Chapter

Appendix VII. Financial statements April 30, 2005

Author(s):
International Monetary Fund
Published Date:
November 2005
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Independent Auditors’ Report

To the Board of Governors

of the International Monetary Fund

Washington, DC

We have audited the accompanying balance sheet of the General Department of the International Monetary Fund (the “Department”) as of April 30, 2005, and the related statements of income, changes in reserves and resources, and cash flows for the year then ended. These financial statements are the responsibility of the Department’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The Department’s financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 14, 2005, expressed an unqualified opinion on those statements and included an explanatory paragraph that described the adoption of International Accounting Standard No. 32 (Revised), Financial Instruments: Disclosure and Presentation, and International Accounting Standard No. 39 (Revised), Financial Instruments: Recognition and Measurement, as discussed in Note 2 to the financial statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the financial position of the General Department of the International Monetary Fund at April 30, 2005, and the results of its operations and its cash flows for the year then ended in conformity with International Financial Reporting Standards.

As discussed in Note 2 to the financial statements, during financial year 2005, the Department adopted International Accounting Standard No. 32 (Revised), Financial Instruments: Disclosure and Presentation, and International Accounting Standard No. 39 (Revised), Financial Instruments: Recognition and Measurement, and applied the revisions retrospectively from May 1, 2003.

Our audit was conducted for the purpose of forming an opinion on the basic 2005 financial statements taken as a whole. The supplemental schedules listed on pages 161 to 166 are presented for the purpose of additional analysis and are not a required part of the basic financial statements. These schedules are the responsibility of the Department’s management. Such 2005 schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. The 2004 schedules were subjected to auditing procedures by other auditors, whose report dated June 14, 2005, referred to above, stated that such information is fairly stated in all material respects when considered in relation to the basic 2004 financial statements taken as a whole.

June 14, 2005

Member of

Deloitte Touche Tohmatsu

General Department Balance sheets as at April 30, 2005, and 2004(In thousands of SDRs)
2005200420052004
AssetsLiabilities (including quotas)
Usable currencies122,388,465103,261,911Remuneration payable247,798212,654
Credit outstanding (Note 4)49,853,66462,152,682
Other currencies41,244,24846,671,529Other liabilities151,530100,189
Total currencies (Note 5)213,486,377212,086,122Special Contingent Account (Note 12)1,589,0191,495,019
Quotas, represented by:
SDR holdings574,310506,029Reserve tranche positions (Note 5)49,848,79862,856,110
Gold holdings (Note 6)5,851,7715,851,771Subscription payments163,629,602149,937,890
Receivables (Note 7)568,416517,002Total Quotas213,478,400212,794,000
Other assets (Notes 8 and 15)709,940751,655Total Liabilities (including Quotas)215,466,747214,601,862
Investments held in the Special Disbursement Account (Note 9)2,518,6132,630,804Reserves of the General Resources Account5,724,0675,110,717
Structural Adjustment Facility loans (Note 4)45,56685,908Resources of the Special Disbursement Account2,564,1792,716,712
Total Assets223,754,993222,429,291Total Liabilities, Reserves, and Resources223,754,993222,429,291
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
General Department Income statements for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Operational income
Interest and charges (Note 7)2,270,0442,231,678
Interest on SDR holdings16,32216,630
Investment income of the Special Disbursement Account (Note 9)52,15740,938
Other charges and income (Note 7)34,03590,676
2,372,5582,379,922
Operational expenses
Remuneration (Note 13)1,033,847966,404
Administrative expenses (Note 14)673,204548,792
1,707,0511,515,196
Total net income665,507864,726
Net income of the General Department comprises
Net income of the General Resources Account613,350823,788
Income of the Special Disbursement Account52,15740,938
665,507864,726
The accompanying notes are an integral part of these financial statements.
General Department Statements of changes in reserves and resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
General Resources AccountSpecial

Disbursement

Account

resources
Special

reserve
General

reserve
Total

reserves
Balance at April 30, 20032,381,4541,905,4754,286,9292,727,165
Net income33,981789,807823,78840,938
Net transfers from the SDA (Note 9)(51,391)
Balance at April 30, 20042,415,4352,695,2825,110,7172,716,712
Net income31,394581,956613,35052,157
Net transfers from the SDA (Note 9)(204,690)
Balance at April 30, 20052,446,8293,277,2385,724,0672,564,179
The accompanying notes are an integral part of these financial statements.
General Department Statements of cash flows for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Usable currencies and SDRs from operating activities
Net income665,507864,726
Adjustments to reconcile net income to usable resources generated by operations:
Changes in receivables and other assets49,41265,104
Changes in remuneration payable and other liabilities86,485(72,048)
Increase in the Special Contingent Account94,00094,000
Usable currencies and SDRs from credit to members:
Purchases in currencies and SDRs, including reserve tranche purchases(1,613,933)(17,829,722)
Repurchases in currencies and SDRs13,907,17721,638,613
Repayments of Structural Adjustment Facility loans40,34250,908
Net usable currencies and SDRs provided by operating activities13,228,9904,811,581
Usable currencies and SDRs from investment activities
Net acquisition (disposal) of investments by the Special Disbursement Account112,191(40,455)
Acquisition of fixed assets(59,111)(43,099)
Net usable currencies and SDRs provided by (used in) investment activities53,080(83,554)
Usable currencies and SDRs from financing activities
Subscription payments in SDRs and usable currencies171,10015,675
Changes in composition of usable currencies5,946,3551,084,248
Transfers to the PRGF Trust, PRGF-HIPC Trust, and other accounts(204,690)(51,391)
Net usable currencies and SDRs provided by financing activities5,912,7651,048,532
Net increase in usable currencies and SDRs19,194,8355,776,559
Usable currencies and SDRs, beginning of period103,767,94097,991,381
Usable currencies and SDRs, end of period122,962,775103,767,940
The accompanying notes are an integral part of these financial statements.

General Department Notes to the financial statements as at April 30, 2005, and 2004

1. Purpose and organization

The International Monetary Fund (“IMF”) is an international organization of 184 member countries. It was established to promote international monetary cooperation and exchange stability and to maintain orderly exchange arrangements among members; to facilitate the expansion and balanced growth of international trade, and contribute thereby to the promotion and maintenance of high levels of employment; and to provide temporary financial assistance to member countries under adequate safeguards to assist in solving their balance of payments problems in a manner consistent with the provisions of the IMF’s Articles of Agreement. The IMF conducts its operations and transactions through the General Department and the Special Drawing Rights Department (the SDR Department). The General Department consists of the General Resources Account (GRA), the Special Disbursement Account (SDA), and the Investment Account. The Investment Account has not been activated. The IMF also administers trusts and accounts established to perform financial and technical services and financial operations consistent with the purposes of the IMF. The resources of these trusts and accounts are contributed by members or the IMF through the SDA. The financial statements of the SDR Department and these trusts and accounts are presented separately.

General Resources Account

The GRA holds the general resources of the IMF. Its resources reflect the payment of quota subscriptions, use and repayment of IMF credit, collection of charges on the use of credit, payment of remuneration on creditor positions, borrowings, and payment of interest and repayment of borrowings.

Special Disbursement Account

The assets and resources of the SDA are held separately from the GRA and Investment Account of the General Department. The SDA is the vehicle for receiving and investing profits from the sale of the IMF’s gold and for making transfers to other accounts (outside the General Department) for special purposes authorized in the Articles, in particular for financial assistance to low-income members of the IMF. Resources of the SDA include transfers received from the Trust Fund (in liquidation), a trust administered by the IMF as trustee, and part of the proceeds from the sales of the IMF’s gold in the past. Income from the investment of gold profits in the SDA is to be transferred, as needed, to the Poverty Reduction and Growth Facility–Heavily Indebted Poor Countries Trust (PRGF-HIPC Trust), in accordance with decisions of the IMF. The SDA also has outstanding loans extended under the Structural Adjustment Facility (SAF), which was established in March 1986 to provide balance of payments assistance on concessional terms to qualifying low-income developing country members.

Assets that exceed the financing needs of the SDA, excluding investments arising from the sales of gold undertaken pursuant to the 1999 decision on gold sales by the IMF, are transferred to the Reserve Account of the Poverty Reduction and Growth Facility Trust (PRGF Trust), which is administered separately by the IMF as trustee.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the General Department are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000, and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (one SDR was equal to 1.45183 U.S. dollars as of April 30, 2004).

Currencies

Currencies consist of members’ currencies and securities held by the IMF. Each member has the option of substituting non-negotiable and non-interest-bearing securities for the IMF’s holdings of its currency that exceed ¼ of 1 percent of the member’s quota. These securities are encashable by the IMF on demand.

Each member is required to pay to the IMF its initial quota and subsequent quota increases partly in its own currency, with the remainder to be paid in usable currencies prescribed by the IMF, or SDRs. One exception was the quota increase of 1978, which was paid entirely in members’ own currencies.

Usable currencies consist of currencies of member countries considered by the IMF to have strong balance of payments and reserve positions. These currencies are included in the IMF’s financial transactions plan to finance purchases and other transfers of the IMF. Participation in the financial transactions plan is reviewed on a quarterly basis. Usable currencies and SDR holdings are cash equivalents. The changes in non-usable currencies (credit outstanding and other currencies) result from the IMF’s transactions (purchases and repurchases) where a member’s currency is exchanged for another member’s currency, or from the inclusion/exclusion of a member’s currency in the IMF’s financial transaction plan.

Currencies, including securities, are valued in terms of the SDR on the basis of the currency/SDR exchange rate determined for each currency. Securities can be substituted by members for currencies at their option. These securities are not marketable, but can be converted into currencies on demand. Each member is obligated to maintain, in terms of the SDR, the value of the balances of its currency, including its securities, held by the IMF in the GRA. This requirement is referred to as the maintenance-of-value obligation. The currency balances in the balance sheets include these receivables and payables. All currencies are revalued periodically in terms of the SDR, including at each financial year end. Whenever the IMF revalues its holdings of a member’s currency, a receivable or a payable is established for the amount required to maintain the SDR value of the IMF’s holdings of that currency.

