Chapter

Appendix III. Principal Policy Decisions of the Executive Board

Author(s):
International Monetary Fund
Published Date:
October 2003
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A. Disposition of Net Income for FY2003

1. SDR 69 million of the Fund’s net income for FY2003 derived from the application of paragraph 2 of Decision No. 12730-(02/43),1 adopted April 26, 2002, shall be placed to the Fund’s Special Reserve after the end of the financial year.

2. The expense derived from the application of International Accounting Standard 19—Employee Benefits during FY2003 shall be charged against the Fund’s Special Reserve and shall be recorded separately in the financial records of the Fund (EBS/03/43, 4/7/03).

Decision No. 12987-(03/36)

April 21, 2003

B. Rate of Charge on Use of Fund Resources for FY2004

1. Notwithstanding Rule 1- 6(4)(a), effective May 1, 2003, the proportion of the rate of charge referred to in Rule 1–6(4) to the SDR interest rate under Rule T-l shall be 132 percent.

2. The net income target for FY2004 shall be SDR 108 million. Any net income for financial year 2004 in excess of SDR 108 million shall be used to reduce retroactively the proportion of the rate of charge for financial year 2004. If net income for financial year 2004 is below SDR 108 million, the amount of projected net income for financial year 2005 shall be increased by the equivalent of that shortfall. For the purpose of this provision, net income shall be calculated without taking into account net operational income generated by the surcharges on purchases under the Supplemental Reserve Facility and Contingent Credit Lines, the surcharge on purchases in the credit tranches and under the Extended Fund Facility or the effect on income of the implementation of International Accounting Standard 19—Employee Benefits (EBS/03/43, 4/7/03).

Decision No. 12988- (03/36)

April 21, 2003

C. Burden Sharing—Implementation in FY2004

Section I. Principles of Burden Sharing

1. The financial consequences for the Fund that 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

The rate of charge referred to in Rule 1–6(4) shall be adjusted in accordance with the provisions of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45),2 adopted April 28, 2000.

Section III. Adjustment for Deferred Charges

Notwithstanding paragraph 1(a) of Section IV of Executive Board Decision No. 12189-(00/45), adopted April 28, 2000, the rate of charge and the rate of remuneration determined under that Section shall be rounded to two decimal places.

Section IV. Amount for Special Contingent Account-1

1. An amount of SDR 94 million shall be generated during financial year 2004 in accordance with the provisions of this Section and shall be placed to the Special Contingent Account-1 referred to in Decision No. 9471-(90/98), adopted June 20, 1990.

  • In order to generate the amount to be placed to the Special Contingent Account-1 in accordance with paragraph 1 of this Section, notwithstanding Rule 1- 6(4)(a) and (b) and Rule I—10, the rate of charge referred to in Rule 1–6(4) and, subject to the limitation in (b), the rate of remuneration prescribed in Rule I-10 shall be adjusted in accordance with the provisions of this paragraph.
  • Notwithstanding paragraph 1 above, adjustments to the rate of charge and the rate of remuneration under this paragraph shall be rounded to two decimal places. 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.
  • The adjustments under this paragraph shall be made as of May 1, 2003, August 1, 2003, November 1, 2003, and February 1, 2004; shortly after July 31 for the period 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.
  • Subject to paragraph 3 of Decision No. 8780- (88/12), 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.
  • Distributions under (a) shall be made in proportion to the amounts that have been paid or have not been received by each member because of the respective adjustments.
  • 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),3 adopted April 30, 1986, or any subsequent decision of the Fund.
  • Subject to paragraph 4 of Decision No. 8780- (88/12), 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 (b).

Section V. Review

The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit set forth in paragraph 2(b) of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45),4 adopted April 28, 2000 (EBS/03/43, 4/7/03).

Decision No. 12989- (03/36)

April 21, 2003

D. Surcharges on Purchases Under Supplemental Reserve Facility and Contingent Credit Lines, and in Credit Tranches and Under Extended Fund Facility —Disposition of Net Operating Income

For financial year 2004, after meeting the cost of administering the PRGF Trust, any remaining net operational income generated by the surcharges on purchases under the Supplemental Reserve Facility and the Contingent Credit Lines and the surcharges on purchases in the credit tranches and under the Extended Fund Facility shall be placed, after the end of that financial year, to the General Reserve (EBS/03/43, 4/7/03).

