencies that will be taken into account;

(ii) the maximum amount of purchases that may be permitted in case of unfavorable external contingent deviations;

(iii) the minimum threshold, which shall generally be 10 percent of the member’s quota, that must be exceeded by the applicable net sum of deviations, cumulated from the beginning of the baseline period, before external contingency purchases may be permitted or adjustments pursuant to paragraph 27 may be required;

(iv) the proportion of the applicable net sum of deviations that may be financed under this Section, subject to any subsequent changes that may be required pursuant to paragraph 18(a)(iii) to ensure the viability of the member’s program supported by the arrangement; and

(v) the maximum amount by which the associated arrangement could be reduced or other adjustments pursuant to paragraph 27 could be required in case of favorable external contingent deviations, which amount will normally be the same as the amount specified pursuant to (ii) above.

(b) For purposes of this Section, the expression “net sum of deviations” shall mean the net aggregate effect on the member’s balance of payments of deviations in the variables relating to the external contingencies specified pursuant to subparagraph (a)(i) above; and the expression “applicable net sum of deviations” shall mean the net sum of deviations in the situations covered by paragraph 20(b) or the net sum of deviations adjusted for the limit on interest cost deviations in the situations covered by paragraph 20(c), as appropriate.

(c) The Fund shall determine the length of each baseline period, which shall generally be from twelve to eighteen months, and the maximum amount of external contingency purchases that may be permitted on account of deviations that occur during such baseline period.

(d) When a member makes a request under paragraph 17, every effort will be made to obtain contingent financing from other sources.

20 (a) Subject to the limitations specified by this Decision, the amount of an external contingency purchase under this Section shall be determined on the basis of the applicable net sum of the deviations in accordance with subparagraphs (b) and (c) below. Deviations will be calculated in relation to baseline projections established for each period.

(b) Except as provided in subparagraph (c) below, the amount that may be financed under this Section shall be determined as the net sum of deviations reduced by the equivalent Of the minimum threshold specified pursuant to paragraph 19(a)(iii) and subsequently multiplied by the proportion specified pursuant to paragraph 19(a)(iv).

(c) In case of a favorable or unfavorable deviation in net interest costs that, when multiplied by the proportion specified pursuant to paragraph 19(a)(iv), would exceed the percentage of the member’s quota that is available for purchases under paragraph 21(a), the amount that may be financed under this Section shall be determined as the sum of:

(i) the net aggregate amount of the deviations, other than a deviation in net interest costs, multiplied by the proportion specified pursuant to paragraph 19(a)(iv); and

(ii) the amount of the deviation in net interest costs reduced by the equivalent of the minimum threshold specified pursuant to paragraph 19(a)(iii) and multiplied by the same proportion, up to a limit equivalent to the percentage of the member’s quota available for purchases under paragraph 21(a), except that any excess of a favorable or unfavorable deviation in net interest costs over such limit shall be included in the calculation as required to avoid or to reduce an unfavorable or favorable net sum of deviations;

For the cases covered by this subparagraph (c), the net sum of deviations shall be determined by dividing the amount that may be financed by the proportion specified pursuant to paragraph 19(a)(iv) and by adding an amount equivalent to the minimum threshold specified pursuant to paragraph 19(a)(iii).

(d) Once the threshold adjustment in subparagraph (b) or subparagraph (c) above has been made for a purchase in respect of a baseline period, no further such adjustment shall be made for later purchases in respect of that period.

(e) Purchases under this Section shall be permitted only when the applicable net sum of deviations exceeds the minimum threshold specified by the Fund pursuant to paragraph 19(a)(iii), provided that in applying this subparagraph (e) the limit specified by subparagraph (c)(ii) above shall be disregarded.

21. (a) Subject to the other limitations on purchases specified in this Decision, the Fund’s holdings of a member’s currency resulting from purchases on account of deviations in net interest costs in association with all Fund arrangements for the member shall not exceed 35 percent of the member’s quota.

(b) For purposes of applying the imitation in subparagraph (a) above, when a purchase under this Section is attributable to unfavorable deviations in net interest costs and in one or more other variables relating to external contingencies, the portion of the purchase that is to be allocated to a deviation in net interest costs shall be determined on the basis of the share of such deviation in the applicable net sum of deviations, and in determining this share the portion of the threshold reduction in paragraph 20(b) that is to be allocated to net interest costs shall be determined on the same basis.

27. If, in respect of any baseline period, the Fund finds that a favorable applicable net sum of deviations with respect to the contingencies specified pursuant to paragraph 19(a)(i) has occurred, the following provisions shall apply, subject to the maximum amount specified pursuant to paragraph 19(a)(v) and only if such net sum of deviations has not been largely offset by the effects of unanticipated deviations in external contingencies affecting the member’s current account that have not been specified pursuant to paragraph 19(a)(i):

(a) When no purchase under this Section has been made by the member in respect of the baseline period for which the Fund makes such finding, as a preference, the limits on, or objectives for, the member’s reserves under the associated Fund arrangement shall be increased or, as a second option, the amount of the associated Fund arrangement shall be reduced, or both, as determined by the Fund, by an amount that shall be equivalent to a substantial part of the applicable net sum of deviations not exceeding the amount that would have been financed under this Section if the applicable net sum of deviations would have been unfavorable; and

(b) When one or more purchases under this Section had earlier been made by the member in respect of the baseline period for which the Fund makes such finding, as a preference, the limits on, or objectives for, the member’s reserves under the associated Fund arrangement shall be increased or, as a second option, the amount of the associated Fund arrangement shall be reduced, or both, as determined by the Fund, by an amount that shall be equivalent to a substantial part of the applicable net sum of deviations not exceeding the amount that would have been financed under this Section if the applicable net sum of deviations that have occurred since the latest of any such earlier purchases would have been unfavorable, provided that the member may choose to substitute for a reduction of the amount of the arrangement a repurchase of a corresponding amount of the Fund’s holdings of the member’s currency in respect of such earlier purchases.

28. Until June 30, 1994, the Fund will be prepared to extend financial assistance subject to the provisions of this Decision to members that encounter a balance of payments difficulty produced by an excess in the cost of their cereal imports.

36. (a) The provisions of paragraph 12 shall apply to purchases on account of export shortfalls under this Section.

(b) Subject to the provisions of subparagraphs (c) and (d) below, a member may expect that its request for a purchase on account of an excess in cereal import costs under this Section will be met immediately, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

(i) 17 percent of the member’s quota, if the Fund is satisfied that the member will cooperate with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties; and

(ii) 42 percent of the member’s quota, if the member has a Fund arrangement, supporting a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which performance is broadly satisfactory, or if the Fund approves such an arrangement at the time of the request, or if the member’s current and prospective policies are such as would, in the Fund’s view, meet such criteria.

(c) If the Fund considers that the record of the member’s cooperation with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties had not been satisfactory, the member may expect that its request for a purchase on account of an excess in cereal import costs under this Section will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

(i) 17 percent of the member’s quota, if the Fund is satisfied that the member has taken action that gives, prior to submission of the request, a reasonable assurance that policies corrective of the member’s balance of payments problem will be adopted; and

(ii) 42 percent of the member’s quota, if the member has a Fund arrangement, supporting a program that meets the criteria for the Use of the Fund’s general resources in the upper credit tranches, under which a review is completed by the Fund at the time of the request, or if the member’s policies in the recent past, as well as its current and prospective policies, are such as would, in the Fund’s view, continue to meet such criteria.

(d) Notwithstanding subparagraphs (b) and (c) above, if a member’s balance of payments position apart from the effects of the excess in cereal import costs is satisfactory, such member may expect that its request for a purchase on account of an excess in cereal import costs under this Section will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed 83 percent of the member’s quota.

(e) Approval in principle of a Fund arrangement shall be deemed to fulfill the conditions in subparagraphs (b)(i) and (c)(i) above.

46. The Fund will review this decision not later than July 16, 1992.

II.

Paragraph 41 of Decision No. 8955-(88/126),8 as amended, shall be deleted and the subsequent paragraphs shall be renumbered accordingly.

Decision No. 9503-(90/114)

July 16, 1990

(b) Amendment—Coverage of Services

(a) Paragraph 13 of Decision No. 8955-(88/126),8 adopted August 23, 1988, as amended, shall be amended to read as follows:

If, in the opinion of the Fund, adequate data on receipts from services other than investment income are available, the member requesting a purchase under this Section shall specify whether the receipts shall be included or excluded in the calculation of the shortfall. The choice by the member to include such receipts shall continue to apply for a period of three years.

(b) Paragraph 46 of Decision No. 8955-(88/126),8 adopted August 23, 1988, as amended, shall be renumbered paragraph 47, and the following paragraph shall be added as paragraph 46:

Notwithstanding paragraph 13, any member that has specified, for a purchase made prior to [the date of adoption of this decision], that receipts from travel and workers’ remittances shall be included in the calculation of the shortfall, shall specify, for the first purchase under Section II or Section IV following [the date of adoption of this decision], whether services shall be included or excluded in the calculation of the shortfall.

Decision No. 9586-(90/161)

November 15, 1990

(c) Amendment—Early Drawing Provision

Paragraph 14 of Decision No. 8955-(88/126),8 adopted August 23, 1988, as amended, shall be amended to read as follows:

The existence and amount of an export shortfall for the purpose of any purchase under this Section shall be determined with respect to the latest 12-month period preceding the request for which the Fund has sufficient statistical data, provided that a member may request a purchase in respect of a shortfall year for which not more than 12 months of the data on merchandise exports and on receipts from services are estimated.

Decision No. 9587-(90/161)

November 15, 1990

(d) Amendment—Contingency Mechanism

(a) Paragraph 17 of Decision No. 8955-(88/126),8 adopted August 23, 1988, as amended, shall be amended to read as follows:

When approving a Fund arrangement, or when completing a review under such an arrangement at least six months before the expiration date of the arrangement, the Fund will be prepared to decide, at the request of the member and subject to the provisions of this decision, that, should unfavorable deviations in the member’s balance of payments due to adverse external contingencies occur during the period of the program supported by the arrangement, it will provide to the member external contingency financing in association with the arrangement.

(b) The introductory sentence of paragraph 19 of Decision No. 8955-(88/126),9 adopted August 23, 1988, as amended, shall be amended to read as follows:

When the Fund approves an arrangement, or when the Fund completes a review under such an arrangement, in association with which external contingency financing is to be provided under this Section, it will specify for the arrangement: …

Decision No. 9588-(90/161)

November 15, 1990

(e) Amendment—Compensatory Financing of Fluctuations in Cost of Oil Imports

In Decision No. 8955-(88/126),9 adopted August 23, 1988, as amended, paragraph 1 shall be amended to read as follows:

The Fund is prepared to extend financial assistance, in accordance with the provisions of this Decision, to members that encounter balance of payments difficulties arising out of (i) temporary export shortfalls, (ii) adverse external contingencies, (iii) excess costs of cereal imports, or (iv) excess costs of oil imports.

Paragraph 6 shall be amended to read as follows:

The Fund shall indicate in an appropriate manner which purchases by a member are made pursuant to Section II, III, IV, or V of this Decision, and the export shortfall component, the cereal import cost component, and the oil import cost component of each purchase under Section IV or Section V.

Paragraph 8 shall be amended to read as follows:

(a) Subject to the other limitations on purchases specified by this Decision, the Fund’s holdings of a member’s currency resulting from purchases under this Decision shall not exceed any of the following access limits:

  • (i) a combined limit of 105 percent of the member’s quota for

    • — the sum of purchases on account of export shortfalls under Section II, Section IV, or Section V and purchases on account of external contingencies under Section III;

    • — the sum of purchases on account of export shortfalls under Section II, Section IV, or Section V and purchases on account of an excess in cereal import costs under Section IV or Section V;

    • — the sum of purchases on account of external contingencies under Section III and purchases on account of an excess in cereal import costs under Section IV or Section V;

    • — the sum of purchases on account of export shortfalls under Section II, Section IV, or Section V and purchases on account of excesses in oil import costs under Section V; and

    • — the sum of purchases on account of excesses in cereal import costs under Section IV or Section V and purchases on account of excesses in oil import costs under Section V.

  • (ii) a limit of 83 percent of the member’s quota for purchases on account of export shortfalls under Section II, Section IV, or Section V if at the time of the request for the purchase the member’s balance of payments position apart from the effects of the export shortfall is satisfactory, and a limit of 40 percent of the member’s quota for such purchases in all other cases;

  • (iii) a limit of 40 percent of the member’s quota for purchases on account of external contingencies under Section III;

  • (iv) a limit of 83 percent of the member’s quota for purchases on account of an excess in cereal import costs under Section IV or Section V if at the time of the request for the purchase the member’s balance of payments position apart from the effects of the excess in cereal import costs is satisfactory, and a limit of 17 percent of the member’s quota for such purchases in all other cases;

  • (v) a limit of 83 percent of the member’s quota for purchases on account of an excess in oil import costs under Section V if at the time of the request for the purchase the member’s balance of payments position apart from the effects of the excess in oil import costs is satisfactory, and a limit of 57 percent of the member’s quota for such purchases in all other cases; and

  • (vi) a combined limit of 122 percent of the member’s quota for the sum of purchases on account of export shortfalls under Section II, Section IV, or Section V, purchases on account of external contingencies under Section III, purchases on account of an excess in cereal import costs under Section IV or Section V, and purchases on account of an excess in oil import costs under Section V.

(b) Notwithstanding the provisions of subparagraph (a)(ii), (iii), (iv), and (v) above, the limits of 40, 17, and 57 percent above may be exceeded to permit additional purchases under this Decision, provided that the aggregate amount of the Fund’s holdings of the member’s currency resulting from such additional purchases shall not exceed 25 percent of the member’s quota.

The introductory sentence of paragraph 12(a) shall be amended to read as follows:

Subject to the provisions of subparagraphs (b) and (c) below, a member may expect that its request for a purchase on account of an export shortfall under this Section, Section IV, or Section V will be met immediately, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed: …

The introductory sentence of paragraph 12(b) shall be amended to read as follows:

If the Fund considers that the record of the member’s cooperation with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties had not been satisfactory, the member may expect that its request for a purchase on account of an export shortfall under this Section, Section IV, or Section V will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed: …

Paragraph 12(c) shall be amended to read as follows:

Notwithstanding subparagraphs (a) and (b) above, if a member’s balance of payments position apart from the effects of the export shortfall is satisfactory, such member may expect that its request for a purchase on account of an export shortfall under this Section, Section IV, or Section V will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed 83 percent of the member’s quota.

A new paragraph 12(e) shall be inserted as follows:

When a member has outstanding purchases on account of excesses in oil import costs under Section V, the limits in subparagraphs (a), (b), and (c) above shall be reduced in accordance with paragraph 49(f).

Paragraph 16(b) shall be amended to read as follows:

If a member requests a purchase under this Section in relation to a shortfall year that in whole or in part is included in the period of the two postshortfall years concerning any earlier purchase under this Section, Section IV, or Section V, the amount of the requested purchase shall be adjusted so as to take into account any amount by which such earlier purchase differs from the amount that could have been purchased on the basis of data available at the time of the request.

Paragraph 29 shall be amended to read as follows:

For a period of three years from the date of a member’s first request for a purchase in respect of cereal imports under Decision No. 6860-(81/81),10 or under this Section or Section V, any purchases by the member in respect of its export shortfalls shall be made under this Section instead of under Section II of this Decision. The same provision shall apply if, after the end of the three-year period, the member makes a new purchase in respect of cereal imports under this Section or Section V.

The introductory sentence of paragraph 36(b) shall be amended to read as follows:

Subject to the provisions of subparagraphs (c) and (d) below, a member may expect that its request for a purchase on account of an excess in cereal import costs under this Section or Section V will be met immediately, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed: …

The introductory sentence of paragraph 36(c) shall be amended to read as follows:

If the Fund considers that the record of the member’s cooperation with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties had not been satisfactory, the member may expect that its request for a purchase on account of an excess in cereal import costs under this Section or Section V will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed: …

Paragraph 36(d) shall be amended to read as follows:

Notwithstanding subparagraphs (b) and (c) above, if a member’s balance of payments position apart from the effects of the excess in cereal import costs is satisfactory, such member may expect that its request for a purchase on account of an excess in cereal import costs under this Section or Section V will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed 83 percent of the member’s quota.

A new paragraph 36(f) shall be inserted as follows:

When a member has outstanding purchases on account of excesses in oil import costs under Section V, the limits in subparagraphs (b), (c), and (d) above shall be reduced in accordance with paragraph 49(f).

Paragraph 38(b) shall be amended to read as follows:

If a member requests a purchase under this Section in relation to a shortfall year that in whole or in part is included in the period of the two postshortfall years concerning any earlier purchase under Section II, Section V, or this Section, the amount of the requested purchase shall be adjusted so as to take into account any amount by which such earlier purchase differs from the amount that could have been purchased on the basis of data available at the time of the request.

A new Section V shall be inserted as follows:

Section V. Compensatory Financing of Fluctuations in the Cost of Oil Imports

41. Until December 31, 1991, the Fund will be prepared to extend financial assistance subject to the provisions of this Decision to members that encounter a balance of payments difficulty produced by an excess in the cost of their oil imports.

42. For the period from the date of a member’s first request for a purchase in respect of oil imports under this Section through December 31, 1991, any purchase by the member in respect of its export shortfalls or of its excesses in cereal import costs shall be made under this Section instead of under Section II or Section IV of this decision.

43. A member with balance of payments difficulties may expect that its request for a purchase under this Section will be met if the Fund is satisfied that:

(a) any shortfall in exports, any excess costs in oil imports, and any excess costs in cereal imports that result in a net shortfall in the member’s exports are of a short-term character and are largely attributable to circumstances beyond the control of the member, and

(b) the member satisfies the conditions of cooperation with the Fund in accordance with paragraph 49.

44. (a) Subject to the limits specified in paragraphs 8 and 49, a member may request a purchase under this Section for an amount equal to the net shortfall in its exports calculated as the sum of its export shortfall, the excess in its oil import costs, and, if cereal import costs are to be included in the calculation of the net shortfall in exports in accordance with paragraph 29, the excess in its cereal import costs.

(b) (i) For the calculation of the net shortfall in exports, an excess in exports shall be considered a negative shortfall in exports, a shortfall in oil import costs shall be considered a negative excess in oil import costs, and a shortfall in cereal import costs shall be considered a negative excess in cereal import costs.

  • (ii) An export shortfall shall be determined in accordance with Section II, and an excess in cereal import costs shall be determined in accordance with Section IV.

  • (iii)An excess in oil import costs shall be determined in accordance with paragraphs 45 and 46.

(c) For the purposes of this Section, oil imports will be understood to mean imports of crude petroleum, petroleum products, and natural gas. Such imports shall be included in the calculation of an excess in oil import costs to the extent that, in the opinion of the Fund, adequate data are available.

45. The existence and amount of an excess in the cost of oil imports shall be determined, for the purposes of purchases under this Section, with respect to the latest 12-month period preceding the request for which the Fund has sufficient statistical data, provided that the Fund may allow a member to make a purchase on the basis of estimated data in respect of a 12-month period ending not later than 12 months after the latest month for which the Fund has sufficient statistical data on the member’s oil import costs. The calculation of a member’s shortfall or excess in exports, of its excess or shortfall in the cost of oil imports, and of its excess or shortfall in the cost of cereal imports shall be made for the same 12-month period.

46. In order to identify more clearly what are to be regarded as excess costs of oil imports of a short-term character, the Fund, in consultation with the member concerned, will seek to establish reasonable estimates regarding the medium-term trend of the member’s oil import costs. For the purposes of this Section, the excess in a member’s oil imports for the 12-month period referred to in paragraph 45 shall be the amount by which the member’s oil imports in that 12-month period are more than the arithmetic average of the member’s oil imports for the 5-year period centered on that 12-month period.

47. The amount of a purchase under this Section, as defined in paragraph 44, may be on account of an export shortfall, on account of an excess in oil import costs, or on account of an excess in cereal import costs, or it may be on account of any combination of two or three of these components. The total amount of the purchase and the amount of each component are subject to the limits specified in paragraphs 8 and 49.

48. (a) The part of a purchase relating to an export shortfall, subject to the limits in paragraphs 8 and 49, shall not exceed the lesser of the export shortfall defined in paragraph 44(b)(ii) and the net shortfall in exports defined in paragraph 44(a).

(b) The part of a purchase relating to an excess in oil import costs, subject to the limits in paragraphs 8 and 49, shall not exceed the lesser of the excess in oil import costs defined in paragraph 44(b)(iii) and the net shortfall in exports defined in paragraph 44(a).

(c) The part of a purchase relating to an excess in cereal import costs, subject to the limits in paragraphs 8 and 49, shall not exceed the lesser of the export shortfall defined in paragraph 44(b)(ii) and the net shortfall in exports defined in paragraph 44(a).

49. (a) The provisions of paragraph 12 shall apply to purchases on account of export shortfalls under this Section.

(b) The provisions of paragraph 36 shall apply to purchases on account of excesses in cereal import costs under this Section.

(c) Subject to the provisions of subparagraphs (d) to (i) below, a member may expect that its request for a purchase on account of an excess in oil import costs under this Section will be met immediately, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

  • (i) 40 percent of the member’s quota if the Fund is satisfied that the member will cooperate with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties; and

  • (ii) 82 percent of the member’s quota if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which performance is broadly satisfactory, or if the Fund approves such an arrangement for the member at the time of the request, or if the member’s current and prospective policies are such as would, in the Fund’s view, meet such criteria.

(d) Subject to the provisions of subparagraphs (e) to (i) below, if the Fund considers that the record of the member’s cooperation with the Fund in an effort to find, where required, appropriate solutions for its balance of payments difficulties had not been satisfactory, the member may expect that its request for a purchase on account of an excess in oil import costs under this Section will be met, whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed:

  • (i) 20 percent of the member’s quota if the Fund is satisfied that the member has taken action that gives, prior to the submission of the request, a reasonable assurance that policies corrective of the member’s balance of payments problem will be adopted;

  • (ii) 40 percent of the member’s quota if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which performance is broadly satisfactory, or if the Fund approves such an arrangement for the member at the time of the request, or if the member’s current and prospective policies are such as would, in the Fund’s view, meet such criteria; and

  • (iii) 82 percent of the member’s quota if the member has a Fund arrangement, in support of a program that meets the criteria for the use of the Fund’s general resources in the upper credit tranches, under which a review is completed by the Fund at the time of the request, or if the member’s policies in the recent past, as well as its current and prospective policies, are such as would, in the Fund’s view, continue to meet such criteria.