Credit outstanding

The IMF provides balance of payments assistance in accordance with established policies by selling to members, in exchange for their own currencies, SDRs or currencies of other members. When members make purchases, they incur obligations to repurchase the IMF’s holdings of their currencies arising from the purchases within specified periods by payments in SDRs or other currencies, as determined by the IMF. IMF credit is subject to specific repayment schedules over periods that vary depending on the type of facility used. Members are entitled to repurchase, at any time, the IMF’s holdings of their currencies on which charges are levied and are expected to make repurchases as and when their balance of payments and reserve position improve.

The repurchase policies of the IMF are intended to ensure the revolving character of its resources. Programs supported by the IMF, other than the Supplemental Reserve Facility (SRF), are guided by the requirement that members should be able to make repurchases in accordance with normal terms of the respective facilities (referred to as the obligation schedule). In keeping with a long-standing principle of the IMF that its resources should be repaid as soon as the balance of payments and reserve position improve, debtors in a position to do so are expected to make repurchases under predetermined expectation schedules. However, if a member’s external position is not sufficiently strong, it may request that repurchases on the expectation schedule be extended to the original obligation schedule. The extension period is one year for credit tranche and SRF purchases and three years for Extended Fund Facility (EFF) purchases. A member is considered overdue only after failure to make a payment on the repurchase obligation schedule.

Overdue obligations and the burden-sharing mechanism

It is the policy of the IMF to exclude from current income charges due by members that are six months or more overdue in meeting any financial obligation to the IMF. The IMF fully recovers this lost income from the burden-sharing mechanism, through adjustments, in the current period, to the rates of charge and remuneration. Members that have borne the financial consequences of overdue charges receive refunds to the extent that overdue charges that had given rise to burden-sharing adjustments are subsequently settled.

An impairment loss would be recognized if there is objective evidence of impairment as a result of a past event that occurred after initial recognition, and is determined as the difference between the outstanding credit’s carrying value and the present value of the estimated future cash flows. No impairment losses have been recognized.

First Special Contingent Account

In view of the risk resulting from overdue obligations, the IMF accumulates balances in the first Special Contingent Account (SCA-1) by collecting resources under the burden sharing mechanism. Losses arising from overdue principal, if realized, would be charged against the SCA-1. The IMF has not realized any losses on overdue financial obligations. However, the IMF considers it prudent to maintain the SCA-1 as an added protection until all arrears are fully settled. Balances in the SCA-1 are refundable to the members that shared the cost of its financing in proportion to their contributions when there are no outstanding overdue repurchases and charges, or at such earlier time as the IMF may decide.

Gold holdings

The Articles of Agreement limit the use of gold in the IMF’s operations and transactions. Any use provided for in the Articles requires a decision adopted by an 85 percent majority of the total voting power. Under the Articles, the IMF may sell gold outright on the basis of prevailing market prices but cannot engage in any other gold transactions, such as loans, leases, swaps, or the use of gold as collateral. In addition, the IMF does not have the authority to buy gold, but it may accept payments from a member in gold instead of SDRs or currencies in any operation or transaction under the IMF’s Articles at prevailing market prices.

In accordance with the provisions of the Articles, whenever the IMF sells gold held on the date of the Second Amendment of the IMF’s Articles of Agreement (April 1, 1978), the portion of the proceeds equal to the historical cost must be placed in the GRA. Any portion of the proceeds in excess of the historical cost will be held in the SDA or transferred to the Investment Account. The IMF may also sell gold held on the date of the Second Amendment to those members that were members on August 31, 1975, in proportion to their quotas on that date, in exchange for their own currencies, at the historical cost.

The IMF values its gold holdings at historical cost using the specific identification method. The carrying value of the Fund’s gold holdings is derived from quota subscriptions prior to the Second Amendment and the settlement of financial obligations by members in 1992 and 1999 (see Note 6).

Other assets

Other assets include primarily fixed assets, net pension plan assets, and net assets for other post-retirement benefits.

Fixed assets with a cost in excess of a threshold amount are capitalized at cost and depreciated over the estimated useful lives of the assets, using the straight-line method. Buildings, equipment, and furniture are depreciated over 30, 3, and 7 years, respectively. Software is amortized over 3 years.

The IMF operates two defined-benefit pension plans and provides post-retirement benefits to staff. The pension plans are funded by payments from the staff and the IMF, taking into account the recommendations of independent actuaries. Assets of the pension plans are held in separate trustee-managed funds. The IMF also established a Retired Staff Benefits Investment Account (RSBIA) to hold and invest funds set aside to finance the cost of post-retirement employee benefits. The assets of RSBIA are administered by the IMF. Pension plans and other post-retirement assets are measured at fair value as of the balance sheet date. Pension costs and expected costs of the post-retirement medical and life insurance benefits are determined using the Projected Unit Credit Method, which measures the present value of the estimated future cash outflows, using interest rates of government securities that have maturities approximating the terms of the pension liabilities, and accrued over the period of employment. Valuations of these obligations are carried out annually by independent actuaries.

SAF loans in the Special Disbursement Account

SAF loans provide financial assistance to low-income members at an interest rate of one-half of one percent per annum for a period of ten years. Repayments of all SAF loans are transferred to the PRGF Trust Reserve Account when received. Allowances for loan losses would be established if and when there is objective evidence that an impairment loss on loans has been incurred.

Investments in the Special Disbursement Account

Investments in the SDA are made in short-term deposits denominated in SDRs with maturities of less than one year and are classified as fair-value-through-profit-and-loss. Investments are recorded on the settlement date at cost and the carrying value of the investments approximate their fair value. Investment income comprises interest earned on investments.

SDR holdings

Although SDRs are not allocated to the IMF, the IMF may acquire, hold, and dispose of SDRs through the GRA. The IMF receives SDRs from members in the settlement of their financial obligations to the IMF and uses SDRs in transactions and operations with members. The IMF earns interest on its SDR holdings at the same rate as all other holders of SDRs.

Quotas

Each member is assigned a quota that forms the basis of its financial and organizational relationship with the IMF. A member’s quota is related to, but not strictly determined by, economic factors such as national income, the value of external trade and payments, and the level of official reserves. Quotas determine members’ subscriptions to the IMF, their relative voting power, access to financing, and their share in SDR allocations. Should a member withdraw from the IMF, its quota is repayable to the extent it is not needed to settle other net obligations of the member to the IMF. As a result of adopting IAS 32 Revised, “Financial Instruments Disclosure and Presentation,” quota subscriptions have been reclassified as liabilities effective May 1, 2003, retrospectively, as these financial instruments also embody an unconditional obligation to redeem the instrument upon a member’s withdrawal from the IMF.

Reserve tranche position

A member has a reserve tranche in the IMF when the IMF’s holdings of its currency, excluding holdings that reflect the member’s use of IMF credit, are less than the member’s quota. Reserve tranches result from quota payments, part of which are to be made in reserve assets, and the use of the member’s currency in the IMF’s transactions or operations. A member’s reserve tranche is considered a part of its external reserves and a liquid claim against the IMF. The member may draw on the reserve tranche at any time when it represents that it has a balance of payments need. Reserve tranche purchases are not subject to repurchase obligations or charges.

Reserves of the General Resources Account

The IMF’s reserves, consisting of the General Reserve and the Special Reserve, provide it with protection against financial risk of a general nature. The IMF determines annually what part of its net income will be retained and placed to the General Reserve or the Special Reserve, and what part, if any, will be distributed. The General Reserve may be used to meet capital losses or administrative deficits. The Articles of Agreement permit the IMF to use the Special Reserve for any purpose for which it may use the General Reserve, except distribution. After meeting the cost of administering the PRGF Trust, net operational income generated from surcharges on purchases under the SRF, the credit tranches, and the EFF has been placed to the General Reserve. All other income has been placed to the Special Reserve.

SDR interest rate

The SDR interest rate is determined weekly by reference to a combined market interest rate, which is a weighted average of yields on short-term instruments in the capital markets of the euro area, Japan, the United Kingdom, and the United States.

Charges

The IMF levies periodic charges on members’ use of GRA credit. The basic rate of charge is set as a proportion of the SDR interest rate, which is equivalent to the effective interest rate. Under the burden-sharing mechanism (see Note 12), the basic rate of charge is increased to offset the effect on the IMF’s income of the nonpayment of charges and also to finance the additions to the SCA-1.

A surcharge progressing from 300 to 500 basis points above the rate of charge applies to the use of credit under the SRF. In addition, credit outstanding exceeding 200 percent of quota, resulting from purchases in the credit tranches and under the EFF (other than those under the SRF) after November 28, 2000, is subject to a surcharge of 100 basis points, and credit in excess of 300 percent of quota, to a surcharge of 200 basis points. Special charges are levied on members’ currency holdings that are not repurchased when due and on overdue charges. Special charges do not apply to members that are six months or more overdue to the IMF. A service charge is levied by the IMF on all purchases, except reserve tranche purchases. A refundable commitment fee is charged on Stand-By and Extended Arrangements. At the expiration or cancellation of an arrangement, the unrefunded portion of the commitment fee is recognized as current income.

Remuneration

The IMF pays interest, referred to as remuneration, on a member’s reserve tranche position. A portion of the reserve tranche is unremunerated and is equal to 25 percent of the member’s quota on April 1, 1978 (that part of the quota that was paid in gold prior to the Second Amendment of the Fund’s Articles). For a member that joined the Fund after that date, the unremunerated reserve tranche is the same percentage of its initial quota as the average unremunerated reserve tranche was as a percentage of the quotas of all other members when the new member joined the Fund. The unremunerated reserve tranche remains fixed for each member in nominal terms, but because of subsequent quota increases, it is now significantly lower when expressed as a percentage of quota. The average is equal to 3.8 percent of quota at April 30, 2005, and 2004, but the actual percentage is different for each member.