Decision No. 12990- (03/36) SRF/CCL.

April 21, 2003

E. Review of System of Special Charges

The Fund has reviewed the system of special charges applicable to overdue obligations to the General Resources Account, the Structural Adjustment Facility, and the Trust Fund (EBS/03/43, 4/7/03).

Decision No. 12991-(03/36) G/SAF/TR April 21, 2003

F. Framework Administered Account for Technical Assistance Activities—Pacific Financial Technical Assistance Center Subaccount

In accordance with the terms and conditions of the Instrument establishing the Framework Administered Account for Technical Assistance Activities (Decision No. 10942- (95/33)),5 as amended, the Fund hereby approves the establishment of the “Pacific Financial Technical Assistance Center Subaccount,” which shall be used by the Fund to administer resources to be contributed by the Government of Australia, and any subsequent Contributors, as described in EBS/02/84, 5/15/02.

Decision No. 12751-(02/52)

May 22, 2002

G. Framework Administered Account for Technical Assistance Activities—Africa Regional Technical Assistance Centers Subaccount

In accordance with the terms and conditions of the Instrument establishing the Framework Administered Account for Technical Assistance Activities (Decision No. 10942- (95/33)),6 as amended, the Fund hereby approves the establishment of the Africa Regional Technical Assistance Centers Subaccount, which shall be used by the Fund to administer resources to be contributed by the Governments of France, the Federal Republic of Germany, Italy, the Netherlands, Norway/Ministry of Foreign Affairs, Sweden, and the United Kingdom, and any subsequent Contributors, as described in EBS/02/135 (7/26/02).

Decision No. 12832-(02/88)

August 9, 2002

H. Implementation of Procedures for Surveillance: 2002 Review

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),7 adopted April 29, 1977, as amended. The next review shall be conducted no later than August 10, 2002.

The Executive Board has reviewed the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392 (77/63), adopted April 29, 1977, as amended, as required by paragraph 2 of that decision. The next review of the document shall be conducted no later than August 10, 2002.

Decision No. 12178-(00/41)

April 10, 2000,

as amended by Decision Nos. 12713-(02/38), April 5, 2002, and 12792-(02/75), July 10, 2002

I. Implementation of Procedures for Surveillance: 2002 Review

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), adopted April 29, 1977, as amended. The next review shall be conducted no later than July 15, 2004.

The Executive Board has reviewed the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63), adopted April 29, 1977, as amended, as required by paragraph 2 of that decision. The next review of the document shall be conducted no later than July 15, 2004 (SM/02/184, Sup. 1, 6/18/02).

Decision No. 12793-(02/76)

July 15, 2002

J. Biennial Review of Implementation of Fund Surveillance and of 1977 Surveillance Review— Changes in Article IV Consultation Cycles

1. Each member presently receiving financial assistance under a Fund arrangement shall immediately be placed on the 24-month consultation cycle and, in future, whenever a Fund arrangement is approved for a member, that member shall automatically be placed on the 24-month consultation cycle. Article IV consultations with such members shall be conducted in accordance with the procedures specified below.

2. Article IV consultations with a member receiving financial assistance under a Fund arrangement will be expected to be completed within 24 months of the date of completion of the previous Article IV consultation with that member, except that the consultation cycle will be shortened under the following circumstances:

(a) where the most recent Article IV consultation with the member was completed 6 months or more before the date of approval of the relevant arrangement, the next Article IV consultation with that member will be expected to be completed by the later of (i) 6 months after the date of approval of the arrangement, and (ii) 12 months, plus a grace period of three months, after the date of completion of the previous Article IV consultation; and

(b) where, with respect to a member whose circumstances do not fall within paragraph 2(a), a program review under an arrangement for that member is not completed by the date for completion specified in the arrangement, the next Article IV consultation with that member will be expected to be completed by the later of (i) 6 months after the date specified in the arrangement for completion of the review, and (ii) 12 months, plus a grace period of 3 months, after the date of completion of the previous Article IV consultation, provided, however, that, where the relevant program review is completed before the later of the dates specified in (i) and (ii) above, the next Article IV consultation will be expected to be completed within 24 months of the date of completion of the previous Article IV consultation with that member.