(e) Notwithstanding subparagraphs (c) and (d) above, if a member’s balance of payments position apart from the effects of the excess in oil import costs is satisfactory, such member may expect that its request for a purchase on account of an excess in oil import costs under this Section will be met whenever the purchase would not cause the Fund’s holdings of the member’s currency resulting from such purchases to exceed 83 percent of the member’s quota.

(f) Notwithstanding subparagraphs (c), (d), and (e) above, the Fund’s holdings of a member’s currency resulting from purchases on account of excesses in oil import costs under this Section shall not exceed:

  • — in the case of a member falling under subparagraph (c)(i), (d)(i), or (d)(ii) above, the amount of access that remains available to the member for purchases on account of export shortfalls under Section II, Section IV, or this Section, and

  • — in the case of a member falling under subparagraph (c)(ii), (d)(iii), or (e) above, the amount of access that remains available to the member either for purchases on account of export shortfalls under Section II, Section IV, or this Section or for purchases on account of excesses in cereal import costs under Section IV or this Section.

When a member makes a purchase on account of an excess in oil import costs under this Section, the access limits in paragraph 12 for purchases on account of export shortfalls and the access limits in paragraph 36 for purchases on account of excesses in cereal import costs shall be reduced accordingly. If the member falls under subparagraph (c)(ii), (d)(iii), or (e) above, it shall, when requesting the purchase, specify, in accordance with this subparagraph, the extent to which this purchase shall reduce the access limits in paragraph 12 for purchases on account of export shortfalls and the access limits in paragraph 36 for purchases on account of excesses in cereal import costs.

(g) The Fund shall approve a member’s request for a purchase on account of an excess in oil import costs under subparagraph (c), (d), or (e) above only if it is satisfied that the member is pursuing appropriate energy policies.

(h) A purchase under subparagraph (c)(i) or (d)(i) above shall be approved by the Fund if the Fund is satisfied, based on a written statement submitted by the member, that the member will pursue appropriate macro-economic policies and objectives.

(i) Except in this subparagraph, when compensatory financing is phased in accordance with this subparagraph, references in this Decision to purchases on account of excesses in oil import costs under this Section shall be understood to apply to the amount of compensatory financing before phasing. Whenever estimated data are used for 9 months or more of the 12-month period referred to in paragraph 45, the amount of compensatory financing on account of an excess in oil import costs under this Section shall be phased in two purchases in accordance with this subparagraph. The member may expect that its request for the first purchase, which shall be for up to 65 percent of the amount, shall be met immediately. The member may expect that its request for the second purchase, which shall be for up to the difference between the amount recalculated on the basis of the actual data available at the time of the request and the amount of the first purchase, shall be met after actual data become available for at least 6 months of the 12-month period referred to in paragraph 45, provided that:

  • — if policy implementation by the member or the external circumstances of the member differ materially from that originally anticipated at the time of the request for the first purchase, the Fund may decide not to approve, or to reduce the amount available under, the second purchase, and

  • — if the sum of the first purchase and of the second purchase requested by the member exceeds the limit in this paragraph under which the first purchase was made, the second purchase shall be subject to the relevant provisions of subparagraph (c), (d), or (e) above instead of the provisions of this subparagraph.

(j) Without prejudice to subparagraph (g) above, approval in principle of a Fund arrangement shall be deemed to fulfill the conditions in subparagraphs (c)(i) and (d)(i) above.

50. A member shall allocate the amount of its purchase as between the export shortfall, the oil import, and the cereal import element, where the sum of the three components, each as limited by paragraph 8,

(a) exceeds the limit of 105 percent of the member’s quota, if, at the time of the request for the purchase, the member’s balance of payments position apart from the effects of the export shortfall, the excess in oil import costs, or the excess in cereal import costs is satisfactory; or

(b) exceeds the amount that the member may purchase pursuant to the access limits in paragraph 8, in all other cases.

51. (a) When a member has made a purchase under this Section on the basis of estimated statistical data and the amount of the purchase exceeds the amount that could have been purchased on the basis of actual statistical data, the member will be expected to make a prompt repurchase in respect of the outstanding purchase, in an amount equivalent to the excess.

(b) If a member requests a purchase under this Section in relation to a shortfall year that in whole or in part is included in the period of the two postshortfall years concerning any earlier purchase under Section II, Section IV, or this Section, the amount of the requested purchase shall be adjusted so as to take into account any amount by which such earlier purchase differs from the amount that could have been purchased on the basis of data available at the time of the request.

52. (a) Subject to paragraph 51(a), when a reduction in the Fund’s holdings of a member’s currency is attributed to a purchase under this Section, the member shall attribute that reduction between the outstanding oil import component, export shortfall component, and cereal import component of the purchase.

(b) When the Fund’s holdings of a member’s currency resulting from a purchase under this Section, Section II, or Section IV are reduced by the member’s repurchase or otherwise, the member’s access to the Fund’s resources under this Section will be restored pro tanto, subject to the limits in paragraphs 8 and 49.

53. (a) After the expiration of the period referred to in paragraph 42, the total amount of the export shortfall components and of the cereal import components of a member’s purchases outstanding under this Section shall be counted as having been purchased under Section II or Section IV, depending on the Section under which they would otherwise have been made.

(b) The provisions of Section II or of Section IV shall continue to apply to the export shortfall and cereal import components of a purchase under this Section after the expiration of the period referred to in paragraph 42 or the expiration of this Section.

Section V shall become Section VI, paragraphs 41 to 46 shall be renumbered 54 to 59, and paragraph 47 shall be renumbered 61. The first sentence of paragraph 57 shall be amended to read as follows:

If on August 23, 1988 the Fund’s holdings of a member’s currency resulting from purchases on account of export shortfalls exceed 65 percent of the member’s quota, purchases by the member on account of export shortfalls under Section II, Section IV, or Section V and purchases on account of external contingencies under Section III may be permitted, up to a transitional combined access limit for the sum of such purchases, in excess of the 105 percent and 122 percent limits specified in paragraph 8(a).

Paragraph 58 shall be amended to read as follows:

(a) Rule 1-6(4) shall be amended by inserting the following new subparagraph (vi):

or (vi) under the Compensatory and Contingency Financing Facility (Executive Board Decision No. 8955-(88/126), as amended).

(b) Decision No. 5703-(78/39)11 shall be amended by inserting the following clause in paragraph 1(a) immediately after the reference to Decision No. 6860-(81/81)12:

or the decision on the Compensatory and Contingency Financing Facility (Decision No. 8955-(88/126), as amended).

Paragraph 59 shall be amended to read as follows:

Notwithstanding paragraph 13, any member that has specified, for a purchase made prior to November 15, 1990, that receipts from travel and workers’ remittances shall be included in the calculation of the shortfall shall specify, for the first purchase under Section II, Section IV, or Section V following November 15, 1990, whether services shall be included or excluded in the calculation of the shortfall.

The following new paragraph 60 shall be inserted:

60. Notwithstanding paragraph 41, a purchase under Section V may be made after the date of expiration of that Section, if (i) it results from a request initiated before such date of expiration and relates to a net shortfall year ending not later than December 31, 1991, or (ii) it is a second purchase within the meaning of paragraph 49(i), and the first purchase was made prior to such date of expiration or was made pursuant to (i) above, provided that a first purchase within the meaning of paragraph 49(i) may not be made after June 30, 1992.

Decision No. 9604-(90/170)

December 5, 1990

D. Operational Budget—Method of Allocating Currencies—Operational Guidelines

The Executive Board approves the operational guidelines set out in the Annex.

Decision No. 9480-(90/103)

June 27, 1990

Annex

1. On the transfer side of the operational budget, currencies will be allocated in proportion to members’ gold and foreign exchange reserves, as reported in International Financial Statistics, provided that for the budgets before the March-May 1991 budget, the Fund’s holdings of a member’s currency in terms of quota shall not be reduced as a result of transfer allocations below a floor of one half of the average level, expressed as a percent of quota, at which the Fund would hold by the end of a budget period the currencies of members that are sufficiently strong to be included in the operational budget (excluding the U.S. dollar). The floor would be raised to two thirds of the average level of currencies in relation to quotas starting with the budget for the period March-May 1991;

2. The use of the U. S. Dollar in transfers shall be included in the operational budgets on the basis of ad hoc proposals and, to the extent feasible, the Fund will aim to maintain the Fund’s holdings of U.S. dollars close to the average level of the Fund’s holdings of currencies of other members that are sufficiently strong to be included in the operational budget;

3. On the receipts side of the operational budget, the currencies to be used in receipts will be allocated in proportion to the reserve tranche positions of those members included in the operational budget, provided that such use shall not raise the Fund’s holdings of such a member’s currency above its norm for remuneration;

4. The currencies of members with no outstanding purchases and with relatively large reserve tranche positions that were not considered sufficiently strong for inclusion in the operational budget would be used in receipts only, with their agreement;

5. The Fund will seek to maintain adequate working balances, of not less than 10 percent of quotas;

6. The Fund will review these guidelines before the end of 1991 or before the increase in quotas under the Ninth General Review will come into effect, whichever comes earlier.

E. Valuation of SDR
(a) SDR Valuation Basket

The Executive Board, having reviewed the list of the currencies, and the weights of these currencies, that determine the value of the special drawing right, in accordance with Decision No. 6631-(80/145) G/S,13 adopted September 17, 1980, decides that, with effect from January 1, 1991, the list of the currencies in the SDR valuation basket shall remain the same, and the weight of each of these currencies to be used to calculate the amount of each of these currencies in the basket will be as follows:

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Decision No. 9549-(90/146) G/S

Octobers, 1990

(b) Amendment to Rule O-1

In accordance with Executive Board Decision No. 6631-(80/145) G/S,13 adopted September 17, 1980, Executive Board Decision No. 9549-(90/146) G/S,14 adopted October 5, 1990, and the guidelines set out in Decision No. 8160-(85/186) G/S,15 adopted December 23, 1985, Rule O-1 shall read as follows, effective January 1, 1991:

Rule O-1. The value of the SDR shall be the sum of the values of the following amounts of the following currencies:

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Decision No. 9619-(91/1) G/S

December 31, 1990

F. Overdue Financial Obligations—Special Charges—Suspension of Application in General Resources Account

1. The Fund has reviewed Decision No. 8165-(85/189) G/TR,16 as amended.

2. The special charges on overdue repurchases and on overdue charges in the General Resources Account prescribed by Sections I and II of Decision No. 8165-(85/189) G/TR,16 as amended, shall cease to be levied on the following members:

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The suspension shall be effective May 1, 1991, or as of the date when the member’s overdue obligations to the Fund are equal to or below the level specified above, whichever is later.

3. The Fund will extend the suspension of special charges under paragraph 2 to any member presently in protracted arrears to the Fund as listed in the Annex to this decision if the Fund endorses a Fund-monitored or rights accumulation program for that member, or if the Fund determines that (i) the member is actively cooperating with the Fund toward the clearance of its arrears to the Fund, and (ii) the member has undertaken not to increase its overdue obligations to the Fund above a specified ceiling level. In this case, the suspension of special charges shall become effective as of the date of the Fund’s decision to add the member to the list under paragraph 2, or as of the date on which the member’s overdue obligations to the Fund are equal to or below the specified ceiling level, whichever is later.

4. If, after a suspension of special charges under paragraph 2, a member fails to make payment of any newly maturing obligation to the Fund or the equivalent thereof within ten business days of the due date of such obligation, the member shall be subject to special charges on the total of its overdue repurchases and charges in the General Resources Account to which special charges are applicable for as long as such payment is not made. In addition, such suspension shall cease as of the date on which a member fails to reduce its overdue obligations to the Fund to or below any ceiling level that becomes applicable after the effectiveness of suspension, for as long as the member’s overdue obligations to the Fund exceed that applicable ceiling level.

5. The Fund will review this decision not later than the next regular annual review of the system of special charges pursuant to Decision No. 8165-(85/189) G/TR,17 as amended.

Decision No. 9723-(91/63) G/TR

April 24, 1991

Annex List of Members in Protracted Arrears

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G. Debt-and Debt-Service Reduction Operations—Early Repurchase Expectations—Amendment

1. The following section shall be inserted as Section C in Decision No. 9331-(89/167),18 adopted December 19, 1989:

C. Release of Collateral Financed with Additional Resources

7. The provisions of this section shall apply when a member has purchased additional resources to finance the establishment of a collateral, and any portion of such collateral is released, subject to the following conditions:

  • (i) the member has not fully repurchased these additional resources from the Fund; and

  • (ii) the amount of the aggregate collateral that remains after this release is less than a threshold amount equal to:

    • — the sum of outstanding disbursements to the member of additional resources from the Fund and of additional funds for debt and debt service reduction from the World Bank and from regional development banks (“outstanding additional disbursements from international financial institutions”), minus

    • — any amounts that may have been used previously by the member for further debt or debt service reduction operations in accordance with paragraph 8 below.

8. If the member has not used an amount equivalent to the difference between the threshold amount and the remaining aggregate collateral (“excess release”) for further debt or debt service reduction operations within 12 months of the release, the Managing Director shall, after consultation with the member, promptly report the matter to the Executive Board. In this report, the Managing Director shall recommend that the Executive Board decide that the member is expected to make an early repurchase, or shall recommend such other action as may be appropriate.

9. The member will inform the Fund of the release of any portion of the aggregate collateral within 5 working days of such release, and of any use of the excess release for further debt or debt-service reduction operations within 30 days of such use.

10. The Fund may decide that the member shall be expected to repurchase, within 30 days of the decision or within such longer period as the Executive Board may decide, an amount equivalent to the portion of the excess release that was financed with additional resources from the Fund. For purposes of this Section, the portion of the excess release financed with additional resources from the Fund shall be calculated by applying the same proportion to the excess release as the amount of the member’s outstanding purchases from the Fund of additional resources bears to the total amount of outstanding additional disbursements from international financial institutions to the member.

2. Decision No. 9331-(89/167)19 shall be further amended as follows:

(a) Section C shall become Section D, and paragraphs 7 to 10 of the decision shall be renumbered paragraphs 11 to 14;

(b) The phrase “paragraph 3, 6 or 10” shall be substituted for the phrase “paragraph 3 or 6” in former paragraphs 7, 8, and 9 (new paragraphs 11, 12, and 13); and

(c) The phrase “Decision No. 9331-(89/167), as amended” shall be substituted for the phrase “Decision No. 9331-(89/167)”in former paragraph 8(b) and (c) (new paragraph 12(b) and (c)).

Decision No, 9693-(91/48)

April 3, 1991

H. Fund’s Income Position
(a) Rate of Charge as of November 1, 1990

Effective November 1, 1990, the proportion of the rate of charge referred to under paragraph 3 of Decision No. 9457-(90/89),20 shall be 87.8 percent.

Decision No. 9603-(90/170)

December 10, 1990

(b) Burden Sharing—Implementation in FY 1992
Section I. Principles of “Burden Sharing”

1. The financial consequences for the Fund which stem from the existence of overdue financial obligations shall be shared between debtor and creditor member countries.

2. The sharing shall be applied in a simultaneous and symmetrical fashion.

Section II. Determination of the Rate of Charge

1. The rate of charge for financial year 1992 referred to in Rule I-6(4)(a) shall be adjusted in accordance with the provisions of Section IV.

2. The rate of charge in force as of the end of financial year 1992, as adjusted under Section IV, shall continue to apply subsequently unless it is otherwise decided.

Section III. Amount for Special Contingent Account 1

An amount equivalent to 5 percent of the Fund’s reserves at the beginning of the financial year shall be generated during financial year 1992 in accordance with the provisions of Section IV, and shall be placed to the Special Contingent Account 1 referred to in Decision No. 9471-(90/98),21 adopted June 20, 1990.

Section IV. Implementation of Burden Sharing

1. During financial year 1992, notwithstanding Rule I-6(4)(a) and (b) and Rule 1-10, the rate of charge referred to in Rule 1-6(4) and the rate of remuneration prescribed in Rule 1-10 shall be adjusted in accordance with the provisions of this Section.

2. (a) In order to generate the amount to be placed to the Special Contingent Account 1 in accordance with Section III, the rate of charge, and, subject to the limitation in (c), the rate of remuneration shall be adjusted, in accordance with the provisions of this paragraph, so as to produce equal amounts of income.

(b) If income from charges becomes deferred during an adjustment period as defined in (d), the rate of charge and, subject to the limitation in (c), the rate of remuneration shall be further adjusted, in accordance with the provisions of this paragraph, so as to generate, in equal amounts, an additional amount of income equal to the amount of deferred charges. For the purposes of this provision, special charges on overdue financial obligations under Decision No. 8165-(85/189) G/TR,22 adopted December 30, 1985, as amended, shall not be taken into account.

(c) No adjustment in the rate of remuneration under this paragraph shall be carried to the point where the average remuneration coefficient would be reduced below 85 percent for an adjustment period.

(d) The adjustments under this paragraph shall be made as of May 1, 1991, August 1, 1991, November 1, 1991 and February 1, 1992:

  • — shortly after July 31 for the period from May 1 to July 31;

  • — shortly after October 31 for the period from August 1 to October 31;

  • — shortly after January 31 for the period from November 1 to January 31;

  • — shortly after April 30 for the period from February 1 to April 30;

(e) The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit in (c) above.

3. A midyear review of the Fund’s income position shall be held shortly after October 31, 1991. If, after any adjustment under paragraph 2, the actual net income for the first six months of the financial year, on an annual basis, is below the target amount for the year, by an amount equivalent to, or greater than, 2 percent of the Fund’s reserves at the beginning of the financial year, the Executive Board will consider how to deal with the situation. If by December 15 no agreement has been reached as a result of this consideration, the rate of charge shall be increased as of November 1 to the level necessary to reach the target amount of net income for the year.

4. (a) Subject to paragraph 3 of Decision No. 8780-(88/12),23 adopted January 29, 1988, the balances held in the Special Contingent Account 1 shall be distributed in accordance with the provisions of this paragraph to members that have paid additional charges or have received reduced remuneration as a result of the adjustment, when there are no outstanding overdue charges and repurchases, or at such earlier time as the Fund may decide.

(b) An amount equal to the proceeds of any adjustment for deferred charges shall be distributed, in accordance with the provisions of this paragraph, to members that have paid additional charges or have received reduced remuneration, when, and to the extent that, charges, the deferral of which had given rise to the same adjustment, are paid to the Fund. Distributions under this provision shall be made quarterly.

(c) Distributions under (a) or (b) shall be made in proportion to the amounts that have been paid or have not been received by each member as a result of the respective adjustments.

(d) If a member that is entitled to a payment under this paragraph has any overdue obligation to the Fund in the General Department at the time of payment, the member’s claim under this paragraph shall be set off against the Fund’s claim in accordance with Decision No. 8271-(86/74),24 adopted April 30, 1986, or any subsequent decision of the Fund.

(e) Subject to paragraph 4 of Decision No. 8780-(88/12),23 adopted January 29, 1988, if any loss is charged against the Special Contingent Account 1, it shall be recorded in accordance with the principles of proportionality set forth in (c).

Decision No. 9696-(91/49)

April 5, 1991

(c) Extended Burden Sharing—Review

Pursuant to Decision No. 9471-(90/98),25 adopted June 20, 1990, the Fund has reviewed the operation of the implementation of extended burden sharing, including the amounts of adjustments.

Decision No. 9697-91/49)

April 5, 1991

(d) Retroactive Reduction of Rate of Charge for FY 1991

Net income for financial year 1991 in excess of the target amount of 5 percent of the Fund’s reserves at the beginning of that financial year shall be used to reduce retroactively the proportion of the rate of charge to the SDR interest rate specified in paragraph 2 of Decision No. 9457-(90/89),26 adopted June 8, 1990, for the period May 1, 1990 to October 31, 1990, to 87.8 percent, and any excess amount remaining after such reduction shall be used to reduce further the proportion for the period May 1, 1990 to April 30, 1991.

Decision No. 9749-(91/77)

June 7, 1991

(e) Disposition of Net Income for FY 1991

The Fund’s net income for FY 1991, equal to SDR 69,848,835, shall be placed to the Special Reserve.

Decision No. 9750-(91/77)

June 7, 1991

(f) Net Income Target and Rate of Charge for FY 1992

1. In accordance with Rule I-6(4)(a), the target amount of net income for FY 1992 shall be 5 percent of the Fund’s reserves at the beginning of the financial year.

2. During FY 1992, and notwithstanding Rule 1-6(4), the rate of charge referred to in Rule 1-6(4) shall be a proportion of the SDR interest rate under Rule T-l.

3. Effective May 1, 1991, the proportion shall be 96.6 percent.

4. In accordance with Section IV, paragraph 3 of Decision No. 9696-(91/49),27 adopted April 5, 1991, a midyear review of the Fund’s income position shall be held shortly after October 31, 1991. At that time, the proportion of the SDR interest rate shall be reviewed on the basis of (i) the then prevailing SDR interest rate, and (ii) the revised estimated income and expense of the Fund during the year and the target amount of net income for the year. If after any adjustments under Section IV, paragraph 2, of Decision No. 9696-(91/49)27 actual net income for the first six months of the financial year, on an annual basis, is below the target amount for the year by an amount equal to, or greater than, 2 percent of the Fund’s reserves at the beginning of the financial year, the Executive Board will consider how to deal with the situation. If by December 15, 1991 no agreement has been reached as a result of this consideration, the proportion of the SDR interest rate shall be increased as of November 1, 1991 to the level necessary to reach the target amount of net income for the year.

5. When estimating income, no deduction shall be made for projected deferred income.

6. The Executive Board shall be notified, shortly after the end of each quarter, of the average rate of charge for the quarter.

Decision No. 9751-(91/77)

June 7, 1991

I. Structural Adjustment Facility, Enhanced Structural Adjustment Facility, and Enhanced Structural Adjustment Facility Trust
(a) Extension of Period for Reviews

a. The Fund decides that in Decision No. 9114-(89/40) SAF/ ESAF,28 adopted March 29, 1989, “June 30, 1990” shall be replaced by “July 31, 1990.”

b. The Fund, as Trustee, decides that in Decision No. 9119-(89/40) ESAF,29 adopted March 29, 1989, “June 30, 1990” shall be replaced by “July 31, 1990.”

