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Chapter 8. Special Onetime Allocation of SDRs

Author(s):
International Monetary Fund
Published Date:
October 1997
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There has been broad agreement in the Board for some time that the Fund should make a special “equity” allocation of SDRs to correct for the feet that more than one-fifth of members have joined the Fund since the last SDR allocation in 1979-81 and some other members have not participated in every SDR allocation.

The Interim Committee, at its September 1996 meeting, endorsed the Executive Board’s proposal for a special onetime allocation of SDRs—through an amendment to the Articles—that would raise each member’s ratio of cumulative allocations to quota to a common benchmark level. This would enable all members of the Fund to participate in the SDR system on an equitable basis. The Interim Committee emphasized that such an amendment would not in any way affect the Fund’s existing power to allocate SDRs on the basis of a finding of a long-term global need to supplement reserves as and when that need arises.

In its subsequent work on a draft amendment of the Articles, the Board broadly agreed on three elements of a onetime allocation.

  • An allocation would be made to all participants, on the basis of their quotas agreed under the Ninth General Review.

  • With respect to those members with overdue obligations to the Fund that have been unable to consent to or pay for the proposed increase in their quotas under the Ninth General Review, the allocation would be calculated on the basis of their proposed Ninth Review quotas rather than on their actual quotas under the Eighth Review.

  • The SDRs allocated to a participant in arrears to the Fund would be deposited and held in an escrow account within the SDR Department until the participant had eliminated all of its overdue obligations to the Fund.

As of the end of the 1996/97 financial year, the Board had not concluded its consideration of the amount of the special allocation.

At its April 1997 meeting, the Interim Committee welcomed the progress in the Board toward a proposed amendment of the Articles to provide for a special onetime allocation of SDRs. It requested the Board to finalize its work as soon as possible and to report to the Committee at its September 1997 meeting.

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