The rate of remuneration, which is equivalent to the effective interest rate, is equal to the SDR interest rate, adjusted downward to finance a share of the nonpayment of charges and additions to the SCA-1 under the burden-sharing mechanism (see Note 12).

Adoption of new International Financial Reporting Standards

In December 2003, the International Accounting Standards Board (IASB) issued a revised International Accounting Standard 32, “Financial Instruments: Disclosure and Presentation” (IAS 32 Revised), which requires the classification of certain financial instruments, including shareholder interests, as a financial liability if such financial instruments embody redemption features. The adoption of IAS 32 Revised required the IMF to reclassify its quota subscriptions, which are repayable upon members’ withdrawal, as liabilities. IAS 32 Revised is effective for financial year 2006, but the IMF decided to adopt it early during financial year 2005, with retrospective effect as of May 1, 2003. The impact of the implementation of IAS 32 Revised on the balance sheet was to increase total liabilities and decrease members’ resources by SDR 213.5 billion as of April 30, 2005 (SDR 212.8 billion as of April 30, 2004).

In December 2003, the IASB revised International Accounting Standard 39, “Financial Instruments: Recognition and Measurement,” under which investments previously classified as available-for-sale are permitted to be reclassified as securities at fair-value-through-profit-and-loss. After the reclassification, changes in fair value of the investments would continue to be recognized in the income statement. The revised standard is effective for financial year 2006, but the IMF elected to adopt it in financial year 2005, with retrospective effect as of May 1, 2003. The implementation of the revised standard did not have an impact on the IMF’s financial position or results of operations.

In December 2004, the IASB issued an amendment to IAS 19, “Employee Benefits Actuarial Gains and losses, Group Plans and Disclosures.” The amended IAS 19 provides an additional option for recognizing actuarial gains and losses and requires additional disclosures on the plan assets held by the employee benefit plans as well as further disclosure on the net periodic cost and reconciliation of the funded status. This revised standard will become effective for financial year 2007. The IMF will consider the implications of this revision on the General Department’s financial statements.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

3. Financial risk management

In providing financial assistance to member countries and conducting its operations, the IMF is exposed to various types of risks, including credit, interest rate, exchange rate, liquidity, and operational risks. Because of its unique role in the international monetary system, the principal risk facing the IMF is credit risk.

Credit risk

Credit risk refers to potential losses on the credit outstanding due to the inability, or unwillingness, of member countries to make repurchases. While the IMF is accorded preferred creditor status, credit risk is inherent since the IMF generally provides financing when other sources are not available to a member and has limited ability to diversify its loan portfolio. As a result, credit concentration is high (see Note 4).

The IMF’s credit risk–mitigating measures comprise policies on access limits; program design and monitoring, including conditionality attached to its financing; early repurchase; and preventative, precautionary, and remedial measures to cope with the financial consequences of protracted arrears.

The IMF has established access limits, including limits on overall access to resources in the GRA, as well as limits on access to the credit tranches under the Extended Fund Facility. The overall limit is currently set at an annual limit of 100 percent of a member’s quota, with a cumulative limit of 300 percent of a member’s quota. Access in excess of these limits can be granted in exceptional circumstances (exceptional access cases) subject to certain procedural requirements and substantive criteria that have been adopted by the Executive Board.

The IMF generally provides financial assistance to members in the context of a program that is designed to help the member overcome its balance of payments difficulties during the program period. IMF assistance is normally disbursed in tranches and subject to conditionality in the form of performance criteria and periodic reviews. To ensure the integrity of data provided to the Fund in the context of access to Fund resources and compliance with performance criteria, the IMF may apply remedies for misreporting by member countries by expecting early repurchases for noncomplying drawings.

In accordance with the Articles of Agreement, member countries using IMF resources are expected to make early repurchases as their balance of payments and reserve positions improve. Moreover, members are expected to make repurchases resulting from purchases in the credit tranches or under the Compensatory Financing Facility made after November 20, 2000, under predetermined expectation schedules ahead of the obligation date to preserve the revolving character of the IMF’s resources and reduce the duration of IMF credit exposure.

The IMF maintains precautionary balances consisting of the SCA-1 and the reserves of the GRA to cover possible overdue principal and losses in income and to preserve the IMF’s reputation as a prudent financial organization. The level of precautionary balances is determined by taking into consideration the amount of credit in protracted arrears and a margin for risk associated with credit in good standing. The Executive Board decided that in the current circumstances, the IMF should aim at precautionary balances in an amount of SDR 10 billion. In addition, the burden-sharing arrangement is another risk-mitigating mechanism unique to the IMF whereby the financial risk of overdue charges is passed on to creditor and debtor members and allows for the strengthening of the IMF’s overall financial position.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. The IMF’s cost structure and its income position are interest-rate driven. Fluctuations in interest rates could widen or narrow the spread between the rate of charge on credit outstanding and the rate of remuneration paid to member countries with remunerated reserve tranche positions. To minimize the effect of interest rate fluctuations on income, the IMF links the rate of charge directly to the SDR interest rate (which is equal to the rate of remuneration). Moreover, the Executive Board may decide to recover any net income shortfalls in the GRA caused by falling interest rates or other factors by increasing the net income target for the following financial year.

Exchange rate risk

Exchange rate risk is the exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on an entity’s financial position and cash flows. The IMF uses the SDR as the unit of account and conducts its transactions in terms of the SDR. It has no exchange rate risk exposure on its holdings of members’ currencies since, under the Articles of Agreement, members are required to maintain the value of such holdings in terms of the SDR. Any depreciation/appreciation in their currency vis-à-vis the SDR gives rise to a currency valuation adjustment receivable or payable that must be settled on an annual basis and that is included in the stock of the IMF’s currency holdings. Therefore, the value of the IMF’s currency holdings does not fluctuate in SDR terms.

Exchange rate risk on IMF investments is managed by investing in securities denominated in SDRs or in the constituent currencies of the SDR valuation basket. The IMF also has other assets and liabilities, such as trade receivables and payables, denominated in currencies other than SDRs and makes administrative payments largely in U.S. dollars, but the exchange rate risk exposure is very limited.

Liquidity risk

Liquidity risk is the risk of non-availability of resources to meet the IMF’s financing needs and obligations. The IMF must have usable resources available to meet members’ demand for credit. While the IMF’s sources are revolving, uncertainties in timing and amount of credit extended to members during financial crises expose the IMF to liquidity risk. Moreover, the IMF must also stand ready to meet the potential demands from members drawing upon their reserve tranche positions, which have no fixed maturity and are part of members’ reserves.

The IMF manages its liquidity risk not by matching the maturity of assets and liabilities, but by closely scrutinizing developments in its liquidity position, especially as it relates to the adequacy of quota-based resources to meet liquidity needs. The Articles of Agreement require the IMF to conduct a general review of members’ quotas at intervals of no more than five years in order to assess the adequacy of quota-based resources to meet members’ demand for IMF financing. There have been eight quota increases, including an ad hoc increase, as a result of the reviews. Should the available quota-based resources be inadequate to meet financing needs, the IMF may activate its standing credit lines totaling SDR 34 billion under the General Arrangements to Borrow and the New Arrangements to Borrow. The IMF also monitors its liquidity position over a shorter term, using an objective criterion such as the forward commitment capacity for the next twelve-month period (Schedule 2 provides the IMF’s available resources and liquidity position).

Operational risk

Operational risk includes risk of loss attributable to errors or omissions because of failures in executing or processing transactions, inadequate controls, human factors, and/or failures in underlying support systems.

The IMF mitigates operational risk by (i) identifying key operational risks, (ii) maintaining a system of internal control, (iii) documenting policies and procedures on administrative and accounting and reporting processes, and (iv) conducting internal audits to ensure accurate processing of transactions and minimize the possibility of undetected errors. The design and effectiveness of controls are evaluated continuously and improvements are implemented on a timely basis. The results of the internal evaluation of the effectiveness of internal controls are reported by the Office of Internal Audit and Inspection to the External Audit Committee, which also exercises oversight over the external audit of the IMF’s accounts and its controls.

The IMF has adopted a Code of Ethics to promote the highest standards of ethics among its staff, including senior management and members of the Executive Board. The enforcement of the Code of Ethics is further supplemented with procedures for the reporting and investigation of irregularities and improprieties, including fraudulent acts.

4. Credit and loans outstanding

Credit outstanding in the GRA and SAF loans in the SDA are carried at amortized cost.

Changes in the outstanding use of IMF credit under the various facilities of the GRA were as follows:

April

30, 2003
PurchasesRepurchasesApril

30, 2004
PurchasesRepurchasesApril

30, 2005
(In millions of SDRs)
Credit tranches33,89812,874(5,042)41,7301,445(7,717)35,458
Extended Fund Facility14,9421,132(2,323)13,751163(4,549)9,365
Supplemental Reserve
Facility15,7003,807(13,479)6,028(1,459)4,569
Systemic Transformation
Facility644(490)154(136)18
Enlarged Access279(3)276(5)271
Compensatory and
Contingency
Financing Facility414(294)120(36)84
Supplementary
Financing Facility101(7)94(5)89
Total credit outstanding65,97817,813(21,638)62,1531,608(13,907)49,854

The following repurchases were made by members during the financial years ended April 30:

20052004
(In millions of SDRs)
Early repurchases2,645328
Repurchase expectations5,85415,944
Repurchase obligations5,4085,366
Total repurchases13,90721,638

The IMF approved the following members’ requests to extend repurchases from the expectation to the obligation schedule during the financial years ended April 30:

Total repurchase expectations extended
20052004
(In millions of SDRs)
Argentina7791,941
Brazil8,096
Dominica1
Dominican Republic11
Ecuador33
Papua New Guinea26
Serbia and Montenegro19
Sri Lanka74
Turkey8,273
Uruguay434227

As of April 30, 2005, and 2004, outstanding SAF loans amounted to SDR 46 million and SDR 86 million, respectively.