Decision No. 9486-(90/105) SAF/ESAF

June 29, 1990

(b) Review of Operation

Pursuant to Decision No. 9114-(89/40) SAF/ESAF,28 adopted March 29, 1989, the Fund has reviewed the operation of the Structural Adjustment Facility, of the Enhanced Structural Adjustment Facility, and of the Enhanced Structural Adjustment Facility Trust. The operation of these facilities and of the Enhanced Structural Adjustment Facility Trust shall be further reviewed before July 31, 1991.

Decision No. 9487-(90/106) SAF/ESAF

July 2, 1990

J. Structural Adjustment Facility—Amendment

The Regulations for the Administration of the Structural Adjustment Facility, annexed to Decision No. 8238-(86/56) SAF,30 adopted March 26, 1986, as amended, shall be amended as follows:

(i) Paragraph 14(1) shall be amended to read:

(1) The amounts of such assistance shall be identified in any commitment, arrangement, or disbursement under the Enhanced Structural Adjustment Facility. They shall remain available for disbursement until the expiration of the commitment period under the three-year arrangement under the Enhanced Structural Adjustment Facility.

(ii) The following new subparagraph shall be added to paragraph 14:

(5) If a member has received loans from the Structural Adjustment Facility in conjunction with loans from the Enhanced Structural Adjustment Facility Trust, any payment made by the member for the discharge of an obligation under any such loan shall also be attributed to the obligation under the other loan having the same due date in proportion to the respective amounts of such obligations.

Decision No. 9490-(90/106) SAF

July 2, 1990

K. Enhanced Structural Adjustment Facility Trust
(a) Amendments

Section II, paragraph 2(d) of the Instrument to Establish the Enhanced Structural Adjustment Facility Trust annexed to Decision No. 8759-(87/176) ESAF,31 adopted December 18, 1987, as amended, shall be amended by adding the following sentence after the first sentence:

The Fund may increase, within the overall amount of resources committed under a three-year arrangement, the amount to be made available for the second disbursement under an annual arrangement to help meet adverse external contingencies occurring during the period of the arrangement.

Decision No. 9488-(90/106) ESAF

July 2, 1990

Section II, paragraph 1(d) of the Instrument to Establish the Enhanced Structural Adjustment Facility Trust annexed to Decision No. 8759-(87/176) ESAF,31 adopted December 18, 1987, as amended, shall be amended by substituting “1992” for “1990,” to read as follows: “(d) Commitments under three-year arrangements may be made during the period from January 1, 1988 to November 30, 1992.”

Decision No. 9555-(90/147) ESAF

September 24, 1990

(a) The following subparagraph shall be added to paragraph 1 of Section II of the Instrument to Establish the ESAF Trust (Annex to Decision No. 8759-(87/176) ESAF,31 adopted December 18, 1987, as amended), as subparagraph (e):

After the expiration of the third annual arrangement for an eligible member, the Trustee may approve an additional annual arrangement for that member, if it is satisfied that the performance of the member under the arrangement has been satisfactory and that the member has adopted appropriately strong measures in response to its external circumstances in an effort to strengthen substantially and in a sustainable manner its balance of payments position. Commitments under such additional annual arrangements shall be within the access limits determined in accordance with paragraph 2 of this Section, and may be made during the period specified in (d) above.

(b) Paragraph 2(d) of Section II of the Instrument to Establish the ESAF Trust (Annex to Decision No. 8759-(87/176) ESAF,31 as amended) shall be amended to read as follows:

The amount of resources committed to a qualifying member under a three-year arrangement and the amounts for the second-and third-year arrangements shall be reviewed at the time of the consideration of each annual program. The Fund may increase the overall amount of resources committed under a three-year arrangement, when increasing the amount to be made available for the second disbursement under an annual arrangement to help meet adverse external contingencies occurring during the period of the arrangement. The amounts committed to a member shall not be reduced because of developments in its balance of payments, unless such developments are substantially more favorable than envisaged at the time of approval of the three-year arrangement and the improvement for the member derives in particular from improvements in the external environment.

(c) Paragraph 3(c) of Section II of the Instrument to Establish the ESAF Trust (Annex to Decision No. 8759-(87/176) ESAF,32 as amended) shall be amended to read as follows:

No disbursement under any commitment to a member shall be made after the expiration of the period specified in Section III, paragraph 3.

Decision No. 9585-(90/161) ESAF

November 15, 1990

(b) Review of Access Limits

Pursuant to Section II, Paragraph 2(a) of the Instrument to Establish the Enhanced Structural Adjustment Facility Trust, the Fund as Trustee has reviewed the maximum limit and the exceptional maximum limit on access to the resources of the Enhanced Structural Adjustment Facility Trust established by Decision No. 8845-(88/61) ESAF,33 adopted April 20, 1988. These limits shall be further reviewed not later than July 31, 1991.

Decision No. 9489-(90/106) ESAF

July 2, 1990

L. Supplementary Financing Facility Subsidy Account—Additional Subsidy Payments for May 1, 1989 Through June 30,1989 and Subsidy Payments for July 1, 1989 Through June 30,1990

1. In accordance with the Instrument establishing the Supplementary Financing Facility Subsidy Account, as amended, additional subsidy payments shall be made with respect to charges paid on holdings of currency referred to in Section 7 of the Instrument for the period May 1, 1989 through June 30, 1989, in the amount indicated to each of the eligible members as listed in Column 2 of the attachment.

2. In accordance with the Instrument establishing the Supplementary Financing Facility Subsidy Account, as amended, subsidy payments shall be made with respect to charges paid on holdings of currency referred to in Section 7 of the Instrument for the period July 1, 1989 through June 30, 1990, in the amount indicated to each of the eligible members as listed in Column 5 of the attachment.

3. The subsidy payments shall be made to each eligible member on July 25, 1990, or as soon thereafter as the member has paid all outstanding charges, if any, on balances eligible for the subsidy.

Decision No. 9510-(90/122) SBS

July 25, 1990

Attachment

SFF Subsidy Account: Approved Disbursements and Proposed Disbursements for May-June 1989 and July 1989-June 1990

(In SDRs)

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These figures include SDR 2,535,384 withheld by the Fund pending payment of overdue SFF charges by members.—Indicates that the member has no outstanding purchases under the SFF for the period shown.

APPENDIX V: Press Communiqués of the Interim Committee and the Development Committee

Interim Committee of the Board of Governors on the International Monetary System PRESS Communiqués
Thirty-Fifth Meeting, Washington, September 23-24, 1990

1. The Interim Committee of the Board of Governors of the International Monetary Fund held its thirty-fifth meeting in Washington, D.C. on September 23-24, 1990 under the chairmanship of Mr. Michael H. Wilson, Minister of Finance of Canada. Mr. Michel Camdessus, Managing Director of the International Monetary Fund, participated in the meeting, which was also attended by observers from a number of international and regional organizations and from Switzerland.

2. The Committee noted that, after several years of rapid expansion, growth is continuing, albeit at a slower pace. The recent rise in the world price of oil, were it to continue, may contribute to cost-price pressures and moderate growth, especially in oil importing countries.

It is therefore important that fiscal and monetary policies continue to focus on improving the conditions for strong, sustainable non-inflationary growth over the medium term. Attempts to insulate domestic energy prices through subsidies or price controls, or to compensate for higher oil prices by increasing nominal wages, would only serve to fuel inflationary expectations and require, at a later stage, tighter fiscal and monetary policies. While the consequences of recent developments in the Middle East are likely to complicate the task of fiscal consolidation in a number of countries, the need for credible actions to lower fiscal deficits remains urgent. Stability-oriented monetary policy has a crucial role to play in preventing a wage-price spiral. It is also essential that both industrial and developing countries continue to implement structural reforms aimed at fostering energy conservation, boosting saving and capital formation and increasing efficiency through enhanced competition and liberalization of trade and domestic markets.

Such a policy stance in the face of recent events would contribute to strengthening the medium-and long-term outlook for the world economy and would help to maximize the gains expected from the accelerated integration of the European Community, the German unification, and the far-reaching changes now taking place in Central and Eastern Europe.

3. The Committee stressed that the resilience of the world economy and the success of market-oriented reforms and adjustment efforts in Central and Eastern Europe and in developing countries all depend importantly on an open, transparent, and competitive trading system. In this context, it strongly emphasized the vital importance of a successful Uruguay Round in reducing further the barriers to trade, in establishing trading rules and disciplines for the future, and in bringing into the multilateral trading system areas that have largely remained outside its framework. While welcoming the progress that has been made in certain areas of the Round, the Committee expressed deep concern over delays and noted that differences have yet to be resolved on several issues that are crucial to an overall agreement. The Committee urged all participants in the negotiations to make every effort to ensure a timely and successful conclusion of the Round and thereby create the conditions for higher rates of economic growth world wide.

4. The Committee welcomed the continuing examination by the Executive Board of major issues in the evolving international monetary system, including the implications of policies of major countries, the progress toward European Monetary Union, and the prospects for further moves toward convertibility in Eastern Europe, as well as work on exchange rate systems and on the determinants and systemic consequences of capital flows. The Committee emphasized the central responsibility of the Fund for evaluating continuously the functioning of the international monetary system and identifying improvements that could be implemented, especially through its bilateral and multilateral surveillance activities, support for the process of policy coordination, technical assistance, and its readiness to alleviate global liquidity shortages should they arise.

5. The Committee noted that once again unexpected events have adversely affected the world economy. The Committee welcomed the international efforts of individual countries to provide immediate and medium-term economic assistance to those countries seriously affected by the Persian Gulf crisis. It encouraged the Executive Board to continue to explore how the Fund can best support members’ efforts to deal with recent developments, including the increase in oil prices. Committee members noted that the Fund is well equipped to help members formulate appropriate and strong adjustment policies and catalyze support from other sources. The Committee agreed that the Fund should respond on an expedited basis to present difficulties through use and, as appropriate, adaptations of its existing instruments, including access to stand-by and extended arrangements, the Compensatory and Contingency Financing Facility, and the Enhanced Structural Adjustment Facility. The Committee invited the Executive Board expeditiously to develop the modalities of these adaptations and to take account of the requirements of current circumstances in tailoring members’ access to Fund resources, including ways to address the problems of certain members in servicing such new debt. The Committee hoped that all members that are in a position to do so will collaborate in these efforts to assist members that are severely affected by current developments in the Middle East.

6. The Committee welcomed the progress made by a number of heavily indebted countries in undertaking measures designed to restore macroeconomic balance and re-establish the conditions for sustained growth. The successful experience of these countries illustrates the central importance for members with debt difficulties of adopting policies to improve efficiency and to foster saving, investment, and private capital inflows, including a return of flight capital. It underscores also the crucial role of prompt and adequate external financing in support of such policies. The early and successful conclusion of financing arrangements in the context of the strengthened debt strategy has been a key element in fostering an improved economic performance in heavily indebted countries. The timely assistance of the Fund and the World Bank to these members in support of growth-oriented adjustment programs is of critical importance in their efforts to normalize relations with all external creditors and mobilize the necessary additional financial resources.

In this light, the Committee noted with concern the difficult prospects facing many low-income and lower middle-income countries indebted mainly to official creditors, and the likely worsening of payments imbalances in many countries on account of the recent developments in the Middle East, the Committee urged those countries to adopt and sustain the necessary corrective policies. The Committee also noted with concern the slow progress of some negotiations between commercial banks and members. With respect to commercial bank financing packages, it called on all parties concerned to expedite negotiations and resolve outstanding arrears problems. As regards official bilateral debts, the Committee welcomed the continuing support of creditors for members’ efforts to pursue adjustment and regain external viability. It noted in that connection the helpful actions taken by some creditor countries to provide new money or to reduce debt and debt service burdens, including through cancellation of official development assistance obligations. It also welcomed the recent decisions of the Paris Club to permit debt/equity and other debt conversion in reschedulings and to extend longer repayment periods on a case-by-case basis to lower middle-income countries, as well as the continuing review of additional options. It invited the Paris Club to consider recent initiatives and proposals to enlarge the scope of official debt relief. The Committee welcomed the U.S. effort to implement the “Enterprise for the Americas Initiative” designed to promote investment, growth, and debt reduction in Latin America.

7. The Committee welcomed the progress achieved in some Central and Eastern European countries in reducing imbalances and observed that the process of structural change on which the region is embarking will require action in many fields—particularly in light of recent oil market developments—and over an extended period. Safety nets will be necessary to protect the vulnerable segments of society. It will be important for these economies to be opened to foreign trade and investment as rapidly as possible. While remaining mindful of the need to continue to address the needs of other countries facing similar difficulties, the international community should support the programs of stabilization and reform of these countries by improving the access of their exports to world markets and increasing its financial and technical assistance. In this connection, the support provided by national governments and regional and multilateral institutions, and its effective coordination, were welcomed.

The Committee welcomed the entry of the Czech and Slovak Federal Republic and the prospective entry of Bulgaria and Namibia into the Bretton Woods institutions. Together with the membership applications of Mongolia and Switzerland, these developments enhance the universal character of the Fund and the Bank.

8. The Committee welcomed the role of the Fund in convening work, undertaken jointly with the World Bank, the OECD and the designated President of the EBRD, and in close consultation with the Commission of the European Communities, on a detailed study of the economy of the Soviet Union.

9. The Committee stressed the importance of bringing into effect the quota increases under the Ninth General Review at the earliest possible date, particularly in view of recent events and uncertainties in the world economy. The Committee called upon all members to consent to the quota increase and accept the associated Third Amendment of the Articles of Agreement as soon as possible.

10. The Committee agreed to hold its next meeting in Washington, D.C. on April 29, 1991.

Annex: Interim Committee Attendance

September 23-24, 1990

Chairman

Michael H. Wilson, Minister of Finance, Canada

Managing Director Michel Camdessus

Members or Alternates

Mohammad Abalkhail, Minister of Finance and National Economy, Saudi Arabia

Abubakar Alhaji, Minister of Finance and Economic Development, Nigeria

Pierre Bérégovoy, Minister of State for Economy, Finance, and the Budget, France

Nicholas F. Brady, Secretary of the Treasury, United States Zelia Maria Cardoso de Mello, Minister of Economy, Finance and

Planning, Brazil Guido Carli, Minister of the Treasury, Italy Madhu Dandavate, Minister of Finance, India Antonio Erman Gonzalez, Minister of Economy, Argentina Abderrahmane Hadj-Nacer, Governor, Banque Centrale d’Algerie Ryutaro Hashimoto, Minister of Finance, Japan Simon Crean, Minister of Science and Technology and Minister Assisting the Treasurer, Australia (Alternate for Paul J. Keating, Deputy Prime Minister and Treasurer, Australia) Wim Kok, Deputy Prime Minister and Minister of Finance,

Netherlands Rolf Kullberg, Governor, Bank of Finland CHEN Yuan, Deputy Governor, People’s Bank of China (Alternate for LI Guixian, State Councillor and Governor of the People’s Bank of China) John Major, Chancellor of the Exchequer, United Kingdom Philippe Maystadt, Minister of Finance, Belgium Adrianus Mooy, Governor, Bank of Indonesia PAY PAY wa Syakassighe, Governor, Banque du Zaïre Abdul Malik A1 Hamar, Governor, United Arab Emirates Central Bank (Alternate for Mohammed Mehdi Saleh, Acting Minister of Finance, Iraq) Pedro R. Tinoco, Jr., President, Banco Central de Venezuela Theo Waigel, Federal Minister of Finance, Germany John W. Crow, Governor, Bank of Canada (Alternate for Michael H. Wilson, Minister of Finance, Canada)

Observers

Rafeeuddin Ahmed, Under-Secretary-General for International

Economic and Social Affairs, UN Horst Bockelmann, Economic Adviser and Head of the Monetary and Economic Department, BIS

B.T.G. Chidzero, Chairman, Development Committee Henning Christophersen, Vice President, CEC Barber B. Conable, President, World Bank Kenneth K.S. Dadzie, Secretary-General, UNCTAD Arthur Dunkel, Director General, GATT

Markus Lusser, Chairman of the Governing Board, Swiss National Bank

Izevbuwa Osayimwese, Head, Economics and Finance Department, OPEC

Jean-Claude Paye, Secretary-General, OECD

Thirty-Sixth Meeting, Washington, April 29-30, 1991

1. The Interim Committee of the Board of Governors of the International Monetary Fund held its thirty-sixth meeting in Washington, D.C. on April 29-30, 1991 under the chairmanship of Mr. Michael H. Wilson, Minister of Industry, Science and Technology and Minister for International Trade of Canada. Mr. Michel Camdessus, Managing Director of the International Monetary Fund, participated in the meeting, which was also attended by observers from a number of international and regional organizations and from Switzerland. The Committee accepted with regret the resignation of Mr. Wilson as Chairman. It expressed its warmest thanks for his contribution to the work of the Committee and wished him well in his new responsibilities.

2. The Committee observed that the spike in oil prices in the second half of last year and the uncertainty triggered by the Middle East crisis had added to the weakening of world economic activity that had become manifest during the course of 1990. There was a general view that growth would be slow in 1991 but that it would be stronger in 1992 and be accompanied by a moderation of inflation.

The Committee agreed that monetary and fiscal policies should be directed toward providing a basis for lower real interest rates and sustained global economic recovery with price stability. The Committee also agreed on the importance of increasing global savings. To help further these objectives, the Committee welcomed recent budgetary actions in several countries and urged other countries to increase efforts to strengthen their fiscal positions. These policy actions would need to be complemented by structural reforms aimed at increasing economic efficiency, particularly those designed to foster greater competition and remove distortions affecting private saving, investment, and the allocation of capital. Such a medium-term strategy was crucial to raising investment and growth in both industrial and developing countries and to addressing the new challenges of reform and reconstruction.

3. The Committee commended the prompt action of the Fund to assist countries seriously affected by the crisis in the Middle East. As for some countries in the region itself, the effects of the crisis had compounded imbalances and structural maladjustments that predated recent events. The Fund needed to play its traditional key role through its policy advice, balance of payments support, and mobilization of financial and technical assistance in helping those countries adopt appropriate macroeconomic and structural adjustment policies.

4. The Committee welcomed the comprehensive efforts of Eastern European countries at introducing market based systems. Despite the initial output and employment losses the Committee was of the view that strong and all-encompassing reforms in these countries were the best way to achieve sustainable growth and full integration into the world economy. The Committee regarded the financial and technical support provided by national governments and international institutions as essential at this stage. Foreign private capital nevertheless would be expected to play an increasingly important, and eventually decisive, role in meeting the financing and technical assistance requirements of these countries, provided tangible progress was made toward a stable economic environment hospitable to private enterprise.

5. The Committee was encouraged by the perseverance of a number of developing countries in pursuing comprehensive policy and structural reforms. The Committee emphasized the indispensable role of adequate and timely external financing in support of such policies, including in countries that had avoided debt servicing difficulties. It welcomed the progress achieved by several heavily indebted members in putting in place bank financing arrangements. At the same time, the Committee noted that difficult cases remained and urged all parties to expedite negotiations. The Committee also underscored the importance of sustained support by official bilateral creditors. Concerning the poorest countries, the Committee welcomed the ongoing review in the Paris Club of recently suggested adaptations to debt restructuring and reduction practices designed to assure appropriate support for members embarked on comprehensive reforms.

6. The Committee viewed with concern the slow progress in the Uruguay Round and urged all members to work with determination toward its prompt and successful conclusion, noting the threats that failure would pose to the global economy. It stressed the importance of a favorable international trading environment and of transparent rules for the trade liberalization and reform efforts of developing and Eastern European countries. It emphasized the responsibility of the industrial countries for opening their own markets, in order to ensure the success of these efforts.

7. The Committee noted the significant increase in the number of member countries seeking Fund support for their adjustmet efforts and the attendant sharp rise in demand for Fund resources. These developments underlined the need for bringing into effect the quota increases under the Ninth General Review of Quotas as soon as possible. The Committee noted with satisfaction that a number of members had already consented to the quota increase and accepted the associated Third Amendment of the Articles of Agreement It urged other members to move speedily toward consent and acceptance.

8. The Committee encouraged the Executive Board to continue its analysis of developments and of key issues in the functioning of the international monetary system. The Committee emphasized the positive contribution that policy coordination is making to the evolution of the system. It urged the Executive Board to study further improvements that could be implemented and to keep the role of the SDR under review.

9. The Committee agreed to hold its next meeting in Bangkok, Thailand, on October 13, 1991.

Annex: Interim Committee Attendance

April 29-30, 1991

Chairman

Michael H. Wilson, Minister of Industry, Science and Technology, and of International Trade, Canada

Managing Director Michel Camdessus

Members or Alternates

Mohammad Abalkhail, Minister of Finance and National Economy, Saudi Arabia

Abubakar Alhaji, Minister of Finance and Economic Development, Nigeria

Abdul Malik A1 Hamar, Governor, United Arab Emirates Central Bank

Pierre Bérégovoy, Minister of State for Economy, Finance and the Budget, France

Nicholas F. Brady, Secretary of the Treasury, United States Zelia Maria Cardoso de Mello, Minister of Economy, Finance and Planning, Brazil

Guido Carli, Minister of the Treasury, Italy Domingo Felipe Cavallo, Minister of Economy, Argentina Abderrahmane Hadj-Nacer, Governor, Banque Centrale d’Algerie Ryutaro Hashimoto, Minister of Finance, Japan Anwar Ibrahim, Minister of Finance, Malaysia R.F. McMullan, Parliamentary Secretary to the Treasurer, Australia (Alternate for Paul J. Keating, Deputy Prime Minister and Treasurer, Australia)

W. Kok, Deputy Prime Minister and Minister of Finance, Netherlands

Rolf Kullberg, Governor, Bank of Finland Norman Lamont, Chancellor of the Exchequer, United Kingdom TONG Zengyin, Deputy Governor, People’s Bank of China (Alternate for LI Guixian, State Councillor and Governor of the People’s Bank of China) Philippe Maystadt, Minister of Finance, Belgium Donald Mazankowski, Deputy Prime Minister and Minister of Finance, Canada

NYEMBO Shabani, Governor, Banque du Zaïre Yashwant Sinha, Minister of Finance, India Carlos Solchaga, Minister of Economy and Finance, Spain Theo Waigel, Federal Minister of Finance, Germany

Observers

Rafeeuddin Ahmed, Under-Secretary-General for International Economic and Social Affairs, UN

S. Balabanoff, Head, Economics Section, Economics and Finance Department, OPEC

Horst Bockelmann, Economic Adviser and Head of the Monetary and Economic Department, BIS

Henning Christophersen, Vice President, CEC

Barber B. Conable, President, World Bank

Kenneth K. S. Dadzie, Secretary-General, UNCTAD

Arthur Dunkel, Director General, GATT

Alejandro Foxley, Chairman, Development Committee

Markus Lusser, Chairman of the Governing Board, Swiss National Bank

Jean-Claude Paye, Secretary-General, OECD

Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee)
PRESS Communiqués Thirty-Ninth Meeting, Washington, September 24, 1990

1. The Development Committee met in Washington, D.C. on September 24, 1990 under the chairmanship of the Hon. B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe.1

2. The Committee met at a time when the economic prospects of many developing countries were being affected adversely, particularly by the disruption of trade and workers’ remittances and the increase in the price of oil resulting from the events in the Middle East as well as by the economic slowdown in some industrial countries, higher interest rates, and the weakening in non-oil commodity prices. It welcomed the efforts currently underway to coordinate the distribution of financial resources for those developing countries affected by the Middle East crisis. Members welcomed the recent suggestions made by the managements of the Bank and the Fund on the response of their respective institutions. They recommended that the Boards of Executive Directors at the Bank and the Fund commence, on an expedited basis, a comprehensive review of measures that would enable them to respond promptly, flexibly and with expanded resources to the current situation. They agreed that experience shows that strong and rapid adjustment measures by affected countries are essential for maintaining internal and external balances. They also stressed that the impact of the Middle East crisis underlines the need to address development issues even more vigorously, including those considered at this meeting.