Upon the expiration or cancellation of an arrangement for a member, that member shall automatically be placed on the standard 12-month consultation cycle and the next Article IV consultation with that member will be expected to be completed by the later of (i) 6 months after such expiration or cancellation, and (ii) 12 months, plus a grace period of 3 months, after the date of completion of the previous Article IV consultation, but in no event later than 24 months after the completion of the previous Article IV consultation (SM/02/184, Sup. 1, 6/18/02, Sup. 3, 9/5/02).

Decision No. 12794-(02/76), July 15, 2002, as amended by Decision No. 12854-(02/96),

September 12, 2002

K. Modalities for Surveillance over Euro-Area Policies in Context of Article IV Consultations with Member Countries

The current frequency of Article IV consultations with individual euro-area countries, which are generally on the standard 12-month cycle, will be maintained.

There will be twice-yearly staff discussions with EU institutions responsible for common policies in the euro area. These discussions will be held separately from the discussions with individual euro-area countries, but are considered an integral part of the Article IV process for each member. The discussions with individual euro-area countries will be clustered, to the extent possible, around the discussions with the relevant EU institutions.

There will be an annual staff report and Board discussion on Euro-Area Policies in the Context of the Article IV Consultations with Member Countries, which will be considered part of the Article IV consultation process with individual members. In addition to monetary and exchange rate policies, the staff report will also cover from a regional perspective other economic policies relevant for Fund surveillance. Staff will report informally to the Board on the second round of discussions with EU institutions to provide adequate context for bilateral consultations with euro-area countries that do not coincide broadly with the annual Board discussion on the euro area.

There will be a summing up of the conclusion of the Board’s annual discussion on Euro-Area Policies in the Context of the Article IV Consultations with Member Countries. It will be cross-referenced in the summings up for the Article IV consultations with euro-area countries at the conclusion of the Article IV process for each country. To the extent that the summing up for the euro area covers economic policies that apply to all EU member countries and that are considered relevant for Fund surveillance, the pertinent parts of the summing up for the euro area could also be referred to in the bilateral Article IV consultations with EU member countries that are not part of the euro area (SM/02/359, 11/21/02).

Decision No. 12899-(02/119)

December 4, 2002

L. Eleventh General Review of Quotas—Period for Consent to increases—Extension

Pursuant to Paragraph 4 of the Resolution of the Board of Governors No. 53–2,8 “Increase in Quotas of Fund Members—Eleventh General Review’,” the Executive Board decides that notices of consent from members to increases in their quotas must be received in the Fund by 6:00 p.m., Washington time, on January 31, 2003.

Decision No. 12802-(02/78)

July 19, 2002

M. Eleventh General Review of Quotas—Period for Consent to increases—Extension

Pursuant to Paragraph 4 of the Resolution of the Board of Governors No. 53–2, “Increase in Quotas of Fund Members—Eleventh General Review’,” the Executive Board decides that notices of consent from members to increases in their quotas must be received in the Fund by 6:00 p.m., Washington time, on July 31, 2003 (EBD/03/3, 1/15/03).

Decision No. 12930-(03/3)

January 23, 2003

N. PRGF Trust and PRGF-HIPC Trust—Reserve Account—September 2002 Review

Pursuant to Decision No. 10286-(93/23)9 ESAF, the Fund has reviewed the adequacy of the Reserve Account of the PRGF Trust, and determines that amounts held in the account are sufficient to meet all obligations which could give rise to a payment from the Reserve Account to lenders to the Loan Account of the PRGF Trust in the six months from April 1, 2002, to September 30, 2002 (SM/02/273, 8/21/02).

Decision No. 12847-(02/94) PRGF

September 6, 2002

O. Establishment of a Trust for Special PRGF Operations for the Heavily Indebted Poor Countries and Interim PRGF Subsidy Operations

1. The Fund adopts the Instrument to Establish a Trust for Special PRGF Operations for the Heavily Indebted Poor Countries and Interim PRGF Subsidy Operations, which is annexed to this decision.