Scheduled repurchases in the GRA and repayment of SAF loans in the SDA are summarized below:

Financial year

ending April 30
General Resources

Account
Special Disbursemen

Account
(In millions of SDRs)
200618,61237
200717,671
20088,793
20092,502
20101,156
2011 and beyond397
Overdue7239
Total49,85446

The use of credit in the GRA by the largest users at April 30 was as follows:

20052004
(In millions of SDRs and as a percentage of total GRA credit outstanding)
Largest user of credit15,35630.8%18,13929.2%
Three largest users of credit36,53973.3%44,02070.8%
Five largest users of credit44,19088.6%53,68086.4%

The five largest users of credit as of April 30, 2005, were Brazil, Turkey, Argentina, Indonesia, and Uruguay. Outstanding credit by member is provided in Schedule 1.

The concentration of GRA outstanding credit by regional geographical area as of April 30 was as follows:

20052004
(In millions of SDRs and as a percentage of total GRA credit outstanding)
Africa1,1682.3%1,3972.3%
Asia and Pacific6,76013.6%8,01912.9%
Europe2,7015.4%6,1609.9%
Latin America and the Caribbean25,61751.4%30,69749.4%
Middle East and Turkey13,60827.3%15,88025.5%
Total49,854100%62,153100%

Overdue obligations

At April 30, 2005, and 2004, four members were six months or more overdue in settling their financial obligations to the General Department.

GRA repurchases, GRA charges, SAF loan repayments, and SAF interest that are six or more months overdue were as follows:

Repurchases and

SAF loans
Charges and SAF

interest
2005200420052004
(In millions of SDRs)
Total overdue7327521,0301,009
Overdue for six months or more7307431,0181,001
Overdue for three years or more661650970939

The type and duration of the overdue amounts in the General Department as of April 30, 2005, were as follows:

Repurchases

and SAF loans
Charges and

SAF interest
Total

obligation
Longest overdue

obligation
(In millions of SDRs)
Liberia201255456May 1985
Somalia10699205July 1987
Sudan316663979August 1985
Zimbabwe10913122May 2001
Total7321,0301,762

5. Currencies

Net changes in the IMF’s holdings of members’ currencies for the years ended April 30, 2005, and 2004 were as follows:

April

30, 2003
Net

change
April

30, 2004
Net

change
April

30, 2005
(In millions of SDRs)
Members’ quotas212,73163212,794684213,478
Members’ outstanding use of IMF credit in the GRA65,978(3,825)62,153(12,299)49,854
Members’ reserve tranche positions in the GRA(68,009)5,153(62,856)13,007(49,849)
Administrative currency
balances(1)(4)(5)83
Total currencies210,6991,387212,0861,400213,486

Receivables and payables arising from valuation adjustments at April 30, 2005, when all holdings of currencies of members were last revalued, amounted to SDR 8,521 million and SDR 5,435 million, respectively (SDR 9,311 million and SDR 3,139 million, respectively, at April 30, 2004). Settlements of these receivables or payables are required to be made promptly after the end of each financial year.

6. Gold holdings

At April 30, 2005, and 2004, the IMF held 3,217,341 kilograms of gold, equal to 103,439,916 fine ounces of gold, at designated depositories. Gold holdings were valued at a historical cost of SDR 5,852 million as of April 30, 2005, and 2004.

Cost
OuncesPer ounceTotal
(In millions)(In SDRs)(In millions of SDRs)
Gold acquired from quota subscriptions90.474353,167
Gold acquired from Cambodia in 1992.0212415
Gold acquired through off-market transaction in 199912.9442072,680
Total103.4395,852

As of April 30, 2005, the market value of the IMF’s holdings of gold was SDR 29.7 billion (SDR 27.7 billion at April 30, 2004). If realized, the excess of the market value over the cost of the IMF’s gold holdings would be transferred to the SDA or to the Investment Account.

7. Interest and charges

As of April 30, 2005, the total holdings on which the IMF levies charges amounted to SDR 49,854 million (SDR 62,153 million as of April 30, 2004). For the financial year 2005, the rate of charge was set at 154 percent of the SDR interest rate for the first half and 136 percent for the second half of the year (for financial year 2004, it was 132 percent of the SDR interest rate). After the retroactive reduction of charges due to income exceeding the net income target for financial year 2005, the basic rate of charge was 144 percent for the first half of the financial year. The average adjusted rate of charge before applicable surcharges for financial year 2005 was 3.1 percent (2.17 percent for financial year 2004). Charges and other receivables as of April 30 were as follows:

20052004
(In millions of SDRs)
Periodic charges1,5981,526
Amount paid through burden sharing(848)(825)
Unpaid charges(187)(188)
563513
Other receivables54
Total receivables568517

Interest and periodic charges for the years ended April 30 consisted of the following:

20052004
(In millions of SDRs)
Interest and periodic charges2,2592,224
Amounts paid through burden-sharing adjustments, net of refunds118
Total interest and charges2,2702,232

Interest earned on SAF loans for the years ended April 30, 2005, and 2004 amounted to SDR 0.3 million and SDR 0.5 million, respectively.

Service charges, and commitment fees on canceled or expired arrangements are included in Other Charges and Income, which amounted to SDR 34 million (SDR 91 million for the year ended April 30, 2004).

8. Other assets—fixed assets

Other assets include fixed assets, which at April 30, 2005, and 2004 amounted to SDR 311 million and SDR 267 million, respectively, and consisted of land, buildings, construction in progress, and equipment.

LandBuildingsOthersTotal
(In millions of SDRs)
Cost
Beginning of the year9621596407
Additions5959
Disposals(3)(3)
End of the year96215152463
Accumulated depreciation
Beginning of the year10733140
Additions7815
Disposals(3)(3)
End of the Year11438152
Net book value as at April 30, 200596101114311
Net book value as at April 30, 20049610863267

9. Special Disbursement Account

Investment

As at April 30, 2005, the investments in the SDA consisted of short-term fixed-term deposits with maturities of less than one year and amounted to SDR 2,519 million (SDR 2,631 million as at April 30, 2004).

Investment income of the SDA for the years ended April 30, 2005, and 2004 was SDR 52 million and SDR 41 million, respectively.

Transfer of SDA resources

Assets in the SDA can be used for special purposes authorized in the Articles, including providing financial assistance to low-income member countries. Transfers for this purpose can be made from current and prior years’ income. Such transfers are not considered an expense, but are equity-like distributions approved separately by the Executive Board and transferred on an as-needed basis.

Proceeds from the repayment of SAF loans are transferred from the SDA to the PRGF Trust. During the financial years ended April 30, 2005, and 2004, such transfers amounted to SDR 41 million and SDR 52 million, respectively.

In addition, the accumulated investment earnings in the SDA are available for financing the PRGF-HIPC Trust on an as-needed basis. During the financial year ended April 30, 2005, the SDA transferred SDR 164 million to the PRGF-HIPC Trust (no such transfer was made for the financial year ended April 30, 2004).

Trust fund

The IMF is the trustee of the Trust Fund, which was established in 1976 to provide balance of payments assistance on concessional terms to eligible members that qualify for assistance. The Trust Fund is in liquidation.

In 1980, the IMF, as trustee, decided that, upon the completion of the final loan disbursements, the Trust Fund would be terminated as of April 30, 1981, and after that date, the activities of the Trust Fund have been confined to the conclusion of its affairs. The Trust Fund has no assets other than claims receivable, including interest and special charges, from Liberia, Somalia, and Sudan amounting to SDR 117.6 million at April 30, 2005 (SDR 117.2 million at April 30, 2004). All interest is deferred. Cash receipts on these loans are to be transferred to the SDA.

10. Borrowings

Under the General Arrangements to Borrow (GAB), the IMF may borrow up to SDR 18.5 billion when supplementary resources are needed, in particular, to forestall or to cope with an impairment of the international monetary system. The GAB became effective on October 24, 1962, and has been renewed through December 25, 2008. Interest on borrowings under the GAB is set at a rate equal to the SDR interest rate.

Under the New Arrangements to Borrow (NAB), the IMF may borrow up to SDR 34 billion of supplementary resources. The NAB is the facility of first and principal recourse, but it does not replace the GAB, which will remain in force. Outstanding drawings and commitments under these two borrowing arrangements are limited to a combined total of SDR 34 billion. The NAB became effective for a five-year period on November 17, 1998, and has been renewed through November 16, 2008. Interest on borrowings under the NAB is payable to the participants at the SDR interest rate or any such higher rate as may be agreed between the IMF and participants representing 80 percent of the total credit arrangements. There was no balance outstanding as at April 30, 2005, and 2004 under the GAB or the NAB.

11. Arrangements

An arrangement is a decision of the IMF that gives a member the assurance that the IMF stands ready to provide SDRs or usable currencies during a specified period and up to a specified amount, in accordance with the terms of the arrangement. At April 30, 2005, the undrawn balances under the 12 arrangements that were in effect in the GRA amounted to SDR 7,927 million (SDR 19,799 million under 13 arrangements at April 30, 2004).

12. Burden sharing and the Special Contingent Account

Under the burden-sharing mechanism, the basic rate of charge is increased and the rate of remuneration is adjusted downward to offset the effect on the IMF’s income of the nonpayment of charges and also to finance the additions to the SCA-1.

Cumulative charges, net of settlements, that have resulted in adjustments to charges and remuneration since May 1, 1986 (the date the burden-sharing mechanism was adopted) amounted to SDR 848 million at April 30, 2005 (SDR 825 million at April 30, 2004). The cumulative refunds for the same period, resulting from the settlements of overdue charges for which burden sharing adjustments have been made, amounted to SDR 1,073 million at April 30, 2005, and 2004.