3. Noting the continuing severity of poverty problems in developing countries, the Committee agreed that the objective of a sizable reduction in the incidence of poverty is the highest priority for the international development community. Members also agreed that a broad consensus is emerging on strategies to be pursued toward the achievement of this goal. They welcomed the contribution of the 1990 World Development Report and the work of the Bank and the Fund in support of this process.

4. The Committee agreed that governments of developing countries have the primary responsibility for achieving the objective of poverty reduction. Members stressed that this objective would be most effectively achieved through the adoption of national development strategies, including sound macroeconomic and structural policies, which:

  • (a) encourage sustainable growth that increases income earning opportunities for the poor; and

  • (b) develop the human resources of the poor, particularly through broad access to education, health, and family planning services.

Members also stressed that the above strategies should be supplemented by social safety net programs, selectively targeted to those in need and consistent with growth-oriented adjustment and development policies. The Committee encouraged all parties concerned to discuss their poverty reduction approaches, programs, and goals in the framework of their policy dialogue. Members also agreed that good governance and involvement of the poor in the design and execution of development projects and programs are key elements for the effectiveness of poverty reduction efforts.

5. The Committee emphasized that the poverty reduction efforts of developing countries should be supported and complemented by developed countries in a consistent manner, through increased official flows, as well as through sound macroeconomic, structural, and open trade policies. Members agreed that aid donors and multilateral development agencies should examine their operational policies to ensure that their external assistance more fully supports the implementation of recipient countries’ national development strategies aimed at lasting poverty reduction, thus improving the quality of aid. In this connection, members welcomed the commitment of the President of the World Bank to submit to the Bank’s Board of Executive Directors, for its early consideration, proposals for fully translating the conclusions of the 1990 World Development Report into the Bank’s operational practice.

6. The Committee reaffirmed its support for the strengthened debt strategy and welcomed the number of debt and debt service reduction packages already concluded, or in the course of negotiation, between debtor countries and commercial banks. Members expressed concern, however, about the slow pace of negotiations on commercial bank financing packages in some cases. They called on the Bank and the Fund to continue to provide support for debt and debt service reduction packages, with the necessary flexibility, under their established guidelines. The Committee emphasized the crucial importance for debtor countries to adopt appropriate growth-oriented adjustment programs as a basis for debt and debt service reduction, thus creating the conditions favorable to domestic and foreign investment and the repatriation of flight capital. Members welcomed U.S. efforts to implement the “Enterprise for the Americas Initiative” designed to promote investment, growth, and debt reduction in Latin America.

7. The Committee expressed its concern that the prospects for external viability with sustainable growth remain difficult for some of the severely indebted lower middle-income countries, largely indebted to bilateral official creditors, even if a significant strengthening of domestic policies is assumed. Members welcomed the recent consensus by Paris Club creditor countries to lengthen repayment periods and to permit debt/equity and other debt conversion in reschedulings. The review of additional options should take into account the need for debtor countries to benefit from increased new financial flows. The Committee welcomed the recent bilateral decisions by a number of creditor countries which would contribute to alleviating the burden of bilateral debt of some severely indebted lower middle-income countries. Members invited all creditor countries to consider taking further measures on a coordinated and case-by-case basis in favor of those countries implementing adjustment programs.

8. The Committee welcomed the debt relief that creditor countries have provided, in particular through concessional official debt rescheduling and official development assistance debt cancellation, to an increasing number of severely indebted low-income countries implementing Bank and Fund supported adjustment programs. Members also welcomed the utilization of International Development Association (IDA) reflows for the benefit of IDA-only countries with outstanding IBRD debt. They encouraged the early use of the resources of the Bank’s facility, financed from the Bank’s net income, to assist eligible IDA-only countries to reduce their debt to commercial banks. Members noted that even with these arrangements and continued adjustment efforts, many of these countries have uncertain prospects for an early return to external viability with sustained growth. The Committee welcomed the request made to the Paris Club in the Houston Declaration to review the implementation of the existing options that apply to the poorest countries and encouraged the concerned creditors to complete this review in a timely manner. The Committee called for early consideration, through the Paris Club, of the proposals made at this meeting by some creditor countries, such as France, the Netherlands, and the United Kingdom, for further bilateral official debt relief to low-income countries implementing adjustment programs. It invited creditor countries to ensure that debt relief measures and official development assistance flows are designed on a case-by-case basis to assist a timely return to external viability with sustainable growth. Members also reiterated that their new commitments of assistance to the severely indebted low-income countries should be provided on highly concessional terms.

9. Members reiterated that it was also important to recognize the needs of a number of indebted countries which have not restructured their external debt obligations and which have been implementing sound macroeconomic policies. The Committee urged that efforts be made to maintain adequate financial flows to these countries, including multilateral flows, to support adjustment, development, and poverty reduction.

10. The Committee welcomed the increasing recognition in both developed and developing countries of the critical contribution of women to economic growth and development. Members agreed, however, that there was a need for a major effort and a strong commitment to concrete action to strengthen the economic role of women in development.

11. The Committee stressed that governments have the primary responsibility to promote women’s economic potential within their own specific sociocultural context. It encouraged them to design women in development policies and strategies in consultation with relevant groups. Members noted that enabling women to raise their own productivity and income is the best way to help them and thereby to contribute effectively to other national development objectives, including poverty reduction. They emphasized that the priorities are education, family planning, and maternal health care, agricultural services, provision of credit facilities, and access to labor markets. The Committee urged governments to remove constraints affecting women by adopting or revising legal codes and regulations, as may be required, in order to guarantee women equal rights including ownership and use of productive assets, and opportunities to take part in all sectors of the economy.

12. The Committee welcomed the initiatives taken so far to give women in development issues a higher priority. It encouraged governments and bilateral and multilateral development institutions to further integrate women in development objectives in their activities. While noting the encouraging progress made by the Bank, members urged it to increase further the resources it devotes to women in development activities and to strengthen its institutional capacity to integrate these issues more effectively into its country strategies, economic and sector work, policy dialogue, and actual lending operations. The Bank’s action plan in this area should include guidelines for monitoring implementation and evaluating its results. The Committee requested the Bank to prepare a progress report on its women in development activities for the 1991 fall meeting.

13. The Committee welcomed the World Summit for Children initiative that will focus international attention on the survival, protection, and development of children. Noting the strong emphasis placed by the Bank on poverty reduction in its lending program and operations, members urged the Bank to play a central role in helping realize the objectives of this Summit, including through the further expansion of its programs in the areas of primary education and health care.

14. The Committee reviewed progress made in the implementation of the World Bank Group’s private sector development action program in light of the need to promote growth, employment opportunities, and poverty reduction. It welcomed the growing emphasis given to market systems and the role of private initiative by member countries in their development strategies. It noted the need to stimulate private foreign and domestic investment and the return of flight capital so as to encourage non-debt creating private flows in the 1990s. Members welcomed the progress made to date under the Bank Group’s action program to support the promotion of an enabling environment for private sector development, public sector restructuring including privatization, and the acceleration of the pace of financial sector reforms. They noted with satisfaction the important role of the International Finance Corporation (IFC) in providing financing and advice for new investment and the work of IFC and the Multilateral Investment Guarantee Agency (MIGA) in supporting the continued growth in the flow of resources to the private sector in developing countries. The Committee also stressed the role that the Bank Group can play in reaching small urban and rural private sector enterprises and encouraged it to increase its efforts to assist the development of indigenous entrepreneurship and a locally based private sector.

15. The Committee reiterated its call on the Bank Group to give a very high priority to private sector development in its operations and continue to expand the scope of its activities in this area, including new approaches and instruments as may be needed, as well as to assist developing countries’ efforts to implement long-term institutional, regulatory, and legal reforms consistent with their socioeconomic situation. As the Bank Group implements and adapts its action program and strives to enhance further its catalytic impact, members emphasized the need to keep under review the roles, policies, and lending programs of the Bank and its affiliates, the balance between their advisory and operational functions, and the need for systematic coordination within the Bank Group. The Committee requested the Bank to prepare a report on these issues and its efforts to strengthen further its activities in support of private sector development for consideration by its Board of Executive Directors.

16. Members recognized the important catalytic role of IFC in promoting sound private sector development. They underscored the need for the Corporation to have adequate resources to meet the growing demand for its services in a regionally balanced and financially prudent manner during the 1990s. In this context, the Committee urged the IFC Board of Executive Directors to complete by the end of the year its review of the operational policies and adequacy of the capital of the Corporation, including the modalities of subscription and payment.

17. Taking note of the recent events, the Committee urged all IMF member countries to take the necessary actions to ensure that the Fund quota increase and the associated third amendment of the Articles become effective without delay.

18. The Committee welcomed the Bank’s first Annual Report on the Environment which it had requested at its Berlin meeting in September 1988. Members stressed that this comprehensive report clearly shows that the Bank is moving forward on a growing number of Bank-related environmental issues while improving the flow of information on these issues. They reiterated the importance of integrating environmental concerns into the Bank’s operations, particularly environmental impact assessments and environmental action plans. They emphasized the importance of new initiatives to provide greater protection for tropical forests and promote energy efficiency and conservation in developed and developing countries. Members asked the Bank to increase its cooperation with governments making efforts in these two areas and to include an assessment of progress achieved in its second Annual Report on the Environment. The Committee also welcomed the creation of an Interim Multilateral Fund in support of the Montreal Protocol on the elimination of chlorofluorocarbons. The Committee welcomed the progress made toward the establishment of a program, including a funding mechanism, to address global environmental problems and urged the donors and the Bank, working in collaboration with UNEP and UNDP, to complete their work before the next Development Committee meeting.

19. The Committee emphasized that current developments and their economic impact make the strengthening of the international trading system more necessary than ever. Members heard from the Director General of the GATT that multilateral trade negotiations under the Uruguay Round were in their final phase and that the time had come for participants in the Round to reach basic agreements across the board, and in particular in such areas as agriculture, textiles, and clothing, and tropical products which are of particular importance to developing countries. They urged all countries to roll back protectionist measures and to refrain from introducing new ones. The Committee reiterated its call on all parties concerned to agree on a global package by December 1990 in a way that would foster trade liberalization on the basis of uniform multilateral rules. The Committee further noted that successful completion of the negotiations was essential in order to support the reform programs in progress in a number of countries.

20. Despite an encouraging trend in the flow of foreign direct investment and nongovernmental organization grants, the Committee noted with concern that net resource flows, particularly to low-income Asian countries and the severely indebted middle-income countries, had declined in 1989. Members agreed on the need to continue to mobilize adequate financing in support of developing countries’ reforms and development efforts. The Committee called on donor countries to indicate their levels of assistance to ensure the full financing of the second phase of the Special Program of Assistance for Sub-Saharan Africa. Members welcomed the outcome of the Maastricht Conference last July and the wide support expressed for measures which could stimulate external assistance for Sub-Saharan Africa’s development efforts. They also welcomed the main conclusions of the Paris conference on the least developed countries.

21. The Committee agreed to focus at its spring 1991 meeting on two aspects of the broad issue of transfer of resources to developing countries: first, the financial implications of development policies aimed at poverty reduction in the light of an issues paper to be prepared by the Bank in consultation with the Fund; and second, the role of foreign direct investment in development with the assistance of a joint Bank-Fund issues paper. The Committee will also discuss the impact of industrial countries’ trade, agricultural and industrial policies on developing countries on the basis of the joint Bank-Fund full report requested at its May 8, 1990 meeting. In addition, members requested a report on progress in the discussion of IFC’s capital adequacy as well as a detailed progress report from the two institutions on the implementation of the debt strategy and its impact on the development prospects of all severely indebted countries.

22. Members expressed their deep appreciation for the dedicated services of its Chairman, the Honorable B.T.G. Chidzero, Senior Minister of Finance, Economic Planning and Development of Zimbabwe, over the last four years. They underlined the special contribution he has made to the strengthening of the Committee as it gears itself to meet the challenges of the 1990s and, in particular, the dignity, distinction, and judgment with which he had presided over the meetings of the Committee. They offered him their warmest good wishes for the future.

23. The Committee agreed to meet again in Washington, D.C. on April 30, 1991.

Fortieth Meeting, Washington, September 27, 1990

At its fortieth meeting on September 27, 1990; in Washington, D.C., the Development Committee selected His Excellency Alejandro Foxley, Minister of Finance of Chile, as Chairman.

Forty-First Meeting, Washington, April 30, 1991

1. The Development Committee met in Washington, D.C. on April 30, 1991 under the chairmanship of Mr. Alejandro Foxley, Minister of Finance of Chile.1

2. In the context of its broad mandate for the transfer of resources to developing countries, the Committee discussed: (a) the financial implications of development policies aimed at poverty reduction; (b) the role of foreign direct investment in development; and (c) the impact of industrial countries’ trade, agricultural and industrial policies on developing countries. The Committee also considered progress reports on the response of the World Bank and the International Monetary Fund to the Middle East crisis, the debt strategy and its impact on the development prospects of all severely indebted countries, the International Finance Corporation’s capital adequacy, and the establishment of a Global Environment Facility.

The Middle East Crisis

3. The Committee welcomed the prompt response and ongoing efforts of the Bank and the Fund to assist the countries seriously affected by the Middle East crisis. The Committee urged the Bank and the Fund to continue analyzing the financial requirements of the countries in the region directly affected by the crisis and other affected developing countries. It also urged the two institutions to assist in the mobilization of resources from both the region and external sources. Members stressed that financial assistance to the affected developing countries in and outside the middle eastern region should seek to facilitate, rather than substitute for, the sustained implementation of sound economic policies and adjustment programs. The Committee underscored the importance of an appropriate and effective coordination arrangement to deal with reconstruction and the adjustment and longer-term development needs of the countries of the region.

Poverty Reduction

4. The Committee reiterated that the reduction of poverty in developing countries is the highest priority for the world development community. It reaffirmed its support for the strategy for reducing poverty presented in the 1990 World Development Report. The Committee noted that the achievement of the objective of poverty reduction would be facilitated by good governance in all countries, recognizing that their sovereignty must be respected. Members emphasized the special need for countries with a high level of poverty to maximize efficiency in the use of existing resources and to mobilize additional domestic savings and public revenues for poverty reduction purposes while increasing the access of the poor to such resources. They also emphasized the need to reexamine the possible reallocation of public expenditures, including excessive military expenditures, to increase their impact on poverty reduction. Members also noted the important role of private sector investment in generating income-earning opportunities for the poor.

While mobilizing additional domestic resources to combat poverty is of prime importance, members recognized that this task is difficult particularly in low-income countries where the poor are concentrated and in some of the severely indebted countries. The Committee stressed, therefore, that adequate external resources, mainly of a concessional nature, are necessary to complement the efforts at poverty reduction in these low-income countries. It emphasized, however, that efforts to meet the external financial requirements of potential new claimants on concessional resources should not be at the expense of current recipients pursuing appropriate development policies including poverty reduction. In this connection, the Committee invited donor countries, particularly those with assistance levels below the 0.7 percent ODA/GDP target, to make further efforts to increase the transfer of resources to developing countries.

5. The Committee was of the view that any additional aid volume should be accompanied by a number of improvements in aid delivery. In this regard it stressed the importance of further efforts at meaningful untying of bilateral aid; recurrent-cost financing, especially in the social sectors and infrastructure, for countries undertaking sound policies and over a defined transitional time period for progressively transferring responsibility to host governments; initiatives to enhance the effectiveness of technical assistance to meet the needs of those countries; and means to improve the coordination of concessional resources. The Committee also called upon the providers of concessional resources to examine the scope for reallocating their assistance toward poor countries implementing sound development policies and poverty alleviation strategies.

6. Members welcomed the policy paper on poverty, recently endorsed by the World Bank’s Board of Executive Directors, which calls for reliance on rapid, broadly based economic growth and investments in human capital targeted at the poor. They also welcomed the intention of the Bank to implement a plan of action designed to translate the conclusions of the 1990 World Development Report into its operational practices and budgetary priorities. They expressed support for the Bank’s objective of placing special emphasis on poverty considerations in the design of its country assistance strategies and in the allocation and composition of its lending resources in a manner consistent with the development strategies of the borrowing countries. They urged the Bank management, in consultation with the Board of Executive Directors, to complete rapidly its handbook and operational directive on poverty, which are now under preparation. The Committee requested a progress report for its spring 1992 meeting on the implementation of the Bank’s plan of action for the reduction of poverty. Members noted the Fund’s continued efforts to assist member countries in the pursuit of sound economic policies, while protecting the poor through appropriate measures, including the use of social safety nets. The Committee also urged the Bank, together with the relevant United Nations agencies, to strengthen further their cooperation in improving the data base on poverty, poverty monitoring, and the division of labor among their operational activities of a povertyoriented nature. Members also underscored the need for the Fund to rely on this improved data base in its work on poverty issues.

Foreign Direct Investment and Development

7. The Committee reiterated its view that foreign direct investment (FDI) can make an important contribution to development through the creation of employment, the development of skills, the transfer of technology, the improvement in competitiveness, and the expansion of markets. Members welcomed the recent increase in real terms in FDI flows to developing countries. They agreed that the prime responsibility for creating a climate of confidence and attracting FDI rested with the host countries. Members emphasized that adequate macroeconomic stability and growth in the context of adjustment efforts and the promotion of an efficient private sector, as well as adequate infrastructure and manpower skills, were crucial factors in this respect. The Committee noted that the policies of the industrial countries, particularly in the areas of macroeconomic policies, and the promotion of savings and tax policies, can impact on FDI flows, including those to developing countries given the increasing openness of the latter’s economies. Members stressed that all countries should make further efforts to remove trade and investment barriers so as to allow freer flow of goods and capital. Recognizing that FDI would normally tend to flow to the more advanced and creditworthy developing countries, members stressed the need to explore ways to mobilize and increase FDI flows to low-income countries and lower middle-income countries, particularly in Sub-Saharan Africa. In view of the constraints on FDI flows to low-income countries, the Committee recognized that concessional flows would remain of critical importance to them. Moreover, in the case of low-and lower middle-income countries, members underscored that high priority should be given to the development of local entrepreneurial skills and an indigenous business sector.

8. Given the close relationship between a strong domestic private sector and FDI, the Committee stressed that both the Bank and the Fund should continue to strengthen their efforts to promote an environment favorable to a higher contribution by the private sector to development and increase the flows of FDI to developing countries. Multilateral institutions were also encouraged to assist the efforts of developing countries in maximizing the developmental impact and the most efficient use of FDI by promoting market-oriented policies and, as appropriate, a stronger legal and regulatory framework. The Committee recognized the need of an overall legal framework which would embody the essential legal principles so as to promote FDI; in this regard, it took note of some proposals, notably by France, and urged the MIGA to consult with other competent institutions and report to the next spring’s Development Committee. Recalling their request to the World Bank Group at their September 1990 meeting to give a very high priority to the contribution of the private sector to development and to expand the scope of its activities in this area, members welcomed the recent steps undertaken in the Bank Group, particularly the working party set up by the President, to improve coordination within the Group. The Committee noted that the President of the Bank intends to put forward to the Board of Executive Directors for its consideration a comprehensive plan of action for the World Bank Group to strengthen its role in private sector development. The Committee called on the Bank Group to adopt, in the near future, such a plan of action involving a rigorous and integrated approach to the promotion of the private sector, including an even stronger role for IFC in the development of the Bank Group’s policies.

9. The Committee reiterated its view that the work of IFC is of special relevance to the development of the private sector in the developing countries. The Committee emphasized that as part of a strengthened World Bank Group private sector focus, IFC should have adequate resources to meet the growing demand for its services during the 1990s in a financially prudent and regionally balanced manner. In this connection, members agreed that there should be continued negotiations on an IFC capital increase and that a recommendation on its amount and modalities of subscription and payment should be made by the IFC Board of Directors for early consideration by the Board of Governors so that the Corporation could step up significantly its activities.

Impact of Industrial Countries’ Policies on Development

10. The Committee took note of the findings of the joint Bank-Fund staff paper which underlines the adverse effects of some of the developed countries’ trade, industrial, and agricultural policies on the economies of the developing countries. The Committee stressed that all countries, and in particular the developed countries, have a special responsibility to pursue sound macroeconomic, industrial, trade, and agricultural policies in order to promote a more open multilateral trade and payments system and to remove trade and investment barriers. The Committee encouraged developed countries to take steps to ensure greater transparency and awareness in their countries of the costs and distorting effects of trade restrictive measures. The Committee welcomed the market-oriented reforms and the trade liberalization measures implemented in recent years by an increasing number of developing countries and encouraged them to continue and broaden this progress and to increasingly integrate themselves into the multilateral trading system.