2. The Fund shall conduct semiannual reviews of the financing of the Trust for Special PRGF Operations for the Heavily Indebted Poor Countries and Interim PRGF Subsidy Operations.

Decision No. 11436-(97/10)

February 4, 1997,

as amended by Decision Nos. 11492-(97/45), April 24, 1997,

11861-(98/131) ESAF, December 18, 1998,

12087-(99/118) PRGF, October 21, 1999,

effective November 2, 1999,

12132-(00/9) PRGF, January 27, 2000,

12349- (00/118), December 1, 2000,

12561-(01/85) PRGF, August 23, 2001,

effective September 19, 2001,

12680-(02/17) PRGF, February 20, 2002

12696-(02/27) PRGF, March 15, 2002, and

12777-(02/65), June 20, 2002,

and 12874-(02/110),

October 25, 2002

P. Access Policy in Capital Account Crises — Modifications to Supplemental Reserve Facility and Follow-Up Issues Related to Exceptional Access Policy

Decision No. 11627-(97/123),10 adopted December 17, 1997, on the Supplemental Reserve Facility and Contingent Credit Lines shall be amended as follows:

1. In Section I on the Supplemental Reserve Facility, paragraphs 6(a) and (b) shall read:

“6 (a) A member making purchases under this section shall repurchase the outstanding amounts of its currency resulting from such purchases within two and a half to three years from the date of each purchase in two equal installments; the first installment shall become due two and a half years and the second installment shall become due three years from the date of each purchase.

(b) The member will be expected to repurchase those amounts six months before they become due, provided that the Fund may, upon request by the member, decide to extend one or more such repurchase expectations by six months. If a member fails to make a repurchase as expected, the Fund may require the member to make the repurchase in question within a specified period not to exceed the repurchase schedule under (a) above.”

2. In Section II on Contingent Credit Lines,

  • a new paragraph 18 bis shall be added: “18 bis
    • A member making purchases under this section shall repurchase the outstanding amounts of its currency resulting from such purchases within two to two and a half years from the date of each purchase in two equal semi-annual installments; the first installment shall become due two years and the second installment two and a half years from the date of each purchase.
    • The member will be expected to repurchase those amounts one year before they become due, provided that the Fund may, upon request by the member, decide to extend each such repurchase expectation by up to one year. If a member fails to make a repurchase as expected, the Fund may require the member to make the repurchase in question within a specified period not to exceed the repurchase schedule under (a) above.
    • The Fund shall not approve, and the Managing Director shall not recommend for approval, a request for the use of the general resources of the Fund by a member that is failing to meet a repurchase expectation under (b) above. Provision shall be made in each stand-by and extended arrangement for the suspension of further purchases under the arrangement whenever a member fails to meet a repurchase expectation under (b) above.”
  • in paragraph 19, the reference to “paragraph 6” shall be deleted.

3. The changes made by this decision to the Supplemental Reserve Facility shall apply only to purchases made after the date of this decision.

Decision No. 12943-(03/15)

February 21, 2003

Q. PRGF Trust and PRGF-HIPC Trust—Reserve Account—Review

Pursuant to Decision No. 10286 (93/23) ESAF,11 adopted on February 22, 1993, as amended, the Fund has reviewed the adequacy of balances in the Reserve Account of the PRGF Trust, and determines that they are sufficient to meet all obligations that could give rise to payments from the Account to lenders to the Loan Account of the PRGF Trust in the six months from April 1, 2003, to September 30, 2003 (SM/03/100, 3/21/03).

Decision No. 12979-(03/31) PRGF

March 31, 2003

R. Joint Vienna institute—Amendment of Agreement

The Managing Director is authorized to consent to the First Amendment to the Agreement for the Establishment of the Joint Vienna Institute pursuant to Article XI of that Agreement (EBAP/03/16, 2/11/03).

Decision No. 12941-(03/13)

February 19, 2003

1

See Selected Decisions, Twenty-Seventh Issue (December 31, 2002), page 386.

2

Ibid., page 378.

3

Ibid, page 372.

4

Ibid, page 378.

5

Ibid., page 150.

6

Ibid., page 150.

7

Ibid., page 10.

8

Ibid., pages 680–84

9

Ibid., page 413.

10

Ibid., pages 325 and 627.

11

Ibid., page 413.

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