1. Applicable Legal Provisions

The procedure for the adoption of modifications in the Articles of Agreement is set forth in Article XVII of the present Articles, which reads as follows:

“(a) Any proposal to introduce modifications in this Agreement, whether emanating from a member, a governor or the Executive Directors, shall be communicated to the chairman of the Board of Governors who shall bring the proposal before the Board. If the proposed amendment is approved by the Board the Fund shall, by circular letter or telegram, ask all members whether they accept the proposed amendment. When three-fifths of the members, having four-fifths of the total voting power, have accepted the proposed amendment, the Fund shall certify the fact by a formal communication addressed to all members.

“(b) Notwithstanding (a) above, acceptance by all members is required in the case of any amendment modifying

• (i) the right to withdraw from the Fund (Article XV, Section 1);

• (ii) the provision that no change in a member’s quota shall be made without its consent (Article III, Section 2);

• (iii) the provision that no change may be made in the par value of a member’s currency except on the proposal of that member (Article IV, Section 5(b)).

“(c) Amendments shall enter into force for all members three months after the date of the formal communication unless a shorter period is specified in the circular letter or telegram.”

2. Resolution of Board of Governors

Part IV of this Report contains the text of a Resolution, to which is attached a Proposed Amendment to the Articles of Agreement. The Chairman of the Board of Governors has requested that on his behalf the Secretary of the Fund bring the Resolution and Proposed Amendment before the Board of Governors for its approval. Pursuant to this request the Secretary is transmitting them to the Board with this Report.

In the judgment of the Executive Directors the action requested of the Board of Governors should not be postponed until the next regular meeting of the Board and does not warrant the calling of a special meeting of the Board. For this reason, the Executive Directors, pursuant to Section 13 of the By-Laws, request Governors to vote without meeting. In accordance with established practice, the Executive Directors have also decided to waive the requirement that no Governor shall vote until seven days after the dispatch of the motion. To be valid, votes must be received at the seat of the Fund on or before April 30, 1976.

The Resolution will be adopted if replies are received from a majority of the Governors exercising two-thirds of the total voting power and if a majority of the votes is cast in favor of the Resolution. The Resolution must be voted on as a whole.

3. Acceptance of Proposed Amendment by Members

By adopting the annexed Resolution, the Board of Governors will grant its approval to the Proposed Amendment of the Articles of Agreement. Members will then be asked, by circular letter or telegram, to notify the Fund whether they accept the Proposed Amendment. The Proposed Amendment can be accepted only in its entirety. That is to say, members will not be able to accept part only of the Proposed Amendment.

In accordance with Article XVII(a) of the present Articles, the Proposed Amendment must be accepted by three-fifths of the members, having four-fifths of the total voting power, before it can enter into force.

4. Entry into Force of Proposed Amendment

When the Proposed Amendment has been accepted by the necessary majority, the Fund will certify the fact by a formal communication to be sent by the Secretary of the Fund to all members. Pursuant to Article XVII (c) of the present Articles, the Executive Directors recommend that the Proposed Amendment should enter into force on the date of the formal communication instead of three months after that date. In accordance with that provision and paragraph 3 of the Resolution, the circular letter or telegram by which members will be asked whether they accept the Proposed Amendment will specify the date of the formal communication referred to above as the date of the entry into force of the Proposed Amendment.

The Proposed Amendment will enter into force for all members on the date of the formal communication, whether they have accepted the Amendment or not. It is assumed that members accepting the Proposed Amendment will have taken any legislative and other action that may be necessary to enable them to carry out their obligations under the Articles of Agreement as amended. Other members that have not accepted the Proposed Amendment will need to consider what action is necessary in order to enable them to carry out their obligations under the Articles of Agreement as amended.

5. Notification to Depositary of Articles of Agreement

Upon certification of the entry into force of the Proposed Amendment it is intended to notify that fact to the Government of the United States, which is the depositary of the Articles of Agreement of the Fund, so that it may record the Amendment. It is also intended to ask the Government of the United States to register the Amendment with the Secretary-General of the United Nations, pursuant to Article 102 of the United Nations Charter.

6. Domestic Legal Steps

In view of the important and extensive changes in the Articles that will be introduced by the Amendment, members may find it necessary to review both the financial and nonfinancial aspects of their domestic legislation relating to the Articles of Agreement. The provisions relating to quotas and subscriptions, exchange arrangements, and the special drawing right may be of particular importance in connection with domestic legislation. In connection with exchange arrangements, members may wish to examine any legislation, whether relating directly to the Fund or not, that refers to par values established under the Articles.