11. Members heard from the Director General of the General Agreement on Tariffs and Trade (GATT) on the prospects of the Uruguay Round of multilateral trade negotiations. The Committee reiterated the crucial importance it attaches to the trade liberalization and global trade expansion that would follow the successful outcome of these trade negotiations. Members expressed deep concern about the potentially serious negative impact that a failure would have for the global economy. They urged all participants, particularly the major developed countries, to increase their efforts to avoid further delay in reaching a successful conclusion of the Uruguay Round in areas such as agriculture, textiles and clothing, and tropical products which are of particular importance to developing countries and in strengthening GATT rules and in developing disciplines in new areas. Noting the emergence of an increasing number of regional trading arrangements, the Committee emphasized that such arrangements should be part of, rather than an alternative to, wider efforts at promoting multilateral trade liberalization based on the GATT’s nondiscriminatory principles.

12. The Committee urged the Bank and the Fund to follow up and continue to evaluate closely developments in respect of trade, industrial, and agricultural policies and their impact on the development prospects of developing countries. The two institutions were encouraged to coordinate closely their work on these issues with the GATT. Members noted that the findings of the GATT’s Trade Policy Reviews can provide valuable inputs for the reports prepared from time to time for the Committee on the impact of the industrial countries’ trade policies on developing countries. The Committee agreed to keep international trade development issues under consideration at its forthcoming meetings.

The Debt Strategy and Its Impact on Development Prospects

13. The Committee reaffirmed its support for the strengthened debt strategy and welcomed the progress achieved so far. Members stressed that the situation of a number of debtors required further attention given the constraint that their debt burden, and in some cases current policies, continued to have on their budgetary positions and ability to attract FDI and the return of flight capital. They urged debtor countries and commercial banks to accelerate their negotiations and to reach agreements that will facilitate the return to normal debtor/creditor financial relations. The Committee encouraged the Bank and the Fund to continue to provide support with the necessary flexibility, under their established guidelines, for debt and debt service reduction packages negotiated between debtors and the commercial banks.

14. Members welcomed the adaptation of debt restructuring terms introduced recently by the Paris Club bilateral official creditors—including the lengthening of repayment terms and the option of debt swaps in reschedulings—to assist several severely indebted lower middle-income countries. The Committee noted that the debt problems of many of these countries remained very difficult and there was a need to monitor closely their progress toward resumption of normal financial relations with their creditors and economic growth.

15. Members expressed their concern that, notwithstanding the application of the Toronto terms, the prospects for external viability in many of the severely indebted low-income countries remained highly uncertain. The Committee therefore encouraged the Paris Club creditors to complete by mid-1991 their review of the implementation of the existing options and their consideration of additional debt relief measures which could be taken for the low-income countries in the light of proposals made by a number of creditor countries.

16. Members reiterated that it was also important to recognize the needs of a number of debtor countries which have been pursuing appropriate policies and which have not restructured their external debt obligations even under difficult circumstances. They were of the view that the efforts of those countries to maintain normal debtor/creditor financial relations should be encouraged and supported. The Committee urged that in response to the needs of those countries, special efforts be made to provide them with sufficient financial flows, including multilateral flows, to support adjustment programs, development, and poverty reduction.

Global Environmental Issues

17. Recalling its support for the establishment of a facility to address environmental problems which transcend national borders, the Committee welcomed the establishment of the joint World Bank, UNEP, and UNDP Global Environment Facility. The Committee underlined the role that this facility could play as the mechanism to provide additional assistance to developing countries in the framework of ongoing negotiations on the global environment. Members underscored the importance of this pilot facility and urged that relevant experience derived from its operations in dealing with global environmental challenges be taken into consideration in the World Bank’s regular operations. The Committee stressed the importance of open and transparent approaches to addressing environmental challenges. The Committee urged that these and other organizational issues be addressed early on to ensure that the facility achieves the objectives envisioned by participants.

18. Members noted the recent initiatives taken in the IMF toward greater awareness of environmental concerns in its work.

IMF Quota Increase

19. Taking account of the significant increase in the number of countries seeking Fund assistance, the Committee noted with satisfaction that a number of Fund member countries had already consented to the Fund quota increase and the associated Third Amendment of the Articles of Agreement. The Committee urged other members to move without delay toward consent and acceptance.

Future Work Program of the Committee

20. The Committee agreed to discuss at its next meeting: (a) the development priorities of the 1990s and their implications for the World Bank Group; and (b) the development of human resources in developing countries. It requested the Bank to prepare issues papers on these topics, in consultation with the Fund, drawing as appropriate on the 1991 World Development Report. In addition, members requested progress reports on the Bank’s women in development activities and on the Bank Group’s progress in expanding its private sector activities. They also called on the Bank and the Fund to prepare jointly, for their consideration at their next meeting, a detailed progress report on the implementation of the debt strategy and its impact on the development prospects of all severely indebted countries.

Other Business

21. The Committee appointed Mr. Peter Mountfield (United Kingdom) to succeed the Executive Secretary, Mr. Yves L. Fortin (Canada) for a three-year term with effect from July 1, 1991. Members placed on record their deep appreciation for Mr. Fortin’s dedication and for the major contribution he has made in improving the functioning of the Committee and its policy orientation. Members also thanked the Government of Canada for making Mr. Fortin available to the Committee.

22. The Committee expressed its profound appreciation to the retiring President of the World Bank, Mr. Barber Conable, for the distinguished contribution he has made during his five-year term in office to the cause of development and the reduction of poverty in the developing world and for his support for the work of the Development Committee. Members wished him the very best in his future endeavors.

23. The Committee agreed to meet again in Bangkok, Thailand, on October 14, 1991.

APPENDIX VI: Executive Directors and Voting Power on April 30, 1991

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Voting power varies on certain matters pertaining to the General Department with use of the Fund’s resources in that department.

Percentages of total votes (950,025) in the General Department and the SDR Department.

This total does not include the votes of Cambodia, Mongolia, and South Africa, which did not participate in the 1990 Regular Election of Executive Directors. The combined votes of those members total 10,407—1.10 percent of those in the General Department and SDR Department.

This figure may differ from the sum of the percentages shown for individual Directors because of rounding.

APPENDIX VII: Changes in Membership of Executive Board

Changes in membership of the Executive Board between May 1, 1990 and April 30, 1991 were as follows:

Yusuf A. Nimatallah (Saudi Arabia) resigned as Executive Director for Saudi Arabia, effective June 30, 1990.

Muhammad Al-Jasser (Saudi Arabia), formerly Alternate Executive Director to Yusuf A. Nimatallah (Saudi Arabia), was appointed Executive Director for Saudi Arabia, effective July 1, 1990.

Charles Enoch (United Kingdom) resigned as Alternate Executive Director to Frank Cassell (United Kingdom), effective July 13, 1990.

Charles S. Warner (U.S.) resigned as Alternate Executive Director to Thomas C. Dawson (U.S.), effective July 14, 1990.

Paul Wright (United Kingdom) was appointed Alternate Executive Director to Frank Cassell (United Kingdom), effective July 14, 1990.

Frank Cassell (United Kingdom) resigned as Executive Director for United Kingdom, effective July 22, 1990.

David Peretz (United Kingdom) was appointed Executive Director for United Kingdom, effective July 23, 1990.

Paul Wright (United Kingdom), previously Alternate Executive Director to Frank Cassell (United Kingdom), was appointed Alternate Executive Director to David Peretz (United Kingdom), effective July 23, 1990.

Ricardo J. Lombardo (Uruguay) resigned as Alternate Executive Director to Ernesto V. Feldman (Argentina), effective September 29, 1990.

Miguel A. Fernandez Ordóñez (Spain) resigned as Alternate Executive Director to Leonor Filardo (Venezuela), effective October 15, 1990.

El Tayeb El Kogali (Sudan) completed his term of service as Executive Director for Botswana, Burundi, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe, effective October 31, 1990.

Ernesto V. Feldman (Argentina) completed his term of service as Executive Director for Argentina, Bolivia, Chile, Paraguay, Peru, and Uruguay, effective October 31, 1990.

Leonor Filardo (Venezuela) completed her term of service as Executive Director for Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, and Venezuela, effective October 31, 1990.

Mohammad Reza Ghasimi (Islamic Republic of Iran) completed his term of service as Executive Director for Afghanistan, Algeria, Ghana, Islamic Republic of Iran, Morocco, and Tunisia, effective October 31, 1990.

Seung-Woo Kwon (Korea) resigned as Alternate Executive Director to E.A. Evans (Australia), effective October 31, 1990.

MAWAKANI Samba (Zaïre) completed his term of service as Executive Director for Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Côte d’voire, Djibouti, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Sao Tome and Principe, Senegal, Togo, and Zaïre, effective October 31, 1990.

G.K. Arora (India) was re-elected Executive Director by Bangladesh, Bhutan, India, and Sri Lanka, effective November 1, 1990.

C. Scott Clark (Canada) was re-elected Executive Director by Antigua and Barbuda, The Bahamas, Barbados, Belize, Canada, Dominica, Grenada, Ireland, Jamaica, St. Kitts and Nevis, St. Lucia, and St. Vincent, effective November 1, 1990.

DAI Qianding (China) was re-elected Executive Director by China, effective November 1, 1990.

Jacques de Groote (Belgium) was re-elected Executive Director by Austria, Belgium, Czechoslovakia, Hungary, Luxembourg, and Turkey, effective November 1, 1990.

E.A. Evans (Australia) was re-elected Executive Director by Australia, Kiribati, Korea, New Zealand, Papua NewjGuinea, Philippines, Seychelles, Solomon Islands, Vanuatu, and Western Samoa, effective November 1, 1990.

Renato Filosa (Italy) was re-elected Executive Director by Greece, Italy, Malta, Poland, and Portugal, effective November 1, 1990.

Mohamed Finaish (Libya) was re-elected Executive Director by Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Maldives, Oman, Pakistan, Qatar, Somalia, Syrian Arab Republic, United Arab Emirates, and Republic of Yemen, effective November 1, 1990.

Markus Fogelholm (Finland) was re-elected Executive Director by Denmark, Finland, Iceland, Norway, and Sweden, effective November 1, 1990.

J.E. Ismael (Indonesia) was re-elected Executive Director by Fiji, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Nepal, Singapore, Thailand, Tonga, and Viet Nam, effective November 1, 1990.

Omar Kabbaj (Morocco), previously Alternate Executive Director to Mohammad Reza Ghasimi (Islamic Republic of Iran), was appointed Alternate Executive Director to Abbas Mirakhor (Islamic Republic of Iran), effective November 1, 1990.

Alexandre Kafka (Brazil) was re-elected Executive Director by Brazil, Colombia, Dominican Republic, Ecuador, Guyana, Haiti, Panama, Suriname, and Trinidad and Tobago, effective November 1, 1990.

Yves-Marie T. Koissy (Cote d’lvoire) was appointed Alternate Executive Director to Corentino V. Santos (Cape Verde), effective November 1, 1990.

Roberto Marino (Mexico) was appointed Alternate Executive Director to Angel Torres (Spain), effective November 1, 1990.

Abbas Mirakhor (Islamic Republic of Iran) was elected Executive Director by Afghanistan, Algeria, Ghana, Islamic Republic of Iran, Morocco, and Tunisia, effective November 1, 1990.

L.B. Monyake (Lesotho), formerly Alternate Executive Director to El Tayeb El Kogali (Sudan), was elected Executive Director by Angola, Botswana, Burundi, Ethiopia, The Gambia, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Nigeria, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe, effective November 1, 1990.

L. J. Mwananshiku (Zambia) was appointed Alternate Executive Director to L. B. Monyake (Lesotho), effective November 1, 1990.

G.A. Posthumus (Netherlands) was re-elected Executive Director by Bulgaria, Cyprus, Israel, Netherlands, Romania, and Yugoslavia, effective November 1, 1990.

Corentino Santos (Cape Verde), formerly Alternate Executive Director to MAWAKANI Samba (Zaïre), was elected Executive Director by Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Cote d’lvoire, Djibouti, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Sao Tome and Principe, Senegal, Togo, and Zaïre, effective November 1, 1990.

Grant H. Spencer (New Zealand) was appointed Alternate Executive Director to E.A. Evans (Australia), effective November 1, 1990.

Angel Torres (Spain) was elected Executive Director by Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Spain, and Venezuela, effective November 1, 1990.

Alejandro Vegh (Uruguay) was elected Executive Director by Argentina, Bolivia, Chile, Paraguay, Peru, and Uruguay, effective November 1, 1990.

A. Guillermo Zoccali (Argentina) was appointed Alternate Executive Director to Alejandro Vegh (Uruguay), effective November 1, 1990.

Guenter Grosche (Germany) resigned as Executive Director for Germany, effective December 9, 1990.

Bernd Goos (Germany), formerly Alternate Executive Director to Guenter Grosche (Germany), was appointed Executive Director for Germany, effective December 10, 1990).

Shinichi Yoshikuni Japan) resigned as Alternate Executive Director to Koji Yamazaki (Japan), effective December 24, 1990.

Naoki Tabata (Japan) was appointed Alternate Executive Director to Koji Yamazaki (Japan), effective December 25, 1990.

Abdul Moneim Othman (Iraq) resigned as Alternate Executive Director to Mohamed Finaish (Libya), effective December 31, 1990.

Azizali F. Mohammed (Pakistan) was appointed Alternate Executive Director to Mohamed Finaish (Libya), effective January 2, 1991.

Bernd Esdar (Germany) was appointed Alternate Executive Director to Bernd Goos (Germany), effective February 1, 1991.

Abdulrahman A. Al-Tuwaijri (Saudi Arabia) was appointed Alternate Executive Director to Muhammad Al-Jasser (Saudi Arabia), effective February 11, 1991.

Luis Manuel Piantini (Dominican Republic) resigned as Alternate Executive Director to Alexandre Kafka (Brazil), effective March 31, 1991.

Indridi H. Thorlaksson (Iceland) resigned as Alternate Executive Director to Markus Fogelholm (Finland), effective March 31, 1991.

Ingimundur Fridriksson (Iceland) was appointed Alternate Executive Director to Markus Fogelholm (Finland), effective April 1, 1991.

Juan Carlos Jaramillo (Colombia) was appointed Alternate Executive Director to Alexandre Kafka (Brazil), effective April 1, 1991.

The following served at certain meetings of the Executive Board during 1990/91 as Temporary Alternate Executive Directors to the Executive Directors indicated:

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APPENDIX VIII: Administrative and Capital Budgets

Administrative Budget as Approved by the Executive Board for the Financial Year Ending April 30,1992 Compared with Actual Expenses for the Financial Years Ended April 30,1990 and April 30,1991; and Capital Budget as Approved by the Executive Board for Capital Projects Beginning in Financial Year 1992

(Values expressed in thousands of U.S. dollars)1

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Due to rounding, details may not add to total.

Net administrative budget expenses exclude fixed property expenditures, which are approved in separate capital budgets and a valuation gain or loss on administrative currency holdings. For the financial year ended April 30, 1991, fixed property expenditures were SDR 3,054,130 and the valuation loss on administrative currency holdings was SDR 446,489.

APPENDIX IX: Financial Statements

REPORT OF THE EXTERNAL AUDIT COMMITTEE

Washington, D.C.

June 27, 1991

Authority and Scope of the Audit

In accordance with Section 20(b) of the By-Laws of the International Monetary Fund we have audited the financial statements of the Fund covering the

—General Department for the year ended April 30, 1991,

—SDR Department for the year ended April 30, 1991, and

—Accounts administered by the Fund, which consist of the Supplementary Financing Facility Subsidy Account, the Trust Fund, the Enhanced Structural Adjustment Facility Trust, the Enhanced Structural Adjustment Facility Administered Accounts, the Administered Account—Japan, the Administered Account—Guyana, the Administered Technical Assistance Account—Japan, the Voluntary Contribution Account—Bolivia, for the year ended April 30, 1991 and the Voluntary Contribution Account—Costa Rica for the period May 15, 1990 to May 22, 1990.

Our audit was conducted in accordance with generally accepted auditing standards and included reviews of the accounting and internal control systems, and tests of the accounting records. We evaluated the extent and results of the work of the Independent Accountants as well as that of the Office of Internal Audit and Review and also used other audit procedures as deemed necessary.

Audit Opinion

In our opinion, the financial statements of the General Department (including the related supplemental schedules one through four), the SDR Department, and the Accounts administered by the Fund have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding year (except in the case of the Voluntary Contribution Account—Costa Rica which was in operation for the period May 15, 1990 to May 22, 1990) and give a true and fair view of the respective financial positions and the allocations and holdings of SDRs as at April 30, 1991 (except in the case of the Voluntary Contribution Account—Costa Rica which was terminated on May 22, 1990), and of the financial results of operations and transactions during the respective periods.

In connection with our examination of the Voluntary Contribution Accounts, in our opinion the operation of the Account for Bolivia has been conducted in accordance with the Instrument establishing the Account.

EXTERNAL AUDIT COMMITTEE

/s/ Philippe Lacarriere, Chairman (France)

/s/ Michael J. Jacobs (Australia)

/s/ Jocelyn Thompson (Trinidad and Tobago)

GENERAL DEPARTMENT BALANCE SHEET as at April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.
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GENERAL DEPARTMENT STATEMENT OF INCOME AND EXPENSE for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.

GENERAL DEPARTMENT STATEMENT OF CHANGES IN RESERVES AND RESOURCES for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.
GENERAL DEPARTMENT NOTES TO THE FINANCIAL STATEMENTS

Under the Articles of Agreement, the General Department consists of the General Resources Account, the Special Disbursement Account, and the Investment Account The Investment Account had not been activated at April 30, 1991. The Executive Board also established in May 1981 the Borrowed Resources Suspense Accounts.

General Resources Account

Assets held in the General Resources Account comprise (i) currencies of the Fund’s member countries (including securities), (ii) SDR holdings, and (iii) gold.

Each member has been required to pay to the Fund the amount of its initial quota and subsequent increases partly in the member’s own currency and the remainder in the form of reserve assets, except that for the increases proposed in 1978, members were permitted to pay the entire increase in their own currencies. A member’s quota cannot be increased until the member consents to the increase and pays the subscription.

The Fund makes its resources available to its members in accordance with policies on the use of its resources by selling to members, in exchange for their own currency, SDRs, or currencies of other members. Use of the Fund’s resources by a member is dependent on the member having a balance of payments need.

When members make purchases, they incur an obligation to repurchase, within the periods specified by the Fund, the Fund’s holdings of their currencies by the payment to the Fund of SDRs or the currencies of other members specified by the Fund. The Fund’s policies on the use of its resources are intended to assure that use of its resources is temporary and will be reversed within time periods specified by the Fund.

The composition of the Fund’s holdings of members’ currencies changes as a result of the Fund’s operations and transactions, including purchase and repurchase transactions in currencies as noted above. The caption “Currencies and securities” in the Balance Sheet reflects holdings of currencies of all members, including those of members that make use of the Fund’s resources and those used to finance the Fund’s operations and transactions.

A member has a reserve tranche in the Fund to the extent that the Fund’s holdings of its currency, excluding holdings which reflect the member’s use of Fund credit, are less than the member’s quota. A member’s reserve tranche is regarded as a part of the member’s external reserves and a member may purchase up to the amount of its full reserve tranche at any time when the member represents that it has a need. Reserve tranche purchases are not regarded as a use of Fund credit.

Members may make use of Fund resources under various policies and the amount of such use is related to a member’s quota in the Fund. Under the credit tranche policy, credit is at present made available to members in a range consisting of four tranches or segments each equal to 25 percent of a member’s quota. A first credit tranche purchase is defined as one that raises the Fund’s holdings of a member’s currency in the credit tranche from 0 to 25 percent of quota. Subsequent purchases are referred to as upper credit tranche purchases. Higher conditionality accompanies the use of Fund credit in the upper tranches.

Members experiencing balance of payments difficulties may request stand-by arrangements from the Fund under which the Fund commits itself to provide resources to be made available over periods of up to three years from the date of the arrangements. Purchases under these arrangements in the upper credit tranches depend upon the member’s meeting the performance criteria and other conditions included in the arrangements.

In addition to purchases under the Fund’s credit tranche policies, members may make or have made use of the Fund’s resources under decisions on:

  • Compensatory and contingency financing facility—to assist members encountering payments difficulties produced by temporary export shortfalls, attributable to external circumstances, or an excess in the cost of cereal imports or caused by an excess in the cost of oil imports. The compensatory financing facility includes a mechanism for contingency financing to support adjustment programs supported by the Fund.

  • Buffer stock financing facility—to assist members in connection with the financing of international buffer stocks of primary products.

  • Extended Fund facility—to provide, through extended arrangements not exceeding three years (and where appropriate, at the request of a member, up to four years), medium-term assistance to members to make structural adjustments in their economies. Purchases under these arrangements depend upon the member’s meeting the performance criteria included in the arrangements.

  • Supplementary financing facility and the policy on enlarged access—to make resources available under stand-by and extended arrangements, in addition to those available in the credit tranches or under the extended Fund facility, to members facing serious payments imbalances that are large in relation to their quotas. These policies are temporary and may be utilized only in conjunction with the use of resources in the upper credit tranches.

Members that purchase resources from the Fund have an obligation to repurchase the Fund’s holdings of their currencies by the payment to the Fund of SDRs or the currencies of other members specified by the Fund. Reserve tranche purchases made after April 1, 1978, are not subject to repurchase Purchases in the credit tranches, purchases under the compensatory and contingency financing facility and under the buffer stock facility are to be repurchased in quarterly installments beginning three years and ending not later than five years after the date of purchase. Purchases under the supplementary financing facility or the enlarged access policy financed by borrowed resources (or “substituted” resources) are to be repurchased in semiannual installments beginning three and one-half years and ending not later than seven years after the date of purchase. Purchases under the extended Fund facility (other than purchases under the supplementary financing facility or policy on enlarged access) are to be repurchased in semiannual installments beginning four years and ending not later than ten years after the date of purchase. However, a member is entitled to repurchase at any time holdings of its currency on which the Fund levies charges, and is expected to make repurchases prior to the periods mentioned above as and when its balance of payments and reserve position improves.

Borrowed Resources Suspense Accounts

Borrowed Resources Suspense Accounts have been established in order to hold, transfer, convert and invest (i) currencies borrowed by the Fund before they are transferred to the General Resources Account for use in transactions or operations; and (ii) currencies received by the Fund in repurchases financed with borrowed resources before repayments to lenders can be made. Members are not obligated to maintain the SDR value of their currencies held by the Fund in the Borrowed Resources Suspense Accounts, and as far as practicable, the currencies are invested in SDR-denominated obligations.

At April 30, 1991, there was SDR 796 million in borrowed resources held in suspense (SDR 0.02 million at April 30, 1990).

