Calculation of Monetary Reserves

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2. [A member has contended] that, in calculating its monetary reserves as of April 30, 1948, a sum greater than [the amount calculated by the staff] should have been deducted as the proceeds of a long-term or medium-term loan contracted during the financial year ending on that date.… It is determined that the deduction… calculated by the staff was correctly made, based on the following principles which are adopted:

(a) Before any exclusion of the proceeds of long-term or medium-term loans can be made under Schedule B, paragraph 3, of the Fund Agreement, it is necessary to identify that part of a member’s holdings which can be regarded as representing the proceeds of such loans.

(b) Where the loan can be spent only for a specific project or purpose, the proceeds can be regarded as unspent only to the extent that the special project or purpose has not been completed and paid for. The formality of payment of the proceeds into a special or general account would not as a rule be considered a significant factor.

(c) Where the loan is not contracted for a special project or purpose, the proceeds of that loan which may be deducted should, as a rule of thumb, and in the absence of other evidence of identification, be determined as follows: (1) the member’s lowest holdings of the currency in question between the date of receipt of the proceeds of the loan and the end of the financial year shall be determined, (2) the part of such lowest holdings which shall be excluded will be the proportion which the proceeds of the loan bear to the sum of the member’s holdings of the currency as of the date of receipt of the proceeds of the loan plus other receipts in the same currency between that date and the day of the lowest holdings.

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Decision No. 486-2

October 7, 1949

Calculation of Members’ Repurchase Obligations: Schedule B, Paragraph 3

In applying the provisions of Schedule B, paragraph 3 to the calculation of members’ repurchase obligations, the following principles shall govern (Staff Memorandum No. 413, 12/8/49 and Supplement 1, 12/13/49):

1. Where exclusions have been made at the end of one year for holdings which are the proceeds of long-term or mediumterm loans contracted during the year or for holdings which have been transferred or set aside for the repayment of a loan during the subsequent year, the exclusion continues to be made in the monetary reserve figures for the beginning of the succeeding year.

2. Where an exclusion has been made in respect of currency which became convertible during the year, this currency is included in the monetary reserve figures for the beginning of the subsequent year.

3. If the member indicates that certain holdings are the proceeds of loans or currency set aside, the reasonable implication is that the member wishes paragraph 3 to apply to such holdings. If the member does not provide such data, the implication is that it is not taking advantage of the provision.

Decision No. 510-2

December 16, 1949

Allocation of Obligations: Schedule B, Paragraph 1(c)

If part of a member’s gross repurchase obligation for any financial year is allocated to a currency which the Fund cannot accept because of Article V, Section 7(c) (iii), that part of the gross obligation is abated for that year under Schedule B, Paragraph 1 (c), and is not required to be discharged in gold or some other currency.

Decision No. 521-3

January 16, 1950