The SCA-1 is financed by adjustments to the rate of charge and the rate of remuneration. Balances in the SCA-1 are to be distributed to the members that shared the cost of its financing when there are no outstanding overdue repurchases and charges, or at such earlier time as the IMF may decide. Amounts collected from members for the SCA-1 are akin to refundable cash deposits and are recorded as collections of cash and as a liability to those who paid them. Losses arising from overdue obligations, if realized, would be shared by members in proportion to their cumulative contributions to the SCA-1. For the financial years ended April 30, 2005, and 2004, the annual addition to the SCA-1 amounted to SDR 94 million.

13. Remuneration

At April 30, 2005, total creditor positions on which the IMF paid remuneration amounted to SDR 43,209 million (SDR 56,241 million at April 30, 2004). The average adjusted rate of remuneration for the financial year ended April 30, 2005, was 1.98 percent (1.48 percent for the financial year ended 2004). Remuneration consisted of the following for the years ended April 30:

20052004
(In millions of SDRs)
Remuneration1,045974
Amount withheld for burden-sharing adjustment, net of refunds(11)(8)
1,034966

14. Administrative expenses

Administrative expenses, the majority of which were incurred in U.S. dollars, for the years ended April 30 were as follows:

20052004
(In millions of SDRs)
Personnel343337
Pension and other long-term employee benefits16039
Travel6270
Exchange gains and losses21
Other108103
Less: reimbursement for the administration of the SDR Department(2)(1)
Total administrative expenses, net of reimbursements673549

15. Pension and other post-retirement benefits

The IMF has a defined-benefit Staff Retirement Plan (SRP) that covers substantially all eligible staff and a Supplemental Retirement Benefits Plan (SRBP) for selected participants of the SRP. Participants contribute 7 percent of their pensionable remuneration and the IMF contributes the remainder of the cost of funding the plans and pays certain administrative costs of the plans. In addition, the IMF provides other employment and post-retirement benefits, including medical, life insurance, and other long-term benefits. In 1995, the IMF established a separate account, the Retired Staff Benefits Investment Account (RSBIA), to hold and invest resources set aside to fund the cost of the post-retirement benefits.

The defined-benefit obligations are valued annually by independent actuaries. The latest actuarial valuations were carried out as at April 30, 2005, using the Projected Unit Credit Method.

The amounts recognized in the balance sheet are determined as follows:

20052004
SRPSRBPOtherTotalTotal
(In millions of SDRs)
Fair value of plan assets3,14233593,5043,264
Present value of the defined-benefit obligation(2,901)(245)(574)(3,720)(3,569)
Unrecognized actuarial losses/(gains)51760(17)560734
Unrecognized prior service cost9914
Net balance sheet asset/(liability)758(182)(223)353443

The movement in the net balance sheet asset is reconciled as follows:

20052004
SRPSRBPOtherTotalTotal
(In millions of SDRs)
Beginning of year807(147)(217)443435
Expense recognized in the income statement(90)(41)(44)(175)(51)
Contributions paid416388559
End of year758(182)(223)353443

The pension and other post-retirement benefits expense recognized in the income statement include the amortization, over the estimated average remaining service lives of IMF staff, of actuarial gains and losses in excess of a corridor. The corridor is the higher of 10 percent of either the defined-benefit obligation or the fair value of assets at the beginning of the financial year.

The amounts recognized in the income statements are as follows:

20052004
SRPSRBPOtherTotalTotal
(In millions of SDRs)
Current service cost107263917295
Interest cost1661331210157
Expected loss on assets(219)(25)(244)(226)
Amortization of actuarial (gain)/loss363(5)34(8)
Prior service cost3333
Total expense recognized in incomestatement90424317551
Actual return on assets33743380668

The principal actuarial assumptions used in the actuarial valuations were as follows:

20052004
(In percent)
Discount rate5.75.7
Expected return on plan assets7.57.5
Future salary increases6.4-10.86.4-10.8
Ultimate health care costs growth rates4.04.0

16. Related party transactions

The GRA conducts its transactions with the SDR Department on the same terms and conditions applicable to participants in the SDR Department. During the financial years ended April 30, 2005, the receipts (consisting of repurchases, charges, and interest on SDR holdings) and uses (consisting of purchases and remuneration) of SDRs by the GRA amounted to SDR 3,100 million (SDR 5,472 million for the financial year ended April 30, 2004) and SDR 3,032 million (SDR 5,929 million for the financial year ended April 30, 2004), respectively. As of April 30, 2005, and 2004, the GRA’s SDR holdings amounted to SDR 574 million and SDR 506 million, respectively.

The costs of operating the SDR Department, the PRGF Trust, and the PRGF-HIPC Trust are borne by the GRA. The SDR Department reimbursed the GRA SDR 1.5 million and SDR 1.4 million for the financial years ended April 30, 2005, and 2004, respectively. The IMF has waived the reimbursements by the PRGF Trust to the GRA, amounting to SDR 54.4 million and SDR 57.7 million for the financial years ended April 30, 2005, and 2004, respectively. The PRGF-HIPC Trust does not reimburse the GRA.

17. Lease commitments

The IMF has committed to lease commercial office space through June 2005. Expenditures totaling SDR 3.2 million will be incurred over this period.

18. Subsequent event

On June 11, 2005, the G-8 finance ministers proposed an initiative that would involve debt relief leading to full debt cancellation of outstanding obligations of member countries eligible for HIPC assistance. Under this proposal, the cost of meeting the obligations of the eligible members would be met from existing IMF resources. In situations where other existing and projected debt relief obligations cannot be met from existing IMF resources (for example, for the protracted arrears cases such as Liberia, Somalia, and Sudan), donors have committed to providing the extra resources necessary. IMF resources that will be considered to finance this debt relief operation consist of available resources already earmarked to provide debt relief or provide concessional financing (SDA, PRGF, and PRGF-HIPC resources) for an estimated amount of approximately SDR 4.0 billion as of April 30, 2005. The precise modalities of the proposal have not yet been developed. The G-8 Finance Ministers call upon all shareholders to support the debt relief proposals which would be put to the 2005 Annual Meetings.

Schedule 1Quotas, IMF’s holdings of currencies, reserve tranche positions, and outstanding credit and loans as at April 30, 2005(In thousands of SDRs)
General Resources AccountCredit outstanding
IMF’s holdings of currencies1GRA
MemberQuotaTotalPercent of quotaReserve