Special Disbursement Account

The Fund administers a Trust Fund, established in 1976 to provide balance of payments assistance (loans) on concessional terms to certain members. The Special Disbursement Account was activated on June 30, 1981 to receive transfers from the Trust Fund (repayments of loans and interest) which is in the process of being wound up. The final Trust Fund loan installment was due March 31, 1991. Part of the amounts received into the Special Disbursement Account from the Trust Fund were transferred on a same-day pass-through to the Supplementary Financing Facility Subsidy Account, which was established for the purpose of reducing the cost to eligible members that used the Fund’s resources under the supplementary financing facility. In July 1985, the Fund determined that the resources of the Supplementary Financing Facility Subsidy Account were sufficient to meet its estimated needs, and transfers to that account from the Special Disbursement Account were terminated. Amounts received from the Trust Fund are invested pending loan disbursements under structural adjustment facility and enhanced structural adjustment facility arrangements through the Special Disbursement Account.

Within the Special Disbursement Account a structural adjustment facility (SAF) was established in March 1986 to provide balance of payments assistance to qualifying low-income developing members. Upon approval by the Fund, resources are committed to qualifying members for a three-year period, in support of a macroeconomic and structural adjustment program presented by the member.

Loans disbursed under the structural adjustment facility are repayable in ten semiannual installments commencing not later than the end of the first six months of the sixth year, and to be completed at the end of the tenth year after the date of the disbursement. Interest is charged on the outstanding loan balances at the rate of ½ of 1 percent per annum.

Members are not obligated to maintain the SDR value of their currency held by the Fund in the Special Disbursement Account. Pending their use, the resources held in the Special Disbursement Account are placed in SDR-denominated investments. Prior to an SDR-denominated investment, balances may be placed temporarily in U.S. dollar-denominated investments. Thus, there may be valuation gains and losses in terms of the SDR on these resources from the time they are received until they can be invested in SDR-denominated investments.

The Special Disbursement Account is a part of the General Department of the Fund. However, the assets of the account are to be held separate from other accounts of the General Department and the income of the account is placed in the Special Disbursement Account.

The Fund administers the Enhanced Structural Adjustment Facility Trust (ESAF Trust) which was established in December 1987 to provide loans on concessional terms to eligible members to support programs to strengthen substantially and in a sustainable manner their balance of payments position and to foster growth. The Special Disbursement Account transfers the following resources to the Reserve Account of the ESAF Trust: (i) all income received from the investment of the resources available for the structural adjustment facility; (ii) all interest received, including from special charges, on loans under the structural adjustment facility; (iii) all repayments of loans under the structural adjustment facility; and (iv) all the resources held in the Special Disbursement Account that are derived from the termination of the Trust Fund and that can no longer be used under the structural adjustment facility. Resources of the ESAF Trust Reserve Account which are determined to be in excess of its estimated needs are to be retransferred to the Special Disbursement Account. Upon liquidation of the ESAF Trust, the amounts remaining in the Reserve Account after the discharge of remaining liabilities shall be transferred to the Special Disbursement Account. Transfers to the ESAF Trust Reserve Account commenced in March 1988. For the year ended April 30, 1991, SDR 87 million (SDR 79 million at April 30, 1990) had been transferred from the Special Disbursement Account to the ESAF Trust Reserve Account.

1. Accounting Practices
Unit of Account

The accounts of the General Department are expressed in terms of the SDR. At present, the currency value of the SDR is determined by the Fund each day by summing the values in U.S. dollars, based on market exchange rates, of a basket of five specific currencies. The Fund’s procedures require that the SDR valuation basket be reviewed every five years, and that the basket is to include the currencies of the members having the largest exports of goods and services during the five-year period ending one year prior to the date of the revisions. In accordance with these requirements, the SDR valuation basket was revised effective January 1, 1991. The currencies comprising the basket and their amounts in the basket during the year ended April 30, 1991 were as follows:

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Members’ currencies are valued in terms of the SDR on the basis of the representative rate of exchange determined in accordance with the Rules of the Fund. Gold held by the Fund is valued on the basis that one SDR is equivalent to 0.888671 gram of fine gold (see Note 4).

Basis of Accounting

The Fund maintains its accounts on an accrual basis and, accordingly, recognizes income as it is earned and records expenses as they are incurred except that income from charges from members that are overdue in their obligations to the Fund by six months or more is deferred and is recognized as income only when paid unless the member has remained current in settling charges when due (see discussion of deferred charges in Note 5). It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

The established policy of the Fund is to charge as an expense of each accounting period the total costs incurred for fixed property, furniture and equipment purchases except for the cost of an acquisition of land, which is accumulated in an asset account pending completion of the extension of the building (SDR 13.5 million and SDR 12.1 million in 1991 and 1990, respectively). For the year ended April 30, 1991, the cost of building improvements and equipment in excess of $100,000 amounted to SDR 4.0 million (SDR 2.5 million in 1990). The total accumulated cost of land and buildings, excluding the cost of the extension which is accumulated in other assets, amounts to SDR 102 million (SDR 99 million in 1990).

2. Currencies and Securities

Each member has the option to substitute nonnegotiable and non-interest-bearing securities for the amount of its currency held by the Fund in the General Resources Account that is in excess of ¼ of 1 percent of the member’s quota. These securities, which are part of the Fund’s currency holdings, are encashable by the Fund on demand.

Changes in the Fund’s holdings of members’ currencies and securities for the year ended April 30, 1991 were as follows:

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Each member is obligated to maintain the value of the balances of its currency held by the Fund in terms of the SDR except for holdings which may be held in Borrowed Resources Suspense Accounts, the Special Disbursement Account, and the Investment Account. Whenever the Fund revalues its holdings of a member’s currency, an account receivable or an account payable is established for the amount of currency payable by or to the member in order to maintain the value of the Fund’s holdings of the currency in terms of the SDR. The balances of the accounts receivable or payable are reflected in the Fund’s total currency holdings. At April 30, 1991 accounts receivable to maintain SDR values of currency holdings amounted to SDR 14,383.8 million and accounts payable amounted to SDR 422.9 million (SDR 14,826.2 million and SDR 1,422.0 million, respectively at April 30, 1990). At June 17, 1991 the amounts receivable were SDR 9,117.3 million and the amounts payable were SDR 375.3 million.

The Fund’s holdings of members’ currencies at April 30, 1991 are shown in Schedule 1.

3. SDR Holdings

SDRs are reserve assets created by the Fund and allocated to members participating in the SDR Department. Although SDRs are not allocated to the Fund, the Fund may acquire, hold and dispose of SDRs through the General Resources Account. SDRs held by the Fund are received from its members in the settlement of their financial obligations to the Fund and may be used by the Fund in transactions and operations between the Fund and its members (sold to members in purchases or transferred to members in the settlement of remuneration and interest on Fund borrowing). The Fund earns interest on its SDR holdings at the same rate as all other holders of SDRs.

4. Gold Holdings

At April 30 1991 and 1990 the Fund held 3,217,341 kilograms of gold at designated depositories.

5. Fund Operations

For the year ended April 30, 1991, members’ purchases amounted to SDR 6,955 million of which SDR 707 million were reserve tranche purchases. Over the same period, repurchases by members totaled SDR 5,440 million. Members’ purchases subject to repurchase are shown in Schedule 2.

The outstanding use of Fund credit under various facilities and changes during the year ended April 30, 1991 were as follows:

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Periodic Charges and Remuneration

The Fund levies charges, which are payable periodically, on its holdings of a member’s currency that derive from the member’s use of Fund credit With effect from February 1, 1986, special charges are levied on holdings that are not repurchased when due and on charges that are not settled when due. These special charges are designed to recover the direct financial costs to the Fund arising from members’ overdue financial obligations. A service charge is levied by the Fund on each purchase involving use of Fund resources other than reserve tranche purchases.

The Fund also charges a refundable stand-by fee under a standby or extended arrangement. This fee is refunded proportionally to purchases made under an arrangement If the full amount of an arrangement is not drawn, the balance of the stand-by fee is taken, into income by the Fund upon the expiration of the arrangement Stand-by fees included in other income for the year ended April 30, 1991 amounted to SDR 3.0 million (SDR 4.8 million in 1990).

The Fund pays remuneration on a member’s remunerated reserve; tranche position. A remunerated reserve tranche position is the amount by which the Fund’s holdings of a member’s currency (excluding holdings that derive from the use of Fund credit) is below the norm. The norm is an amount equal to 75 percent of the member’s quota on April 1, 1978 plus the total of subsequent increases in the member’s quota. For members that joined the Fund after April 1, 1978, the norm is determined by adding the proportion of the member’s quota equal to the average of the norm of all other members on the date the member joined the Fund and the total of subsequent increases in the member’s quota.

At April 30, 1991, the total holdings on which the Fund levied charges amounted to SDR 22,906 million (SDR 22,098 million in 1990) and total creditor positions on which the Fund paid remuneration amounted to SDR 16,269 million (SDR 15,486 million in 1990).

Overdue Obligations

At April 30, 1991, 9 members were six months or more overdue to the Fund (11 members in 1990). Credit outstanding to these members including SAF loans amounted to SDR 2,353 million as of April 30, 1991 (SDR 2,589 million as of April 30, 1990). Four of these members (Panama, Peru, Viet Nam, Zambia) are settling obligations as they fall due and are to varying degrees formulating and implementing economic adjustment programs which could lead to the settlement of their arrears. Overdue repurchases and charges of the members were as follows:

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The type and duration of the arrears of these members are as follows:
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Deferred Charges

It is the policy of the Fund to exclude from current income charges owed by members that are six months or more overdue in meeting payments to the Fund unless the member is current in the payment of charges. Charges subsequently accrued will also be excluded from income unless the member becomes current in the payment of charges. Charges excluded from income are recorded as deferred charges and deferred income. Charges due and accrued by members that are six months or more overdue and that have been deferred amounted to SDR 1,078 million (SDR 961 million as at 1990).

Effective May 1, 1986, the Fund adopted a policy under which debtor and creditor members share the financial consequences of overdue obligations (“burden sharing”). An amount equal to deferred charges (excluding special charges) is generated each quarter by an adjustment of the rate of charge and the rate of remuneration. However, the average rate of remuneration is not to be reduced below 85 percent of the SDR interest rate. The amounts received in settlement of overdue charges are distributed to members that paid additional charges or received reduced remuneration when (and to the extent that) deferred charges that gave rise to adjustments are paid The cumulative amount of deferred charges outstanding which have arisen subsequent to May 1, 1986, and have resulted in adjustments to charges and remuneration, amounts to SDR 808 million (SDR 729 million in 1990).

During the year ended April 30, 1991, new deferred charges increased by SDR 118 million (SDR 244 million in 1990), of which SDR 46 million (SDR 55 million in 1990) were deferred special charges. During the same period, settlements of deferred charges amounted to SDR 184 million (SDR 53 million in 1990). Including the adjustments described in the following paragraphs, an amount of SDR 288 million (SDR 254 million in 1990) was recorded as additional periodic charges and reduced remuneration during the same period.

Special Contingent Accounts

In view of the existence of protracted overdue obligations, the Fund accumulates precautionary balances, inter alia, in the Special Contingent Accounts. At April 30, 1991 these balances amounted to SDR 427.0 million and were held in two different Special Contingent Accounts (SCA-1 and SCA-2). A total of SDR 284.7 million was held in the SCA-1 (SDR 214.8 million in 1990) and SDR 142.3 million was held in the SCA-2 as of April 30, 1991.

In order to strengthen its financial position the Fund decided at the end of financial year 1987 to place SDR 26.5 million into a Special Contingent Account (SCA-1). Since then, precautionary balances held in this account have been further increased by additional quarterly adjustments to the rate of charge and the rate of remuneration under the burden sharing mechanism. An amount of SDR 69.9 million was generated through adjustments to the rate of charge and the rate of remuneration and allocated to this account in financial year 1991. Balances in the account are to be distributed to the members that shared the cost of financing it when there are no outstanding overdue charges and repurchases, or at such earlier time as the Fund may decide.

In the context of the strengthened arrears strategy, the Fund extended, effective July 1, 1990, the mechanisms for sharing the burden associated with overdue obligations among debtor and creditor members. This extension is designed to accumulate SDR 1 billion in an additional Special Contingent Account (SCA-2) over approximately five years, which will be financed by a further adjustment of 0.35 percent to the rate of charge and a further adjustment to the rate of remuneration to yield three times the amount generated by the further adjustment to the rate of charge, subject to the floor to the rate of remuneration of 80 percent of the SDR interest rate. The amounts thus accumulated are to safeguard purchases made under a successor arrangement after a rights accumulation program has been successfully completed by members with protracted arrears to the Fund at the end of 1989, while at the same time providing additional liquidity to assist in the financing of such purchases. This scheme provides for refunds of contributions upon full repayment to the Fund of the use of such credit or at such earlier date as the Fund may determine.

Strengthened Cooperative Strategy

In March 1990, the Fund agreed on a strengthened cooperative strategy aimed at resolving the issue of overdue obligations to the Fund. Three major elements form the basis of the cooperative strategy, namely, (i) preventative measures; (ii) remedial and deterrent measures; and (iii) intensified collaboration and the rights approach. The preventative measures help ensure that all members using Fund resources meet their obligations to the Fund as they fall due. As a complement to preventative measures, the deterrent element was strengthened through, inter alia, a tightening of the timing of procedures for dealing with members with overdue financial obligations. This timetable sets time limits between the date of emergence of arrears to the Fund and a declaration of ineligibility and makes explicit the timing of a declaration of noncooperation and initiation of the procedures for compulsory withdrawal. It also includes the possible use of the suspension of voting and related rights as a measure of deterrence once the Third Amendment of the Articles of Agreement, which would make a suspension possible, is ratified. Under the intensified collaborative approach, the Fund has developed the technique of Fund-monitored programs and rights accumulation programs, which permit a member with protracted arrears to the Fund to establish a track record of performance related to policy implementation and payments. A rights accumulation program allows the member to earn rights toward future financing through the implementation of a comprehensive economic program. Rights would be encashed through a disbursement under a successor arrangement after clearance of arrears and when all the requirements for that successor arrangement are met. At April 30, 1991, one member (Zambia) had adopted a rights accumulation program, while four other members with protracted arrears were adopting or following economic adjustment programs which could lead to a rights accumulation program.

6. Reserves

The Fund determines annually what part of its net income shall be placed to the General Reserve or to the Special Reserve, and what part, if any, shall be distributed. The Articles of Agreement permit the Fund to use the Special Reserve for any purpose for which it may use the General Reserve, except distribution. Any administrative deficit for any financial year must be charged first against the Special Reserve.

7. Borrowing

Outstanding borrowing by the Fund was as follows:

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Scheduled repayments of outstanding borrowing by the Fund are shown in Schedule 3.

Supplementary Financing Facility

The supplementary financing facility became operational in May 1979. The Fund entered into borrowing agreements with 14 members, or institutions within their territories, and with the Swiss National Bank under which the lenders agreed to make resources available to the Fund, at call, up to SDR 7,784 million through February 1984 to finance purchases by members under this facility. Borrowing by the Fund under these agreements was repaid in installments between three and one half to seven years after the date of borrowing. The last repayment took place in January 1991. Interest paid by the Fund on amounts borrowed under the borrowing agreements was based on the average yield on U.S. Government securities with a constant maturity of five years.

Enlarged Access

The policy on enlarged access became operational in May 1981. The Fund entered into borrowing agreements with seven members, or institutions within their territories, the Bank for International Settlements, and the Swiss National Bank under which the lenders agreed to make resources available to the Fund, up to SDR 13,475 million, to finance purchases by members under the policy. The maturities of borrowing by the Fund under these agreements vary from three months to seven years. Interest paid by the Fund on amounts borrowed under these agreements is at variable rates of interest which are established periodically, and are related to market interest rates, based on Eurocurrency deposit rates and weighted average yields of domestic instruments denominated in the five currencies in the SDR valuation basket. In September 1990, the Fund decided that once borrowed resources had been fully utilized, ordinary resources would be substituted to meet commitments of borrowed resources in financing purchases made under arrangements under the enlarged access policy, approved before the date the increase in quotas under the Ninth General Review of Quotas becomes effective, or December 31, 1991, whichever is earlier.

Bilateral Arrangements with Japan

In December 1986, the Fund and the Government of Japan agreed to an arrangement under which Japan has made available to the Fund SDR 3 billion, to help finance the Fund’s support of adjustment programs of member countries. Calls under the agreement were made by the Fund over a period of four years ending March 31, 1991. At April 30, 1991, all available resources had been fully utilized and some resources were held in the Borrowed Resources Suspense Accounts pending their use in purchases. The final maturity of each call is five years from the initial date of the call. Interest on amounts borrowed under the arrangement is based on the weighted average of six-month domestic interest rates in the countries that make up the currency basket of the SDR.

General Arrangements to Borrow

Under the General Arrangements to Borrow (GAB) and an associated agreement with a nonparticipant to the GAB, the Fund may borrow up to SDR 18.5 billion when supplementary resources are needed to forestall or to cope with an impairment of the international monetary system. The GAB became effective from October 24, 1962 and has been renewed until December 25, 1993.

Borrowing Guidelines

The Fund has established guidelines for borrowing, which provide that the Fund will not allow the total of outstanding bor-rowing, plus unused credit lines, to exceed the range of 50 to 60 percent of the total of Fund quotas. Since all GAB lines of credit are unlikely to be called upon at the same time, the total of outstanding borrowing shall include either outstanding borrowing by the Fund under the GAB, or two thirds of the total credit lines under the GAB and associated agreements, whichever is the greater. The borrowing guidelines are subject to review by the Executive Board. Total outstanding borrowing and unused credit lines, calculated in accordance with these guidelines, at April 30, 1991 was equal to 18.3 percent of quotas (19.8 percent of quotas at April 30, 1990).

8. Arrangements Under the General Department

At April 30, 1991, forty arrangements were in effect and undrawn balances under these arrangements amounted to SDR 7,498 million. These arrangements are listed in Schedule 4.

9. Administrative Expenses

The Fund incurs administrative expenses, primarily for salaries, travel and other administrative needs, in accordance with an administrative budget approved by the Executive Board. The General Resources Account is reimbursed for expenses incurred in administering the SDR Department, the Special Disbursement Account and the Enhanced Structural Adjustment Facility Trust.

The Fund has certain commercial deposits and receivables relating to its administrative activities. These deposits and receivables are not subject to the maintenance of value obligations.

In addition to the payment of various allowances to or on behalf of Executive Directors and staff, the Fund has a contributory retirement plan. All contributions to the Plan and all other assets, liabilities and income of the Plan are administered separately outside of the General Department and can be used only for the benefit of the participants in the Plan and their beneficiaries. Participants contribute a fixed percentage of pensionable remuneration. The Fund contributes the remainder of the cost of funding the Plan and pays certain administrative costs of the Plan.

The Fund uses the aggregate actuarial method for determining its pension cost and for funding the Plan. Under this method, the employer’s contributions, including those for cost of living adjustments and for experience gains and losses, are spread over the expected future working lifetime of the active participants in the Plan and are determined annually as a percent of pensionable remuneration of the active participants. The funding and cost of the Plan for the year ended April 30, 1991 is based upon an actuarial valuation as at April 30, 1989.

The Fund also has established a Supplemental Retirement Benefit Plan (SRBP) for the purpose of paying certain benefits not payable from the Staff Retirement Plan. Payments to the SRBP are made from the Administrative Budget. The assets of the SRBP are maintained separately from other assets of the Fund and are held on behalf of the participants and beneficiaries entitled to these payments.

The Fund staff is entitled to accumulated annual leave, up to a maximum of 60 days, which may be commuted into a cash payment upon termination of employment. In addition, upon the completion of five years’ service, each member of the staff is entitled to a termination grant, subject to maximum amounts based on years service after July 1979. These amounts are accounted for as they are earned and entitlements have been accrued.

Schedule 1

GENERAL DEPARTMENT QUOTAS, FUND’S HOLDINGS OF CURRENCIES, MEMBERS’ USE OF FUND RESOURCES, AND RESERVE TRANCHE POSITIONS as at April 30, 1991

(In thousands of SDRs)

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Includes nonnegotiable, non-interest-bearing notes which members are entitled to issue in substitution for currency.

Less than SDR 500.

Schedule 2

GENERAL DEPARTMENT SCHEDULED REPURCHASES AND REPAYMENTS OF LOANS as at April 30, 1991

(In thousands of SDRs)

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A member is entitled to repurchase at any time holdings of its currency subject to charges and is expected to make repurchases as and when its balance of payments and reserve position improve.

Includes reserve tranche purchases made prior to April 1, 1978 that are subject to repurchase (SDR 6.2 million).

Schedule 3

GENERAL DEPARTMENT SCHEDULED REPAYMENTS OF FUND BORROWING as at April 30 1991

(In thousands of SDRs)

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Dates of repayment are the dates provided in the borrowing agreements between the Fund and lenders, including maximum periods of renewals which are at the Fund’s option. The borrowing agreements also permit earlier repayments in certain circumstances.

Schedule 4

GENERAL DEPARTMENT STATUS OF ARRANGEMENTS as at April 30, 1991

(In thousands of SDRs)

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Resources under enhanced structural adjustment facility arrangements may be provided from the structural adjustment facility within the Special Disbursement Account and from the Enhanced Structural Adjustment Facility Trust.

SDR DEPARTMENT STATEMENT OF ALLOCATIONS AND HOLDINGS as at April 30, 1991

(In thousands of SDRs)

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The accompanying note is an integral part of the financial statements.
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SDR DEPARTMENT STATEMENT OF RECEIPT AND USE OF SDRs for the year ended April 30, 1991

(In thousands of SDRs)

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The accompanying note is an integral part of the financial statements.
SDR DEPARTMENT NOTE TO THE FINANCIAL STATEMENTS
SDR Department

All transactions and operations involving SDRs are conducted through the SDR Department. SDRs are allocated by the Fund to members that are participants in the SDR Department in proportion to their quotas in the Fund. Allocations were made in 1970, 1971, and 1972, totaling SDR 9.3 billion. Further allocations were made in 1979, 1980 and 1981, totaling SDR 12.1 billion. SDRs do not constitute claims by holders against the Fund to provide currency; however, in connection with the termination of participation or liquidation the Fund will provide to holders the currencies received from participants. The Fund is empowered to prescribe certain official entities as holders of SDRs: to date, 16 institutions have been prescribed as holders. These prescribed holders do not receive allocations and cannot use or receive SDRs in designation.

