In recent years, an increasing number of countries have resorted to trading practices known as countertrade arrangements. These arrangements have taken a variety of forms, and based on the types of goods traded, the financial arrangements involved, and the length of time required to complete the transactions, countertrade arrangements have been variously described as barter, buy-back, counterpurchase, and compensation. These are not internationally standardized definitions of the arrangements, and a countertradeagreement might contain more than one type of
This study emerges from the compilation of the International Monetary Fund’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), which has been published since 1950. These country-specific reports, including the 1989 edition, which serves as the background document for the present study, are prepared in accordance with the provisions of Article XIV, Section 3, of the Fund’s Articles of Agreement. They inform the Fund membership and public of the current status of exchange rate arrangements and the restrictive systems for trade and payments in Fund member countries. Using basic information compiled by the Fund staff, this study identifies trends and reviews major developments underlying topical issues in the system of financial and trade linkages between countries. The emphasis is on recent major policy actions of trading and financial nations that have systemic consequences. By its nature, the study stresses institutional rather than quantitative evidence in support of its findings.
As noted in Section I, the Fund’s Articles of Agreement state broad aims for members’ exchange rate policies and arrangements. However, each member selects its own regime, while the Fund is enjoined to “exercise firm surveillance” over these policies (Article IV). The Fund, in a document entitled “Surveillance Over Exchange Rate Policies” issued in 1977,6 gives members further guidance in setting exchange rate policies; broadly, members should avoid manipulating exchange rates or the international monetary system, they should intervene in the market if necessary to counter disorderly conditions, and when they do so, they should take into account the interests of other members.
This paper summarizes major measures taken in the international exchange and trade systems in 1988 and developments in exchange arrangements and the evolution of exchange rates. The exchange arrangements adopted by members since 1973 cover a broad spectrum of degrees of flexibility, from single-currency pegs to a freely floating system. Most countries have adopted arrangements that fall clearly into one or another of the major categories of the present classification system adopted by the IMF in 1982, and countries with dual markets usually have one market that is clearly more important than the other, which allows accurate classification by major market. Changes in IMF members' arrangements for their currencies during this decade have shown a distinct tendency to move toward more flexible arrangements and away from single-currency pegs, continuing a trend that began in the mid-1970s. A qualitative sense of the significance of the trend toward more flexible arrangements can be conveyed by the degree that world trade is affected by countries adopting different arrangements.
This chapter surveys major developments in Fund members’ restrictive practices affecting international trade and financial transactions. These practices take the form of either quantitative restrictions or price-related measures that involve implicit or explicit taxes and subsidies affecting international transactions. Most of the practices are described in detail in the country-specific reports that comprise the Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER).
which data are not always available. 75 The OECD has estimated that a maximum of some $80 billion or 5 percent of world trade occurred through countertrade arrangements in 1983. This estimate excludes trade under bilateral payments arrangements and trade among Eastern European countries. 76 Including these, the total would rise by 9 percent to 14 percent of world trade. 77 The share of trade that occurs under documented countertradeagreements is highest between Eastern European countries and both developing and industrial countries, and among developing countries
Iran, and Ukraine issue countertrade regulations). Countertrade transactions refer to bilateral and multilateral trading arrangements under which the seller purchases specified goods or services as a partial or total settlement for his exports. Depending on the type of goods or services traded, financial arrangements involved, and the length of time required to complete a transaction, countertrade arrangements are described as barter, buy-back, counterpurchase, compensation, offset, switch trading, and other. A countertradeagreement may contain more than one type of
(see EBS/94/159, 8/16/94). A renewal of the agreement with Malaysia is not envisaged. In August 1994, with a view to encouraging trade, the SBP permitted private firms to enter into countertradeagreements with approval of the Ministry of Finance, subject to normal export-import policy provisions.
Before adoption of current account convertibility in July 1994, the parallel market foreign exchange transactions and above face-value transactions in foreign exchange bearer certificates (FEBCs, one year government paper mainly denominated in U.S. dollars) reflected
This paper reviews economic developments in Pakistan during 1990–95. The authorities succeeded in reducing the budget deficit and in slowing down the growth of the net domestic assets of the banking system in 1993/94. These tighter financial policies led to a marked reduction in the macroeconomic imbalances that had flared up in 1992/93; in particular, they were reflected in a much narrower external current account deficit. Moreover, the strong stance of demand management contributed to a turnaround in private sector confidence, which was evidenced by large capital inflows.