tranche

position
AmountPercent2SDA3PRGF Trust4Total5
(A)+(B)+(C)=(D)
Afghanistan, Islamic Republic of161,900161,916100.0
Albania48,70045,35093.13,35565,84665,846
Algeria1,254,7001,527,333121.785,082357,7130.72357,713
Angola286,300286,445100.1
Antigua and Barbuda13,50013,499100.06
Argentina2,117,10010,217,996482.61798,101,06916.258,101,069
Armenia92,00093,411101.51,406131,573132,979
Australia3,236,4002,167,76767.01,068,771
Austria1,872,3001,330,84571.1541,468
Azerbaijan160,900193,324120.21032,4240.07102,093134,517
Bahamas, The130,300124,04195.26,260
Bahrain, Kingdom of135,00063,84347.371,203
Bangladesh533,300533,098100.0209148,500148,500
Barbados67,50062,31792.35,185
Belarus386,400386,400100.020
Belgium4,605,2003,313,76672.01,291,457
Belize18,80014,56277.54,239
Benin61,90059,72096.52,18839,50339,503
Bhutan6,3005,28083.81,020
Bolivia171,500274,138159.88,875111,5000.2289,103200,603
Bosnia and Herzegovina169,100232,054137.2662,9490.1362,949
Botswana63,00044,04069.918,961
Brazil3,036,10018,392,832605.815,356,22830.8015,356,228
Brunei Darussalam215,200157,12073.058,288
Bulgaria640,2001,333,730208.332,896726,4121.46726,412
Burkina Faso60,20052,88487.87,31831677,86278,178
Burundi77,00076,64199.536033,55033,550
Cambodia87,50087,500100.059,06459,064
Cameroon185,700185,02299.6696202,081202,081
Canada6,369,2004,275,17767.12,094,028
Cape Verde9,6009,596100.057,3807,380
Central African Republic55,70061,117109.71595,5700.0121,18426,754
Chad56,00055,71999.528263,50263,502
Chile856,100596,19469.6259,907
China6,369,2004,510,00170.81,859,246
Colombia774,000488,20263.1285,803
Comoros8,9008,35893.9544
Congo, Democratic Republic of the533,000533,000100.0526,767526,767
Congo, Republic of84,60088,044104.15363,9660.0112,02915,995
Costa Rica164,100144,11387.820,000
Côte d’Ivoire325,200324,59899.8607192,170192,170
Croatia365,100364,943100.0159
Cyprus139,60098,28170.441,326
Czech Republic819,300582,73371.1236,572
Denmark1,642,8001,149,50370.0493,297
Djibouti15,90014,80093.11,10013,35713,357
Dominica8,20011,165136.292,9730.014,2057,178
Dominican Republic218,900402,779184.03183,8800.37183,880
Ecuador302,300418,776138.517,153133,6270.27133,627
Egypt943,700943,722100.0
El Salvador171,300171,303100.0
Equatorial Guinea32,60032,605100.0
Eritrea15,90015,900100.05
Estonia65,20065,195100.06
Ethiopia133,700126,52094.67,188115,022115,022
Fiji70,30055,03978.315,268
Finland1,263,800866,15168.5397,676
France10,738,5007,640,47871.23,098,181
Gabon154,300215,181139.517961,0570.1261,057
Gambia, The31,10029,61895.21,48515,60015,600
Georgia150,300152,613101.5102,313165,745168,058
Germany13,008,2009,130,40070.23,877,833
Ghana369,000369,004100.06294,799294,799
Greece823,000552,42867.1270,601
Grenada11,70017,556150.15,8550.015,855
Guatemala210,200210,206100.0
Guinea107,100107,02699.97571,76971,769
Guinea-Bissau14,20014,200100.069,1499,149
Guyana90,90090,902100.062,39262,392
Haiti81,90092,063112.46810,2300.026,07016,300
Honduras129,500120,87493.38,627128,877128,877
Hungary1,038,400724,38669.8314,016
Iceland117,60099,01684.218,585
India4,158,2003,209,88477.2948,340
Indonesia2,079,3007,949,000382.3145,5006,015,19612.076,015,196
Iran, Islamic Republic of1,497,2001,497,204100.0
Iraq1,188,4001,314,413110.6171,100297,1000.60297,100
Ireland838,400578,05068.9260,365
Israel928,200629,94667.9298,262
Italy7,055,5004,785,68467.82,269,833
Jamaica273,500273,550100.0
Japan13,312,8009,399,82570.63,913,958
Jordan170,500367,861215.888197,4400.40197,440
Kazakhstan365,700365,700100.05
Kenya271,400258,68595.312,722116,078116,078
Kiribati5,6005,601100.04
Korea1,633,6001,161,10071.1472,501
Kuwait1,381,100936,78767.8444,315
Kyrgyz Republic88,80088,800100.05136,387136,387
Lao People’s Democratic Republic52,90052,900100.0623,39923,399
Latvia126,800126,762100.055
Lebanon203,000184,16890.718,833
Lesotho34,90031,34189.83,56324,50024,500
Liberia71,300272,062381.631200,7810.40223,671
Libya1,123,700728,20364.8395,505
Lithuania144,200144,185100.016
Luxembourg279,100198,28971.080,825
Macedonia FYR68,90091,084132.2622,1820.0417,18239,364
Madagascar122,200122,174100.027154,058154,058
Malawi69,40084,462121.72,29017,3500.0339,90557,255
Malaysia1,486,6001,007,50567.8479,101
Maldives8,20010,746131.01,5544,1000.014,100
Mali93,30084,26590.39,04387,84587,845
Malta102,00061,74160.540,261
Marshall Islands3,5003,500100.01
Mauritania64,40064,404100.054,70854,708
Mauritius101,60078,72277.522,879
Mexico2,585,8001,970,53976.2615,309
Micronesia, Federated States of5,1005,100100.01
Moldova123,200170,492138.4547,2920.0927,72075,012
Mongolia51,10050,97799.812527,38427,384
Morocco588,200517,75888.070,443
Mozambique113,600113,600100.07124,040124,040
Myanmar258,400258,402100.0
Namibia136,500136,443100.060
Nepal71,30071,311100.014,26014,260
Netherlands5,162,4003,712,48771.91,449,918
New Zealand894,600629,31870.3265,297
Nicaragua130,000130,010100.0149,995149,995
Niger65,80057,23787.08,56384,29084,290
Nigeria1,753,2001,753,121100.0143
Norway1,671,7001,178,51470.5493,193
Oman194,000134,94769.659,100
Pakistan1,033,7001,139,308110.2118105,7250.211,028,2241,133,949
Palau3,1003,100100.01
Panama206,600217,252105.211,86022,5000.0522,500
Papua New Guinea131,600142,982108.642611,8030.0211,803
Paraguay99,90078,42878.521,475
Peru638,400691,933108.453,5000.1153,500
Philippines879,9001,186,821134.987,431394,3470.79394,347
Poland1,369,000942,90968.9426,099
Portugal867,400584,07367.3283,342
Qatar263,800182,60469.281,197
Romania1,030,2001,287,882125.0257,6770.52257,677
Russian Federation5,945,4005,943,542100.01,946
Rwanda80,10080,113100.058,78858,788
St. Kitts and Nevis8,9008,81999.182
St. Lucia15,30015,295100.07
St. Vincent and the Grenadines8,3007,80094.0500
Samoa11,60010,91894.1693
San Marino17,00012,90075.94,101
São Tomé and Príncipe7,4007,403100.061,9021,902
Saudi Arabia6,985,5004,953,09170.92,032,412
Senegal161,800160,26199.01,543125,789125,789
Serbia and Montenegro467,7001,042,811223.0575,0971.15575,097
Seychelles8,8008,798100.03
Sierra Leone103,700103,685100.024125,030125,030
Singapore862,500613,22971.1249,282
Slovak Republic357,500357,505100.0
Slovenia231,700164,92371.266,784
Solomon Islands10,4009,85294.7550
Somalia44,200140,907318.896,7010.198,840112,004
South Africa1,868,5001,867,910100.0595
Spain3,048,9002,194,85072.0854,071
Sri Lanka413,400593,948143.747,855228,3850.4738,390266,775
Sudan169,700485,590286.111315,8700.63375,098
Suriname92,10085,97693.46,125
Swaziland50,70044,14787.16,562
Sweden2,395,5001,682,56670.2712,934
Switzerland3,458,5002,445,80870.71,012,623
Syrian Arab Republic293,600293,603100.05
Tajikistan87,00087,000100.0287,83487,834
Tanzania198,900188,90395.09,999265,703265,703
Thailand1,081,900975,34790.2106,562
Timor-Leste8,2008,200100.01
Togo73,40073,06999.533215,20415,204
Tonga6,9005,18975.21,712
Trinidad and Tobago335,600238,91371.296,693
Tunisia286,500266,29792.920,222
Turkey964,00013,932,7531,445.3112,77513,081,52526.2413,081,525
Turkmenistan75,20075,200100.05
Uganda180,500180,506100.0119,968119,968
Ukraine1,372,0002,336,779170.33964,7791.94964,779
United Arab Emirates611,700435,52571.2176,776
United Kingdom10,738,5007,299,58668.03,439,006
United States37,149,30026,980,63172.610,167,552
Uruguay306,5001,942,107633.61,635,6003.281,635,600
Uzbekistan275,600283,913103.058,3130.028,313
Vanuatu17,00014,50685.32,496
Venezuela, República Bolivariana de2,659,1002,337,19987.9321,902
Vietnam329,100329,100100.05166,480166,480
Yemen, Republic of243,500275,321113.11331,8330.06198,150229,983
Zambia489,100489,098100.01836,350540,430576,780
Zimbabwe353,400462,473130.9328109,3990.2275,235184,634
Total213,478,400213,486,37749,848,79849,853,664100.0045,5066,588,06556,575,816
Schedule 2Financial resources and liquidity position in the General Resources Account as at April 30, 2005, and 2004(In thousands of SDRs)
20052004
Total resources
Currencies213,486,377212,086,122
SDR holdings574,310506,029
Gold holdings5,851,7715,851,771
Other assets1879,028955,814
Total resources220,791,486219,399,736
Less: Non-usable resources297,828,711115,631,796
of which: credit outstanding49,853,66462,152,682
Equals: Usable resources3122,962,775103,767,940
Less: Undrawn balances under GRA arrangements47,926,54519,799,322
Equals: Uncommitted usable resources115,036,23083,968,618
Plus: Repurchases one year forward513,320,3136,940,396
Less: Prudential balance634,017,80032,828,720
Equals: One year forward commitment capacity (FCC)794,338,74358,080,294
Memorandum item
Resources available under borrowing arrangements34,000,00034,000,000
Quotas of members that finance IMF transactions170,089,000164,143,600
Net uncommitted usable resources899,882,01075,051,056
Liquid liabilities949,848,79862,856,110
Liquidity ratio10200.4%119.4%
Schedule 3Status of arrangements as at April 30, 2005(In thousands of SDRs)
MemberDate of

arrangement
ExpirationTotal amount

agreed
Undrawn

balance
General Resources Account
Stand-By Arrangements
ArgentinaSeptember 20, 2003September 19, 20068,981,0004,810,000
BoliviaApril 2, 2003March 31, 2006171,50060,000
BulgariaAugust 6, 2004September 5, 2006100,000100,000
ColombiaJanuary 15, 2003May 2, 20051,548,0001,548,000
CroatiaAugust 4, 2004April 3, 200697,00097,000
Dominican RepublicJanuary 31, 2005May 31, 2007437,800385,260
GabonMay 28, 2004June 30, 200569,44027,776
ParaguayDecember 15, 2003September 30, 200550,00050,000
PeruJune 9, 2004August 16, 2006287,279287,279
RomaniaJuly 7, 2004July 6, 2006250,000250,000
Total Stand-By Arrangements11,992,0197,615,315
Extended Arrangements
Serbia and MontenegroMay 14, 2002May 13, 2005650,000187,500
Sri LankaApril 18, 2003April 17, 2006144,400123,730
Total extended arrangements794,400311,230
Total General Resources Account12,786,4197,926,545

Deloitte

Deloitte & Touche LLP

Suite 500

555 12th Street, NW

Washington, DC 20004-1207

USA

Tel: +1 202 879 5600

Fax: +1 202 879 5309

www.deloitte.com

Independent Auditors’ Report

To the Board of Governors

of the International Monetary Fund

Washington, DC

We have audited the accompanying balance sheet of the SDR Department of the International Monetary Fund (the “Department”) as of April 30, 2005, and the related statements of income and cash flows for the year then ended. These financial statements are the responsibility of the Department’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The Department’s financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 7, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Department’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the financial position of the SDR Department of the International Monetary Fund at April 30, 2005, and the results of its operations and its cash flows for the year then ended in conformity with International Financial Reporting Standards.

Our audit was conducted for the purpose of forming an opinion on the basic 2005 financial statements taken as a whole. The supplemental schedules listed on pages 172 to 177 are presented for the purpose of additional analysis and are not a required part of the basic financial statements. These schedules are the responsibility of the Department’s management. Such 2005 schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. The 2004 schedules were subjected to auditing procedures by other auditors, whose report dated June 7, 2004, referred to above, stated that such information is fairly stated in all material respects when considered in relation to the basic 2004 financial statements taken as a whole.