Uses of SDRs

Participants and prescribed holders can use and receive SDRs in operations and transactions by agreement among themselves. Participants can also use SDRs in operations and transactions involving the General Resources Account, such as the payment of charges and repurchases. In addition, the Fund ensures, by designating participants to provide freely usable currency in exchange for SDRs, that a participant can use its SDRs to obtain such currency if it has a need because of its balance of payments or its reserve position or developments in its reserves. A participant is not obliged to provide currency for SDRs beyond the point at which its holdings of SDRs in excess of its net cumulative allocation are equal to twice its net cumulative allocation. A participant may, however, provide currency in excess of the obligatory limit.

Interest, Charges, and Assessment

Interest is paid to each holder on its holdings of SDRs. Charges are levied on each participant’s net cumulative allocation plus any negative balance of the participant or unpaid charges. Interest on SDR holdings is paid and charges on net cumulative allocations are collected on a quarterly basis. Interest and charges are levied at the same rate and settled by crediting and debiting individual holdings accounts on the first day of the subsequent quarter. The Fund is required to pay interest to each holder, whether or not sufficient SDRs are received in payment of charges. At April 30, 1991, five members (six members at April 30, 1990) were six months or more overdue to the SDR Department. The amount of unpaid charges of these members to the SDR Department was as follows:

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The duration of arrears of these members are as follows:
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The SDR interest rate is determined by reference to a combined market interest rate, which is a weighted average of yields or rates on short-term instruments in the capital markets of France, Germany, Japan, the United Kingdom, and the United States. The combined market interest rate used to determine the SDR interest rate is calculated each Friday, using the yields or rates of that day. The SDR interest rate, which is set equal to the combined market interest rate, enters into effect on the following Monday and applies until the end of the following Sunday.

The expenses of conducting the business of the SDR Department are paid by the Fund from the General Resources Account, which is reimbursed in SDRs at the end of each financial year. For this purpose, the Fund levies an assessment, at the same rate for all participants, on their net cumulative allocation.

SUPPLEMENTARY FINANCING FACILITY SUBSIDY ACCOUNT BALANCE SHEET as at April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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SUPPLEMENTARY FINANCING FACILITY SUBSIDY ACCOUNT STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
SUPPLEMENTARY FINANCING FACILITY SUBSIDY ACCOUNT NOTES TO THE FINANCIAL STATEMENTS
Purpose

The Supplementary Financing Facility Subsidy Account, which is administered by the Fund, was established in December 1980 to assist low-income developing members to meet the cost of using resources made available through the Fund’s supplementary financing facility and under the policy on exceptional use. The assets of the Supplementary Financing Facility Subsidy Account are separate from the assets of all other accounts of, or administered by, the Fund and are not to be used to discharge liabilities or to meet losses incurred in the administration of other accounts. The Supplementary Financing Facility Subsidy Account became operational in May 1981 and the first subsidy payments were made in December of that year. The resources of the Account arise from contributions and loans from members, interest income earned on investments, and transfers of amounts received in interest and loan repayments from the Trust Fund through the Special Disbursement Account. Cumulative contributions from members to the Supplementary Financing Facility Subsidy Account at April 30, 1991 amounted to SDR 57.4 million. In July 1985, the Fund determined that the resources of the Supplementary Financing Facility Subsidy Account were sufficient to meet its estimated needs, and transfers of resources received from the Trust Fund by the Special Disbursement Account were terminated. Resources considered to be in excess of the estimated subsidy payments are transferred back to the Special Disbursement Account. As of April 30, 1991, the cumulative amount of transfers to the Special Disbursement Account from the Subsidy Account amounted to SDR 81.8 million (SDR 75.4 million at April 30, 1990).

1. Accounting Practices
Unit of Account

The accounts of the Supplementary Financing Facility Subsidy Account are expressed in terms of the SDR. At present, the currency value of the SDR is determined by the Fund each day by summing the values in U.S. dollars, based on market exchange rates, of a basket of five specific currencies. The Fund’s procedures require that the SDR valuation basket be reviewed every five years, and that the basket is to include the currencies of the members having the largest exports of goods and services during the five-year period ending one year prior to the date of the revisions. In accordance with these requirements, the SDR valuation basket was revised effective January 1, 1991. The currencies comprising the basket and their amounts in the basket during the year ended April 30, 1991 were as follows:

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Basis of Accounting

The accounts are maintained on an accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Interest-Earning Deposits

The assets of the Account, pending their disbursement, are held in the form of interest-earning time deposits denominated in SDRs.

3. Subsidy Payments

The amount of the subsidy is calculated as a percentage per annum of the average daily balances in each year of the Fund’s holdings of recipient members’ currencies subject to the schedule of charges applicable to the supplementary financing facility. The rate of subsidy to be paid is determined by the Fund in light of the resources available. The subsidy may not exceed the equivalent of 3 percent per annum of the currency holdings resulting from purchases under the supplementary financing facility nor reduce the effective rate on the use of credit under the supplementary financing facility below the rate of charge on the use of the Fund’s ordinary resources. Subsidy payments are withheld from members that have not paid the charges to which the subsidy applies. At April 30, 1991, subsidy payments totaling SDR 2.5 million have not been made to four members (at April 30, 1990, SDR 3.7 million to five members).

TRUST FUND BALANCE SHEET as at April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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TRUST FUND STATEMENT OF INCOME AND EXPENSE for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.

TRUST FUND STATEMENT OF CHANGES IN TRUST RESOURCES for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
TRUST FUND NOTES TO THE FINANCIAL STATEMENTS
Purpose

The Trust Fund, which is administered by the Fund as Trustee, was established in 1976 to provide balance of payments assistance on concessional terms to eligible members that qualify for assistance. In 1980, the Fund, as Trustee, decided that upon the completion of the final loan disbursements, the Trust Fund shall be terminated as of April 30, 1981. After that date, the activities of the Trust Fund have been confined to the completion of any unfinished business of the Trust Fund and the winding up of its affairs. The resources of the Trust Fund are separate from the assets of all other accounts of or administered by the Fund and cannot be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

1. Accounting Practices
Unit of Account

The accounts of the Trust Fund are expressed in terms of the SDR. At present, the currency value of the SDR is determined by the Fund each day by summing the values in U.S. dollars, based on market exchange rates, of a basket of five specific currencies. The Fund’s procedures require that the SDR valuation basket be reviewed every five years, and that the basket is to include the currencies of the members having the largest exports of goods and services during the five-year period ending one year prior to the date of the revisions. In accordance with these requirements, the SDR valuation basket was revised effective January 1, 1991. The currencies comprising the basket and their amounts in the basket during the year ended April 30, 1991 were as follows:

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Basis of Accounting

The accounts are maintained on an accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred except that income from interest from members that are overdue in their obligations to the Fund by six months or more is deferred and is recognized as income only when paid unless the member has remained current in settling charges when due (see Note 3). The expenses of conducting the business of the Trust Fund that are paid from the General Resources Account of the Fund are reimbursable by the Trust Fund on the basis of an estimate of these expenses. Following the termination of the Trust Fund as of April 30, 1981, residual administrative costs have been absorbed by the General Resources Account. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Loans

Loans were made from the Trust Fund to those eligible members that qualified for assistance in accordance with the provisions of the Trust Fund Instrument The final loan disbursements were made on March 31, 1981. Interest on the outstanding loan balances is charged at the rate of ½ of 1 percent per annum, and special charges are levied on late payments of interest and principal.

3. Overdue Obligations

At April 30, 1991, six members with obligations to the Trust Fund were six months or more late in discharging their obligations to the Fund and were not current in settling interest (eight members at April 30, 1990). For these members the recognition of income from interest on the outstanding loans and special charges is being deferred. At April 30, 1991, the total amount of deferred income, reflected in the balance sheet as interest and charges receivable and accrued and as deferred income amounts to SDR 22.7 million (SDR 17.9 million at April 30, 1990). Overdue loan repayments and interest and special charges due from these members were as follows:

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The type and duration of the arrears of these members at April 30, 1991 were as follows:

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4. Direct Distribution of Profits

The Fund decided that the Trustee make, through the Trust Fund, the direct distribution of part of the profits from the sale of gold for the benefit of developing members. The share of each developing member in this direct distribution of profits was calculated on the basis of its share in total Fund quotas as at August 31, 1975 and on the basis of the actual profits realized in the gold auctions.

The direct distribution of profits has been completed, except that an amount of $3,990,776, representing the share of Cambodia, will continue to be held in the Trust Fund until relations with that member have been restored.

5. Transfer of Resources

The resources of the Trust Fund held on the termination date or subsequently received by the Trustee have been employed to pay interest and principal when due on loan obligations and to make transfers to the Special Disbursement Account.

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST COMBINED BALANCE SHEET as at April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.
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ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST COMBINED STATEMENT OF INCOME AND EXPENSE for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST COMBINED STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes and Schedules 1-4 are an integral part of the financial statements.
ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST NOTES TO THE FINANCIAL STATEMENTS
Purpose

The Enhanced Structural Adjustment Facility Trust, which is administered by the Fund as Trustee, was established in December 1987 to provide loans on concessional terms to low-income developing members that qualify for assistance in order to support programs to strengthen substantially and in a sustainable manner their balance of payments position and to foster growth. The resources of the Enhanced Structural Adjustment Facility Trust are separate from the assets of all other accounts of, or administered by, the Fund and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

The operations and transactions of the Enhanced Structural Adjustment Facility Trust are conducted through a Loan Account, a Reserve Account, and a Subsidy Account.

Loan Account

The resources of the Loan Account consist of the proceeds of loans made to the Enhanced Structural Adjustment Facility Trust for the Loan Account, and payments of principal and interest on loans extended by the Enhanced Structural Adjustment Facility Trust. Resources of the Loan Account are committed to qualifying member countries for a three-year period, upon approval by the Trustee, in support of a three-year macroeconomic and structural adjustment program submitted by the member. Loans disbursed under the Enhanced Structural Adjustment Facility Trust are repayable in ten semiannual installments commencing not later than the end of the first six months of the sixth year, and are to be completed at the end of the tenth year after the date of disbursement.

Interest is charged on the outstanding loan balances and is currently set at the rate of ½ of 1 percent per annum. At April 30, 1991, SDR 811.0 million in loans had been disbursed. (SDR 416.0 million at April 30, 1990).

Reserve Account

The resources of the Reserve Account consist of amounts transferred by the Fund from the Special Disbursement Account; net earnings from investment of resources held in the Reserve Account; net earnings from investment of any resources held in the Loan Account pending use of these resources in operations; payment of overdue principal or interest thereon under Loan Account loans; and payments of interest under Loan Account loans to the extent that payment has been made to a lender from the Reserve Account.

The resources held in the Reserve Account are to be used by the Trustee to make payments of principal and interest on its borrowings for the Loan Account to the extent that the amounts available from receipts of repayments and interest from borrowers under the Loan Account, together with the authorized interest subsidy, are insufficient to cover payments to lenders as they become due and payable.

Subsidy Account

The resources held in the Subsidy Account consist of the proceeds of donations made to the Trust for the Subsidy Account including transfers of net earnings on resources temporarily placed to administered accounts; the proceeds of loans made to the Trust for the Subsidy Account; and the net earnings from investment of donated or borrowed resources held in the Subsidy Account.

The resources available in the Subsidy Account are drawn by the Trustee to pay the difference, with respect to each interest period, between the interest due from the borrowers under the Enhanced Structural Adjustment Facility Trust and the interest due on resources borrowed for Loan Account loans.

1. Accounting Practices
Unit of Account

The accounts of the Enhanced Structural Adjustment Facility Trust are expressed in terms of the SDR. At present, the currency value of the SDR is determined by the Fund each day by summing the values in U.S. dollars, based on market exchange rates, of a basket of five specific currencies. The Fund’s procedures require that the SDR valuation basket be reviewed every five years, and that the basket is to include the currencies of the members having the largest exports of goods and services during the five-year period ending one year prior to the date of the revisions. In accordance with these requirements, the SDR valuation basket was revised effective January 1, 1991. The currencies comprising the basket and their amounts in the basket during the year ended April 30, 1991 were as follows:

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Members are not obligated to maintain the SDR value of their currency held by the Accounts of the Enhanced Structural Adjustment Facility Trust

Basis of Accounting

The Accounts of the Enhanced Structural Adjustment Facility Trust are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Trustee to make all calculations on the basis of the exact number of days in the accounting period. The expenses of conducting the business of the Enhanced Structural Adjustment Facility Trust that are paid by the General Resources Account of the Fund are reimbursed on an annual basis by the Special Disbursement Account, and corresponding transfers from the Trust’s Reserve Account may be made to the Special Disbursement Account, when and to the extent needed.

2. Investments

The resources of the Enhanced Structural Adjustment Facility Trust are invested pending their use in operations and transactions. Investments may be denominated in SDRs or in currency. Balances held in currency-denominated investments may give rise to valuation gains and losses. Pending their investment, resources may be temporarily held in currency, which also may give rise to valuation gains and losses.

3. Contributions

The Trustee accepts donations of resources for the Subsidy Account on such terms and conditions as agreed between the Trustee and the respective contributors. Cumulative contributions received as at April 30, 1991 amounted to SDR 362.3 million (SDR 203.9 million at April 30, 1990) and are listed in Schedule 1.

4. Borrowing

The Trustee borrows resources for the Loan Account and for the Subsidy Account on such terms and conditions as agreed between the Trustee and the respective lenders.

The following summarizes borrowing agreements concluded as at April 30, 1991 (in thousands of SDRs):

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At April 30, 1990 borrowing agreements had been concluded for the Loan Account and the Subsidy Account amounting to SDR 4,575 million and SDR 101 million, respectively. Amounts available under these agreements at April 30, 1990 were SDR 4,009 million for the Loan Account and SDR 20 million for the Subsidy Account.

Scheduled repayments of outstanding borrowing by the Trustee are shown in Schedule 2.

5. Commitments under Loan Arrangements

At April 30, 1991 resources of the Loan Account were committed to members under 14 loan arrangements and undrawn balances under those arrangements amounted to SDR 617 million. At April 30, 1990 undrawn balances under 11 loan arrangements amounted to SDR 621 million. Loan arrangements are listed in Schedule 3. Scheduled repayments of outstanding loans are shown in Schedule 4.

Schedule 1

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST CONTRIBUTIONS TO THE SUBSIDY ACCOUNT1 as at April 30, 1991

(In thousands of SDRs)

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The Subsidy Account also benefits from the net investment earnings of the proceeds of loans or investments, which amounted to SDR 91.4 million at April 30, 1991.

Schedule 2

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST SCHEDULE OF REPAYMENTS OF BORROWING as at April 30, 1991

(In thousands of SDRs)

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Dates of repayment are the dates provided in the borrowing agreements between the Trustee and lenders.

Schedule 3

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST STATUS OF LOAN ARRANGEMENTS1 as at April 30, 1991

(In thousands of SDRs)

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Resources under enhanced structural adjustment facility arrangements may be provided from the structural adjustment facility within the Special Disbursement Account and from the Enhanced Structural Adjustment Facility Trust.

Schedule 4

ENHANCED STRUCTURAL ADJUSTMENT FACILITY TRUST SCHEDULE OF REPAYMENTS OF LOANS as at April 30, 1991

(In thousands of SDRs)

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ENHANCED STRUCTURAL ADJUSTMENT FACILITY ADMINISTERED ACCOUNTS BALANCE SHEET as at April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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ENHANCED STRUCTURAL ADJUSTMENT FACILITY ADMINISTERED ACCOUNTS STATEMENT OF INCOME AND EXPENSE for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.

ENHANCED STRUCTURAL ADJUSTMENT FACILITY ADMINISTERED ACCOUNTS STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of SDRs)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
ENHANCED STRUCTURAL ADJUSTMENT FACILITY ADMINISTERED ACCOUNTS NOTES TO THE FINANCIAL STATEMENTS
Purpose

The Administered Accounts were established for the administration of resources deposited in the accounts. The difference, net of any investment cost, between interest earned by the Fund on the investment of resources and the interest on deposits due will be transferred to the Subsidy Account of the Enhanced Structural Adjustment Facility Trust.

The resources of each of the Administered Accounts are separate from the assets of all other accounts of, or administered by, the Fund and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

1. Accounting Practices
Unit of Account

The accounts of the Administered Accounts are expressed in terms of the SDR. At present, the currency value of the SDR is determined by the Fund each day by summing the values in U.S. dollars, based on market exchange rates, of a basket of five specific currencies. The Fund’s procedures require that the SDR valuation basket be reviewed every five years, and that the basket is to include the currencies of the members having the largest exports of goods and services during the five-year period ending one year prior to the date of the revisions. In accordance with these requirements, the SDR valuation basket was revised effective January 1, 1991. The currencies comprising the basket and their amounts in the basket during the year ended April 30, 1991 were as follows:

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Basis of Accounting

The accounts of the Administered Accounts are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Investments

The resources of the Administered Accounts are invested by the Fund in SDR-denominated deposits.

3. Deposits

The Administered Account Austria was established on December 27, 1988 for the administration of resources deposited in the account by the Austrian National Bank. The deposit totaling SDR 60 million will be repaid in ten equal semiannual installments which begin five and one half years after the date of the deposit and will be completed at the end of the tenth year after the date of the deposit. The deposit will bear interest at an annual rate of ½ of 1 percent per annum.

The Administered Account Belgium was established July 27, 1988 for the administration of resources deposited in the account by the National Bank of Belgium. The deposits totaling SDR 100 million will each have an initial maturity of six months and will be renewable, at the option of the Fund, on the same basis. The final maturity of each deposit, including renewals, will be ten years from the initial date of the deposit. The deposits will bear interest at an annual rate of ½ of 1 percent per annum.

The Administered Account Greece was established November 30, 1988 for the administration of resources deposited in the account by the Bank of Greece. The deposit totaling SDR 35 million will be repaid in ten equal semiannual installments which begin five and one half years after the date of deposit and will be completed at the end of the tenth year after the date of the deposit. The deposit will bear interest at an annual rate of ½ of 1 percent per annum.

ADMINISTERED ACCOUNT—JAPAN BALANCE SHEET as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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ADMINISTERED ACCOUNT—JAPAN STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
ADMINISTERED ACCOUNT—JAPAN NOTES TO THE FINANCIAL STATEMENTS
Purpose

At the request of Japan, the Fund established an account on March 3, 1989, to administer resources contributed by Japan that are to be used to assist certain members with overdue obligations to the Fund. The resources of the Administered Account are to be disbursed in amounts specified by Japan and only to members designated by Japan. The Fund performs financial services in the administration of the resources contributed, and the assets of the Account are separate from the assets of all other accounts of, or administered by, the Fund and are not to be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

Contributions received by the Administered Account are held in temporary investment accounts pending the receipt of notification from Japan that resources should be disbursed. Cumulative contributions amount to $89.7 million, of which $12 million has been disbursed.

1. Accounting Practices
Unit of Account

The accounts of the Administered Account are expressed in U.S. dollars. All transactions and operations of the Administered Account, including the transfers to and by the Account, are denominated in U.S. dollars.

Basis of Accounting

The accounts of the Administered Account are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Investments

The assets of the Administered Account, pending their disbursement, are held in the form of repurchase agreements. Interest received on these assets varies and is market related.

3. Account Termination

The Administered Account can be terminated by the Fund or by Japan. Any resources in the account at termination are to be returned promptly to Japan.

ADMINISTERED ACCOUNT—GUYANA as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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ADMINISTERED ACCOUNT—GUYANA STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
ADMINISTERED ACCOUNT—GUYANA NOTES TO THE FINANCIAL STATEMENTS
Purpose

At the request of Guyana, the Fund established an account on April 5, 1989, to administer resources made available by various contributors in connection with Guyana’s adjustment effort. The Fund administers this Account and performs financial services at the request of Guyana. The resources of the Administered Account are separate from the assets of all other accounts of, or administered by, the Fund and are not to be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

Contributions received by the Account are temporarily invested pending the receipt of notification that resources, including investment income, are to be disbursed. Cumulative contributions amount to $244.4 million, and an amount of $244.6 million including interest earned on contributions has been disbursed.

1. Accounting Practices
Unit of Account

The accounts of the Administered Account are expressed and denominated in U.S. dollars. All transfers to and by the Account are denominated in U.S. dollars or in other freely usable currencies.

Basis of Accounting

The accounts of the Administered Account are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Investments

The assets of the Administered Account, pending their disbursement, are held in the form of repurchase agreements or in the form of interest-earning deposits. Account resources have been temporarily invested in SDR-denominated obligations in anticipation of Guyana’s settlement of obligations denominated in SDR. Interest received on these assets varies and is market related.

3. Account Termination

The Administered Account can be terminated by the Fund, by Guyana, or by the Chairman of the Support Group for Guyana. Otherwise, the Administered Account shall be terminated on December 31, 1991, or such later date as may be agreed. Any proceeds that remain in the Account at termination shall be returned to the transferors, unless otherwise indicated by them.

ADMINISTERED TECHNICAL ASSISTANCE ACCOUNT—JAPAN BALANCE SHEET as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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ADMINISTERED TECHNICAL ASSISTANCE ACCOUNT—JAPAN STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
ADMINISTERED TECHNICAL ASSISTANCE ACCOUNT—JAPAN NOTES TO THE FINANCIAL STATEMENTS
Purpose

At the request of Japan, the Fund established an account on March 19, 1990, to administer resources contributed by Japan that are to be used to finance technical assistance to member countries. Resources of the Administered Technical Assistance Account are to be used with the approval of Japan, to assist members in strengthening their administrative capacity and their capacity to formulate, implement, and maintain macroeconomic programs and structural adjustment programs aimed, inter alia, at helping to resolve or to avoid debt-related difficulties. Disbursements can also be made from the Administered Technical Assistance Account to the Fund’s General Resources Account to reimburse the Fund for qualifying technical assistance projects.

The assets of the Account are accounted for separately from the assets of all other accounts of, or administered by, the Fund and are not to be used to discharge liabilities or to meet losses incurred in the administration of other accounts. Contributions received by the Administered Technical Assistance Account are invested by the Fund pending disbursement. Net investment earnings of the Account accrue and are available for the purposes of the Account. Cumulative contributions amount to $2.5 million, of which $1.5 million has been disbursed.

1. Accounting Practices
Unit of Account

The accounts of the Administered Technical Assistance Account are expressed in U.S. dollars. All transactions and operations of the Administered Technical Assistance Account, including the transfers to and by the Account, are denominated in U.S. dollars.

Basis of Accounting

The accounts of the Administered Technical Assistance Account are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period

2. Investments

The assets of the Administered Technical Assistance Account, pending their disbursement, are invested. Interest received on these investments varies and is market related.

3. Account Termination

The Administered Technical Assistance Account can be terminated by the Fund or by Japan. Any resources that may remain in the Administered Technical Assistance Account at termination, net of accrued liabilities under Technical Assistance Projects, are to be returned to Japan.

VOLUNTARY CONTRIBUTION ACCOUNT—BOLIVIA BALANCE SHEET as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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VOLUNTARY CONTRIBUTION ACCOUNT—BOLIVIA STATEMENT OF CHANGES IN RESOURCES for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
VOLUNTARY CONTRIBUTION ACCOUNT—BOLIVIA NOTES TO THE FINANCIAL STATEMENTS
Purpose

At the request of Bolivia, the Fund established an account on October 21, 1987, to administer contributions to assist Bolivia in discharging a portion of the external indebtedness owed or guaranteed by it to nonofficial creditors. The Fund administers the Voluntary Contribution Account, performs financial services at the request of Bolivia, and makes disbursements from the Account as instructed by Bolivia. The resources of the Account are separate from the assets of all other accounts of, or administered by, the Fund and are not available to discharge liabilities or to meet losses incurred in the administration of other accounts.

Contributions received by the Voluntary Contribution Account are invested pending the receipt of notification of their disbursement. Cumulative contributions amount to $50.4 million, of which $49.9 million has been disbursed.

1. Accounting Practices
Unit of Account

The accounts of the Voluntary Contribution Account are expressed in U.S. dollars. All transactions and operations of the Voluntary Contribution Account, including the transfers to and by the Account, are denominated in U.S. dollars.

Basis of Accounting

The accounts of the Voluntary Contribution Account are maintained on the accrual basis and, accordingly, income is recognized as it is earned and expenses are recorded as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period.

2. Investments

The assets of the Account, pending their disbursement, are held in the form of repurchase agreements or in the form of interest-earning deposits. Interest paid on these assets varies and is market related.

3. Account Termination

The Voluntary Contribution Account can be terminated by the Fund or Bolivia. Any resources in the Voluntary Contribution Account at its termination are to be returned to those that transferred assets to the Account or, in accordance with their instructions, to Bolivia.

VOLUNTARY CONTRIBUTION ACCOUNT—COSTA RICA STATEMENT OF CHANGES IN RESOURCES for the period May 15, 1990 to May 22, 1990

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statement.
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VOLUNTARY CONTRIBUTION ACCOUNT—COSTA RICA NOTES TO THE FINANCIAL STATEMENTS
Purpose

At the request of Costa Rica, the Fund established an account on April 25, 1990, to administer resources to finance Costa Rica’s debt and debt-service reduction and refinancing operations. Resources were used for operations relating to external indebtedness owed or guaranteed by the Republic of Costa Rica, its Central Bank, or any other governmental agency to nonofficial creditors. The Fund administered this Account and performed financial services at the request of Costa Rica. The resources of the Voluntary Contribution Account were separate from the assets of all other accounts of or administered by the Fund and could not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

Cumulative contributions during the operation of the Voluntary Contribution Account amounted to $253.5 million, and these contributions and investment income equal to $253.6 million have been disbursed. Resources received by the Account were temporarily invested until the Fund was notified that resources, including investment income, were to be disbursed.

1. Accounting Practices
Unit of Account

The accounts of the Voluntary Contribution Account were expressed and denominated in U.S. dollars. All transfers to and disbursements from the Account were denominated in U.S. dollars.

Basis of Accounting

The accounts of the Voluntary Contribution Account were maintained on the accrual basis and, accordingly, income was recognized as it was earned. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting period

2. Investments

The assets of the Voluntary Contribution Account, before their disbursement, were held in the form of repurchase agreements. Interest received on these assets varied and was market related.

3. Account Termination

At the instruction of Costa Rica, the Voluntary Contribution Account was terminated by the Fund on May 22, 1990.

STAFF RETIREMENT PLAN REPORT OF THE EXTERNAL AUDIT COMMITTEE

Washington, D.C.

June 27, 1991

Authority and Scope of the Audit

In accordance with Section 20(b) of the By-Laws of the International Monetary Fund, we have audited the financial statements of the Staff Retirement Plan for the year ended April 30, 1991.

Our audit was conducted in accordance with generally accepted auditing standards and included reviews of the accounting and internal control systems, and tests of the accounting records. We evaluated the extent and results of the work of the Independent Accountants as well as that of the Office of Internal Audit and Review and also used other audit procedures as deemed necessary.

Audit Opinion

In our opinion, the financial statements of the Staff Retirement Plan have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding year, and give a true and fair view of the financial status of the Staff Retirement Plan as at April 30, 1991 and of the changes in financial status for the year then ended.

EXTERNAL AUDIT COMMITTEE

/s/ Philippe Lacarriere, Chairman (France)

/s/ Michael J. Jacobs (Australia)

/s/ Jocelyn Thompson (Trinidad and Tobago)

STAFF RETIREMENT PLAN STATEMENT OF ACCUMULATED PLAN BENEFITS AND NET ASSETS AVAILABLE FOR BENEFITS as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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STAFF RETIREMENT PLAN STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.

STAFF RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
STAFF RETIREMENT PLAN NOTES TO THE FINANCIAL STATEMENTS
Description of the Plan
General

The Staff Retirement Plan (Plan) is a defined benefit pension plan covering nearly all staff members of the International Monetary Fund (Employer). All assets and income of the Plan are the property of the Employer and are held and administered by it separately from all its other property and assets and are to be used solely for the benefit of participants, retired participants, and their beneficiaries.

Benefits

The Plan was amended twice in 1990. The first amendment, which limits the compensation on which benefits may be based, had an effective date of May 1, 1989. The second amendment, which makes the changes referred to below as the new Plan provisions, had an effective date of May 1, 1990.

Annual Pension

Participants are entitled to an unreduced pension beginning at normal retirement age of 62 (65 under the old Plan provisions). The amount of the pension is based on the number of years of service, age at retirement, and highest average gross remuneration. Beginning May 1, 1989 the gross remuneration on which pensions from the Plan are based is limited to a predetermined amount which is periodically adjusted. Pension benefits attributable to gross remuneration in excess of this amount are paid from the Supplemental Retirement Benefit Plan. The provisions determining gross remuneration have been amended under the new Plan.

The accrual rate of benefits under the old Plan was 2 percent of gross remuneration for each year of service, while the accrual rate under the new Plan is 2.2 percent for the first 25 years of service and 1.8 percent for the next 10 years of service. Transitional arrangements provide that the pensions of participants hired before May 1, 1990 will be based on a prorated combination of the old and new Plan provisions, using the time period of service before and after May 1, 1990.

Under the new Plan, a grandfathering option allows certain participants to receive pension benefits based on the larger of old Plan benefits or transitional benefits. Those electing the grandfathering option will continue to make contributions on the basis of the higher gross remuneration determined in accordance with the provisions of the old Plan.

Participants between the agés of 50 and 55 may retire with a reduced pension if their age and years of service total at least 75. Participants age 55 and older may retire with an unreduced pension if the sum of their age and years of service equals 85 or more (90 under the old Plan). Early retirement pensions are based on normal pensions, determined under the old Plan provisions or the transitional rules discussed above, whichever is applicable.

Cost of Living Adjustment

Whenever the cost of living increases during a financial year, pensions shall be augmented by a pension supplement which, expressed in percentage terms, shall be equal to the increase in the cost of living for the financial year. If the cost of living increase for a financial year should exceed 3 percent, the Employer has the right, for good cause, to reduce prospectively the additional supplement to not less than 3 percent. Deferred pensions become subject to cost of living adjustments when the sum of a former participant’s age and years of service is at least 50 (55 under the old Plan).

Withdrawal Benefit

Upon termination a participant with at least three years of eligible service may elect to receive either a withdrawal benefit or a deferred pension to commence after the participant has reached the age of 50 (if age and years of service add to 75) or age 55 with shorter service. Under the old Plan the withdrawal benefit was equal to the sum of the accumulated contributions of the participant and a percentage of such accumulated contributions, the percentage being based on the number of months of eligible service. Under the new Plan the withdrawal benefit is a percentage of the participant’s highest average gross remuneration. However, the withdrawal benefit under the new Plan is guaranteed to be at least what it would have been under the old Plan provisions, but based on a participant’s actual contributions.

Commutation

A pensioner entitled to receive a normal, early retirement, or deferred pension may elect to commute up to one third of his or her pension, and receive a lump-sum amount at retirement in lieu of the amount of pension commuted. A participant entitled to receive a disability pension may elect to commute one third of the early retirement pension that would otherwise have been applicable.

Disability Pensions, Death Benefits, and Survivor Benefits

The Plan also provides for disability pensions, death benefits, and benefits to surviving spouses and children of deceased participants. Under the old Plan, surviving spouses and children of pensioners receive benefits only if certain age and eligible service requirements had been met by the deceased retiree. Under the new Plan these benefits are paid without regard to age and eligible service.

Currency of Pension Payments

A participant may elect to have his pension paid in the currency of the country in which he has established permanent residence. Under the new Plan participants may receive their pensions in a combination of two currencies—the U.S. dollar and the currency of the country in which the participant is a permanent resident. As a result of an amendment to the Plan that became effective on May 1, 1991, the additional cost of paying pensions in local currency, formerly paid by the administrative budget, is now paid by the Plan.

Contributions

Participants

As a condition of employment, regular staff members are required to participate in and to contribute to the Plan. The contribution rate is presently 7 percent of the participant’s gross remuneration. Certain other categories of staff members may elect to participate in the Plan. Contributions of participants electing the grandfathering option are based on the grossing-up formula in effect on April 30, 1990.

Employer

The employer meets certain administrative costs of the Plan, such as the actuary’s fees, and contributes any additional amount not provided by the contribution of participants to pay costs and expenses of the Plan not otherwise covered. In financial year 1991 the administrative costs met by the Employer were approximately $0.2 million ($0.7 million in 1990).

Plan Termination

In the event of the termination of the Plan by the Employer the assets of the Plan shall be used to satisfy all liabilities to participants, retired participants and their beneficiaries, and all other liabilities of the Plan. Any remaining balance of the assets shall be returned to the Employer.

1. Accounting Practices
Accumulated Plan Benefits

The actuarial value of vested benefits is presented for two categories. For retired participants, the amount presented equals the present value of the benefits expected to be paid over the future lifetime of the pensioner, and, if applicable, the surviving spouse of the pensioner. For active participants, the amount presented equals the present value of the deferred pension earned to the valuation date for a participant, or, if greater, the value of the withdrawal benefit for that participant, summed over all participants. For the purpose of determining the actuarial value of the vested benefits at the end of the Plan year, it is assumed that the Plan will continue to exist and that salaries will continue to rise, but that participants will not earn pension benefits beyond the date of the calculation.

The amount of nonvested benefits represents the total of the withdrawal benefits of all participants with less than three years of eligible service together the with the estimated effect of projected salary increases on benefits expected to be paid.

In contrast to the actuarial valuation for funding purposes the actuarial valuation used for the financial statements represents the portion of the benefit obligation which had been accumulated by April 30, 1991. It reflects only the service to that date and does not take into account the fact that the value of accumulated benefits, which are the Plan’s liabilities, are expected to increase each year. Nor does it take into account the fact that the market value of investments may fluctuate from year to year, which is significant because the employer’s liability is the excess of the present value of accumulated benefits over the value of the assets. Accordingly, the financial statements do not measure the amount which the Employer will be required to fund in the future.

The increase during financial year 1991 in accumulated benefits referred to in the Statement of Changes in Accumulated Plan Benefits, equal to $183.1 million, includes an amount equal to $45.3 million relating to changes in actuarial assumptions and an amount equal to $57.1 million resulting from Plan amendments.

Valuation of Investments

Investments in securities listed on stock exchanges are valued at the last reported market sales price on the last business day of the accounting period. Over-the-counter securities are valued at their bid price on the last business day of the accounting period. Investments in real estate are valued at the last reported appraisal value. Purchases and sales made by U.S. investment managers are recorded on the settlement date basis, and transactions made by the international investment managers are recorded on the trade date basis.

Investment Income

Dividend and interest income from investments are recorded as earned.

2. Actuarial Valuation and Funding Policy

Under the actuarial valuation used for funding calculations, it is assumed that the Plan will continue to exist and that active participants will continue to earn pension benefits beyond the date of the valuation until the date of withdrawal, disability, death, or retirement, but that no new participant will join the Plan (the “closed method”).

Funding by the Employer is based upon a valuation method, known as the “aggregate method,” which expresses liabilities and contribution requirements as single consolidated figures which include provision for experience gains and losses and cost of living increases. Required Employer contributions are expressed as a percentage to be applied to the gross remuneration of participants and are based upon the valuation completed 12 months previously. For the financial year which began on May 1, 1989 this rate was 8.45 percent and was 3.91 percent for the year which began on May 1, 1990 based upon the valuation at April 30, 1989. The proposed rate for the year beginning May 1, 1991 is 10.46 percent of the new gross remuneration.

The actuarial assumptions used in the valuation to determine the employer contribution in recent years include (a) life expectancy based upon the 1980 and 1982 United Nations mortality tables for men and women, respectively, (b) withdrawal or retirement of a certain percentage of staff at each age, differentiated by sex, (c) an average rate of return on investments of 8.5 percent per annum, (d) an average inflation rate of 5 percent per annum, (e) salary increase percentages which vary with age, and (f) valuation of assets using a five-year moving average method. The April 30, 1990 valuation was based upon the new Plan and its transitional provisions because this valuation projects the cost of future benefits.

Several of the actuarial assumptions used to determine the employer contribution have been changed for years beginning after April 30, 1991. The changes include (1) basing life expectancies on the 1984 and 1982 United Nations mortality tables for men and women, respectively, with each table set back one year and (2) increasing the liabilities of the Plan by 1 percent to reflect the May 1, 1991 incorporation into the Plan of the Pension Parity Adjustment System.

The results of the April 30, 1990 and 1989 valuations are:

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3. Investments

A summary of investments at market values is as follows:

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The net gain in the current value of investments represents the gains (and losses) realized during the year from the sale of investments, the unrealized appreciation (and depreciation) of the market value of investments, and, for investments denominated in currencies other than U.S. dollars, valuation differences arising from exchange rate changes of other currencies against the U.S. dollar.

SUPPLEMENTAL RETIREMENT BENEFIT PLAN REPORT OF THE EXTERNAL AUDIT COMMITTEE

Washington, D.C.

June 27, 1991

Authority and Scope of the Audit

In accordance with Section 20(b) of the By-Laws of the International Monetary Fund, we haveaudited the financial statements of the Supplemental Retirement Benefit Plan for the year ended April 30, 1991.

Our audit was conducted in accordance with generally accepted auditing standards and included reviews of the accounting and internal control systems, and tests of the accounting records. We evaluated the extent and results of the work of the Independent Accountants as well as that of the Office of Internal Audit and Review and also used other audit procedures as deemed necessary.

Audit Opinion

In our opinion, the financial statements of the Supplemental Retirement Benefit Plan have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding year, and give a true and fair view of the financial status of the Supplemental Retirement Benefit Plan as at April 30, 1991 and of the changes in financial status for the year then ended.

EXTERNAL AUDIT COMMITTEE

/s/ Philippe Lacarriere, Chairman (France)

/s/ Michael J. Jacobs (Australia)

/s/ Jocelyn Thompson (Trinidad and Tobago)

SUPPLEMENTAL RETIREMENT BENEFIT PLAN STATEMENT OF ACCUMULATED PLAN BENEFITS AND ASSETS AVAILABLE FOR BENEFITS as at April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
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SUPPLEMENTAL RETIREMENT BENEFIT PLAN STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS for the year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.

SUPPLEMENTAL RETIREMENT BENEFIT PLAN STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS for year ended April 30, 1991

(In thousands of U.S. dollars)

(Note 1)

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The accompanying notes are an integral part of the financial statements.
SUPPLEMENTAL RETIREMENT BENEFIT PLAN NOTES TO THE FINANCIAL STATEMENTS
Description of Supplemental Retirement Benefit Plan
General

The Supplemental Retirement Benefit Plan (SRBP) is a defined benefit pension plan covering all participants of the Staff Retirement Plan of the International Monetary Fund (Employer) and operates as an adjunct to that Plan. All assets and income of the SRBP are the property of the Employer and are held and administered by it separately from all its other property and assets and are to be used solely for the benefit of participants and retired participants and their beneficiaries.

Benefits

The Staff Retirement Plan has adopted limits to pensions payable from that plan. The SRBP provides for the payment of any benefit which would otherwise have been payable if these limits had not been adopted.

In financial year 1991, 15 pensioners received benefits from the SRBP (ten in 1990).

Contributions

Before financial year 1990 the SRBP was entirely funded by the Employer. Beginning May 1, 1989, participants with gross remuneration exceeding a predetermined limit are required to contribute 7 percent of their gross remuneration in excess of this limit to the SRBP. The Employer meets administrative costs of the SRBP and contributes any additional amounts not provided by the contributions of participants to pay costs and expenses of the SRBP not otherwise covered.

The Employer makes regular contributions in relation to non-U.S. citizens whose calculated gross remuneration exceeds the predetermined limit, as adjusted. There is also a partial prefunding by the Employer, just prior to retirement, when non-U.S. citizens retire in the United States, so that the taxable income of the participant is approximately equal to, but not more than, such income that would have accrued if the entire benefit had been payable from any of the prefunded assets of the Staff Retirement Plan. The contributions of participants and the prefunded amounts are used to pay any of the benefits payable, whether for U.S. or non-U.S. staff. Should the assets of the SRBP be exhausted, benefits will be paid from current contributions by the Employer.

Termination

In the event of the termination of the SRBP by the Employer, the assets of the SRBP shall be used to satisfy all liabilities to participants, retired participants and their beneficiaries, and all other liabilities of the SRBP.

1. Accounting Practices
Accumulated Plan Benefits

The actuarial present value of accumulated Plan benefits is stated as at the date of the most recent actuarial valuation, which was April 30, 1991. The actuarial value of benefits is presented for two categories. The vested benefits relate to retired participants and the amount presented equals the present value of the benefits expected to be paid over the future lifetime of the pensioner, and, if applicable, the surviving spouse of the pensioner.

The nonvested benefits relate to active participants and the amount presented equals the present value of the supplemental deferred pension earned to the valuation date for a participant, taking into account the estimated effect of projected salary increases. For the purpose of determining the actuarial value of the benefits at the end of the period, it is assumed that the SRBP will continue to exist but that participants will not accumulate further contributory service beyond the date of the calculation.

Interest Income

Interest income is recorded as earned.

2. Actuarial Valuation

The actuarial assumptions used in the valuation to determine the employer contribution in recent years include (a) life expectancy based upon the 1980 and 1982 United Nations mortality tables for men and women, respectively, (b) withdrawal or retirement of a certain percentage of staff at each age, differentiated by sex, (c) an average rate of return on investments of 8.5 percent per annum, (d)an average inflation rate of 5 percent per annum, (e) salary increase percentages which vary with age, and (f) valuation of assets using a five-year moving average method. The April 30, 1990 valuation was based upon the new Plan and its transitional provisions because this valuation projects the costs of future benefits.

Several of the actuarial assumptions used to determine the employer contribution have been changed for years beginning after April 30, 1991. The changes include (1) basing life expectancies on the 1984 and 1982 United Nations mortality tables for men and women, respectively, with each table set back one year and (2) increasing the liabilities of the Plan by one percent to reflect the May 1, 1991 incorporation into the Plan of the Pension Parity Adjustment System.

3. Assets

Cash balances are maintained in a money market account.
1

In calculating the value of the gold holdings of the EMCF in terms of ECUs, the ECU swap price is set equal to the lower of two values: the average of the prices recorded daily at the two London fixings during the previous six calendar months, and the average price at the two price fixings on the penultimate working day of the period.

2

The quarterly swaps are arranged at the end of the first weeks of January, April, July, and October. Changes in the number of ECUs outstanding thus depend on the exchange rate and the gold price on these dates, whereas changes in the SDR value of ECU holdings are calculated at the SDR/ECU exchange rate at the end of each quarter.

1

See Selected Decisions, Fifteenth Issue, page 16.

2

Ibid., page 18.

3

Ibid., pages 9-14.

4

Ibid., pages 84-88.

5

Ibid., pages 89-90.

6

See Annual Report, 1990, pages 103-104.

7

See Selected Decisions, Fifteenth Issue, pages 133

8

Ibid.

9

Ibid.

10

See Annual Report, 1981, pages 169-71.

11

See Selected Decisions, Fifteenth Issue, pages 196-98.

12

See Annual Report, 1981, pages 169-71.

13

See Selected Decisions, Fifteenth Issue, pages 351-52.

14

See Item (a), above.

15

See Selected Decisions, Fifteenth Issue, page 353.

16

Ibid., pages 204-205.

17

Ibid.

18

Ibid., pages 6669.

19

Ibid.

20

See Annual Report, 1990, page 96.

21

Ibid., pages 96-97.

22

See Selected Decisions, Fifteenth Issue, pages 204-205

23

See Selected Decisions, Fifteenth Issue, pages 216-17.

24

Ibid., page 206.

25

See Annual Report, 1990, pages 96-97.

26

Ibid., page 96.

27

See Item (b), above.

28

28 See Selected Decisions, Fifteenth Issue, page 254.

29

Ibid., pages 45-46.

30

Ibid., pages 231-38.

31

Ibid., pages 23-45.

32

Ibid.

33

Ibid., page 45.

1

Mr. Barber B. Conable, President of the World Bank, Mr. Michel Camdessus, Managing Director of the International Monetary Fund, Mr. Yves L. Fortin, Executive Secretary of the Development Committee, and Mr. S.M.H. Adeli, Chairman of the Group of Twenty-Four, participated in the meeting. Observers from Switzerland and a number of international and regional organizations also attended.

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Cover International Monetary Fund Annual Report 1991
International Monetary Fund Annual Report 1991
ISBN:
9781451944822
ISSN:
2227-8915
Publication Date:
01 Jan 1991
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781451944822.011
Pages:
204