June 14, 2005

Member of

Deloitte Touche Tohmatsu

SDR Department Balance sheets as at April 30,2005, and 2004(In thousands of SDRs)
2005200420052004
AssetsLiabilities
Net charges receivable49,88933,062Net interest payable50,09033,409
Overdue assessments and charges (Note 3)35,96888,933Participants with holdings above allocations (Note 2)
Participants with holdings below allocations (Note 2)SDR holdings16,617,86416,767,772
Less: allocations9,299,7949,594,484
Allocations12,133,53611,838,846Holdings in excess of allocations7,318,0707,173,288
Less: SDR holdings4,006,5043,865,861
Holdings by the General Resources Account574,310506,029
Allocations in excess of holdings8,127,0327,972,985Holdings of SDRs by prescribed holders270,419382,254
Total assets8,212,8898,094,980Total liabilities8,212,8898,094,980
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
SDR Department Income statements for the years ended April 30,2005, and 2004(In thousands of SDRs)
20052004
Revenue
Net charges from participants with holdings below allocations173,782131,593
Assessment on SDR allocations1,5001,400
175,282132,993
Expenses
Interest on SDR holdings
Net interest to participants with holdings above allocations149,673106,570
General Resources Account16,32216,630
Prescribed holders7,7878,393
173,782131,593
Administrative expenses1,5001,400
175,282132,993
Net income
The accompanying notes are an integral part of these financial statements.
SDR Department Statements of cash flows for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Cash flows from operating activities
Receipts of SDRs
Transfers among participants and prescribed holders4,499,0832,409,745
Transfers from participants to the General Resources Account3,100,4375,472,301
Transfers from the General Resources Account to participants and prescribed holders3,032,1575,928,914
Total receipts of SDRs10,631,67713,810,960
Uses of SDRs
Transfers among participants and prescribed holders4,356,0892,293,009
Transfers from participants to the General Resources Account3,085,5105,454,029
Transfers from the General Resources Account to participants and prescribed holders3,032,1575,928,914
Charges paid in the SDR Department210,741131,931
Other(52,820)3,077
Total uses of SDRs10,631,67713,810,960
The accompanying notes are an integral part of these financial statements.

SDR Department Notes to the financial statements as at April 30, 2005, and 2004

1. Nature of operations

The Special Drawing Right (SDR) is an international interest-bearing reserve asset created by the IMF following the First Amendment of the Articles of Agreement in 1969. All transactions and operations involving SDRs are conducted through the SDR Department. The SDR may be allocated by the IMF, as a supplement to existing reserve assets, to members participating in the SDR Department. Its value as a reserve asset derives, essentially, from the commitments of participants to hold and accept SDRs and to honor various obligations connected with its proper functioning as a reserve asset.

The resources of the SDR Department are held separately from the assets of all the other accounts of, or administered by, the IMF. They may not be used to meet the liability, obligations, or losses of the Fund incurred in the operations of the General Department or other accounts, except that the SDR Department reimburses the General Department for expenses incurred in conducting the business of the SDR Department.

At April 30, 2005, all members of the IMF were participants in the SDR Department. SDRs have been allocated by the IMF to members that are participants in the SDR Department at the time of the allocation in proportion to their quotas in the IMF. Six allocations have been made (in 1970, 1971, 1972, 1979, 1980, and 1981) for a total of SDR 21.4 billion. A proposed amendment of the IMF’s Articles of Agreement was approved by the Board of Governors in January 1998 to allow for a special one-time allocation of SDRs equal to SDR 21.4 billion. The amendment will enter into force as of the date the IMF certifies by formal communication to all members that three-fifths of the members, having 85 percent of the total voting power, have accepted it. Upon termination of participation or liquidation of the SDR Department, the IMF will provide to holders the currencies received from the participants in settlement of their obligations. The IMF is empowered to prescribe certain official entities as holders of SDRs; at April 30, 2005, 14 institutions were prescribed as holders (15 institutions at April 30, 2004). Prescribed holders do not receive allocations.

The SDR is also used by a number of international and regional organizations as a unit of account or as the basis for their units of account. Several international conventions also use the SDR as a unit of account, notably those expressing liability limits for the international transport of goods and services.

Uses of SDRs

Participants and prescribed holders can use and receive SDRs in transactions and operations by agreement among themselves. Participants can also use SDRs in operations and transactions involving the General Resources Account, such as the payment of charges and repurchases. The IMF ensures, by designating participants to provide freely usable currency in exchange for SDRs, that a participant can use its SDRs to obtain an equivalent amount of currency if it has a need because of its balance of payments, its reserve position, or developments in its reserves.

General allocations and cancellations of SDRs

The IMF has the authority to provide unconditional liquidity through general allocations of SDRs to participants in the SDR Department in proportion to their quotas in the IMF. The IMF cannot allocate SDRs to itself or to other holders it prescribes. The Articles also provide for the cancellation of SDRs, although to date there have been no cancellations. In its decisions on general allocations of SDRs, the IMF, as prescribed under its Articles, has sought to meet the long-term global need to supplement existing reserve assets in such a manner as will promote the attainment of the IMF’s purposes and avoid economic stagnation and deflation, as well as excess demand and inflation.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the SDR Department are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000 and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (one SDR was equal to 1.45183 U.S. dollars as of April 30, 2004).

Allocations and holdings

At April 30, 2005, and 2004, IMF net cumulative allocations to participants totaled SDR 21.4 billion. Participants with holdings in excess of their allocations have established a net claim on the SDR Department, which is represented on the balance sheet as a liability. Participants with holdings below their allocations have used part of their allocations, which results in a net obligation to the SDR Department and is presented as an asset of the SDR Department. Participants’ net SDR positions as of April 30, 2005, and 2004 were as follows:

20052004
TotalBelow allocationsAbove allocationsTotalBelow allocationsAbove allocations
(In millions of SDRs)
Cumulative allocations21,433.312,133.59,299.821,433.311,838.89,594.5
Holdings of SDRs by participants20,624.44,006.516,617.920,633.63,865.816,767.8
Net SDR positions808.98,127.0(7,318.1)799.77,973.0(7,173.3)

A summary of SDR holdings is provided below:

20052004
(In millions of SDRs)
Participants20,624.420,633.6
General Resources Account574.3506.0
Prescribed holders270.4382.3
21,469.121,521.9
Less: Overdue charges receivable35.888.6
Total holdings21,433.321,433.3

Interest and charges

Interest is paid on holdings of SDRs. Charges are levied on each participant’s net cumulative allocations plus any allocations in excess of its holdings and unpaid charges. Interest on SDR holdings is paid quarterly. Charges on net cumulative allocations are also collected quarterly. Interest and charges are levied at the same rate and are settled by crediting and debiting individual holdings accounts on the first day of the subsequent quarter. The SDR Department is required to pay interest to each holder, whether or not sufficient SDRs are received to meet the payment of interest. If sufficient SDRs are not received because charges are overdue, additional SDRs are temporarily created.

The rate of interest on the SDR is determined by reference to a combined market interest rate, which is a weighted average of yields or rates on short-term instruments in the capital markets of the euro area, Japan, the United Kingdom, and the United States. The combined market interest rate used to determine the SDR interest rate is calculated each Friday, using the yields or rates of that day. The SDR interest rate, which is set equal to the combined market interest rate, enters into effect on a Monday and applies through the following Sunday. The average SDR interest rate was 2.08 percent for the year ended April 30, 2005 (1.58 percent for the year ended April 30, 2004).

Administrative expenses

The expenses of conducting the business of the SDR Department are paid by the IMF from the General Resources Account, which is reimbursed in SDRs by the SDR Department at the end of each financial year. For this purpose, the SDR Department levies an assessment on all participants in proportion to their net cumulative allocations.

Overdue obligations

An allowance for losses resulting from overdue SDR obligations would be created if and when the IMF were to expect a loss to be incurred; no losses have been incurred to date.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

3. Overdue assessments and charges

At April 30, 2005, assessments and charges amounting to SDR 36.0 million were overdue to the SDR Department (SDR 88.9 million at April 30, 2004). At April 30, 2005, three members (as of April 30, 2004, four members) were six months or more overdue in meeting their financial obligations to the SDR Department.

Assessments and charges due from members that are six months or more overdue to the SDR Department were as follows as of April 30:

20052004
(In millions of SDRs)
Total36.088.9
Overdue for six months or more35.287.4
Overdue for three years or more32.175.9

The amount and duration of arrears as of April 30, 2005 were as follows:

TotalLongest overdue obligation
(In millions of SDRs)
Liberia25.1Apr-86
Somalia10.8Feb-91
Sudan0.1Apr-91
Total36.0
SDR Department Statements of changes in SDR holdings for the years ended April 30, 2005, and 2004(In thousands of SDRs)
General Resources AccountPrescribed holdersTotal
Participants20052004
Total holdings, beginning of the year20,633,633506,029382,25421,521,91621,518,839
Receipts of SDRs
Transfers among participants and prescribed holders
Transactions by agreement3,017,28722,3133,039,6001,139,971
Operations
Loans15,675
Settlement of financial obligations66,72785,686152,413212,442
IMF-related operations
SAF/PRGF loans238,394238,394296,530
SAF repayments and interest2,6392,6396,453
PRGF contributions and payments111,086221,820332,906284,016
PRGF repayments and interest95,888488,884584,772332,338
PRGF-HIPC contributions9384,0114,9495,090
Postconflict subsidy payments416416494
Net interest on SDRs135,0837,911142,994116,736
Transfers from participants to the General Resources Account
Repurchases739,803739,8032,981,392
Charges2,344,0612,344,0612,455,568
Quota payment15,675
Assessment on SDR allocation (Note 2)1,6461,6461,394
Interest on SDRs14,92714,92718,272
Transfers from the General Resources Account to participants and prescribed holders
Purchases501,091501,0913,500,261
In exchange for currencies of other participants1,577,0431,577,0431,398,238
Remuneration950,317950,317946,840
Other
Refunds and adjustments3,7063,70683,575
Total receipts6,697,9763,100,437833,26410,631,67713,810,960
Uses of SDRs
Transfers among participants and prescribed holders
Transactions by agreement2,620,477419,1233,039,6001,139,971
Operations
Loans15,675
Settlement of financial obligations85,68666,727152,413212,442
IMF-related operations
SAF/PRGF Loans238,394238,394296,530
SAF repayments and interest2,6392,6396,453
PRGF contributions and payments209,293123,613332,906312,939
PRGF repayments and interest488,88495,888584,772303,415
PRGF-HIPC contributions4,0119384,9495,090
Postconflict subsidy payment416416494
Transfers from participants to the General Resources Account
Repurchases739,803739,8032,981,392
Charges2,344,0612,344,0612,455,568
Quota payment15,675
Assessment on SDR allocation (Note 2)1,6461,6461,394
Transfers from the General Resources Account to participants and prescribed holders
Purchases501,091501,0913,500,261
In exchange for currencies of other participants1,577,0431,577,0431,398,238
Remuneration950,317950,317946,840
Other
Refunds and adjustments3,7063,70683,575
Charges paid in the SDR department
Net charges due157,921157,921135,008
Total uses6,654,4213,032,157945,09910,631,67713,810,960
Charges not paid when due2,8052,8053,240
Settlement of unpaid charges(55,625)(55,625)(163)
Total holdings, end of the year20,624,368574,310270,41921,469,09721,521,916
The ending balances contain rounding differences.
SDR Department Allocations and holdings of participants as at April 30, 2005(In thousands of SDRs)
Net cumulative allocationsHoldings
ParticipantTotalPercent of cumulative allocations(+) Above (−) Below allocations
Afghanistan, Islamic Republic of26,7031770.7(26,526)
Albania68,68568,685
Algeria128,64031,86024.8(96,780)
Angola147147
Antigua and Barbuda66
Argentina318,3701,632,446512.81,314,076
Armenia567567
Australia470,545128,46027.3(342,085)
Austria179,045100,56356.2(78,482)
Azerbaijan9,4309,430
Bahamas, The10,230680.7(10,162)
Bahrain6,2005528.9(5,648)
Bangladesh47,1205411.1(46,579)
Barbados8,039520.7(7,987)
Belarus1111
Belgium485,246196,58040.5(288,666)
Belize1,6671,667
Benin9,409630.7(9,346)
Bhutan276276
Bolivia26,70327,790104.11,087
Bosnia and Herzegovina20,4818524.2(19,629)
Botswana4,35934,697796.030,338
Brazil358,670214,79359.9(143,877)
Brunei Darussalam9,1259,125
Bulgaria6,2866,286
Burkina Faso9,409820.9(9,327)
Burundi13,6971511.1(13,546)
Cambodia15,4173802.5(15,037)
Cameroon24,4632010.8(24,262)
Canada779,290604,04577.5(175,245)
Cape Verde620193.1(601)
Central African Republic9,3251001.1(9,225)
Chad9,4092,76629.4(6,643)
Chile121,92434,68028.4(87,244)
China236,800823,510347.8586,710
Colombia114,271116,919102.32,648
Comoros71650.7(711)
Congo, Democratic Republic of the86,3093,0823.6(83,227)
Congo, Republic of9,7191,93519.9(7,784)
Costa Rica23,7261150.5(23,611)
C ô te d’lvoire37,8283651.0(37,463)
Croatia44,2052850.6(43,920)
Cyprus19,4382,63013.5(16,808)
Czech Republic4,6664,666
Denmark178,86427,95015.6(150,914)
Djibouti1,17836230.8(816)
Dominica592589.8(534)
Dominican Republic31,5851,9636.2(29,622)
Ecuador32,9296,43719.5(26,492)
Egypt135,92462,15045.7(73,774)
El Salvador24,98524,980100.0(5)
Equatorial Guinea5,8124407.6(5,372)
Eritrea
Estonia5454
Ethiopia11,1604534.1(10,707)
Fiji6,9585,40377.7(1,555)
Finland142,69093,34765.4(49,343)
France1,079,870576,96953.4(502,901)
Gabon14,0912731.9(13,818)
Gambia, The5,1211122.2(5,009)
Georgia1,0101,010
Germany1,210,7601,329,313109.8118,553
Ghana62,98310,65516.9(52,328)
Greece103,54418,17517.6(85,369)
Grenada930151.6(915)
Guatemala27,6785,01218.1(22,666)
Guinea17,6041090.6(17,495)
Guinea-Bissau1,21243435.8(778)
Guyana14,5308,59859.2(5,932)
Haiti13,6971,77413.0(11,923)
Honduras19,0571110.6(18,946)
Hungary39,35539,355
Iceland16,409550.3(16,354)
India681,1702,9740.4(678,196)
Indonesia238,95661,56525.8(177,391)
Iran, Islamic Republic of244,056274,054112.329,998
Iraq68,464295,813432.1227,349
Ireland87,26358,45567.0(28,808)
Israel106,36010,68210.0(95,678)
Italy702,400115,00416.4(587,396)
Jamaica40,6132660.7(40,347)
Japan891,6901,805,260202.5913,570
Jordan16,8872,76816.4(14,119)
Kazakhstan793793
Kenya36,9902,9357.9(34,055)
Kiribati1010
Korea72,91123,41332.1(49,498)
Kuwait26,744119,948448.593,204
Kyrgyz Republic16,02216,022
Lao People’ s Democratic Republic9,4099,901105.2492
Latvia9797
Lebanon4,39321,374486.516,981
Lesotho3,73939410.5(3,345)
Liberia21,007(21,007)
Libya58,771479,770816.3420,999
Lithuania6868
Luxembourg16,95510,24460.4(6,711)
Macedonia, former Yugoslav Republic of8,3792,85934.1(5,520)
Madagascar19,2701290.7(19,141)
Malawi10,9754203.8(10,555)
Malaysia139,048130,51093.9(8,538)
Maldives282311110.329
Mali15,9123272.1(15,585)
Malta11,28831,063275.219,775
Marshall Islands
Mauritania9,7191141.2(9,605)
Mauritius15,74417,624111.91,880
Mexico290,020301,814104.111,794
Micronesia, Federated States of1,2241,224
Moldova434434
Mongolia2727
Morocco85,68967,75079.1(17,939)
Mozambique5454
Myanmar43,4743370.8(43,137)
Namibia1818
Nepal8,1056,21876.7(1,887)
Netherlands530,340501,59294.6(28,748)
New Zealand141,32222,64416.0(118,678)
Nicaragua19,4832131.1(19,270)
Niger9,4096066.4(8,803)
Nigeria157,1551,0840.7(156,071)
Norway167,770200,196119.332,426
Oman6,2629,314148.73,052
Pakistan169,989156,23091.9(13,759)
Palau
Panama26,3224011.5(25,921)
Papua New Guinea9,3003523.8(8,948)
Paraguay13,69786,530631.772,833
Peru91,3192,1932.4(89,126)
Philippines116,5953,9923.4(112,603)
Poland47,57047,570
Portugal53,32067,671126.914,351
Qatar12,82223,940186.711,118
Romania75,9503,1484.1(72,802)
Russian Federation1,4971,497
Rwanda13,69719,027138.95,330
St. Kitts and Nevis11
St. Lucia7421,508203.4766
St. Vincent and the Grenadines35451.5(349)
Samoa1,1422,434213.11,292
San Marino580580
Sã o Tom é and Pr í ncipe620101.6(610)
Saudi Arabia195,527346,658177.3151,131
Senegal24,4624441.8(24,018)
Serbia and Montenegro56,66513,60924.0(43,056)
Seychelles40640.9(402)
Sierra Leone17,45524,101138.16,646
Singapore16,475191,2621,160.9174,787
Slovak Republic883883
Slovenia25,4317,43829.2(17,993)
Solomon Islands65440.6(650)
Somalia13,697(13,697)
South Africa220,360222,820101.12,460
Spain298,805219,07073.3(79,735)
Sri Lanka70,8682,4593.5(68,409)
Sudan52,1923180.6(51,874)
Suriname7,7501,18015.2(6,570)
Swaziland6,4322,47438.5(3,958)
Sweden246,525116,33147.2(130,194)
Switzerland12,12812,128
Syrian Arab Republic36,56436,576100.012
Tajikistan10,00710,007
Tanzania31,3722190.7(31,153)
Thailand84,6525500.6(84,102)
Timor-Leste
Togo10,975990.9(10,876)
Tonga252252
Trinidad and Tobago46,2311,9954.3(44,236)
Tunisia34,2435,66216.5(28,581)
Turkey112,307167,300149.054,993
Turkmenistan
Uganda29,3962,97210.1(26,424)
Ukraine8,6838,683
United Arab Emirates38,7374,34511.2(34,392)
United Kingdom1,913,070201,65610.5(1,711,414)
United States4,899,5307,654,235156.22,754,705
Uruguay49,97719,37738.8(30,600)
Uzbekistan109109
Vanuatu944944
Venezuela316,8904,9881.6(311,902)
Vietnam47,6584551.0(47,203)
Yemen, Republic of28,74320,50471.3(8,239)
Zambia68,29819,21928.1(49,079)
Zimbabwe10,200640.6(10,136)
Above allocations9,299,79416,617,864178.77,318,070
Below allocations12,133,5364,006,50433.0(8,127,032)
Total participants21,433,33020,624,368
General Resources Account574,310
Prescribed holders270,419
Overdue charges35,767
21,469,09721,469,097

Deloitte

Deloitte & Touche LLP

Suite 500

555 12th Street, NW

Washington, DC 20004-1207

USA

Tel: +1 202 879 5600

Fax: +1 202 879 5309

www.deloitte.com

Independent Auditors’ Report

To the Board of Governors

of the International Monetary Fund

Washington, DC

We have audited the accompanying combined balance sheet of the Poverty Reduction and Growth Facility Trust (the “Company”) as of April 30, 2005, and the related combined statements of income, changes in resources, and cash flows for the year then ended. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audit. The Company’s combined financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 7, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the combined financial position of the Poverty Reduction and Growth Facility Trust at April 30, 2005, and the combined results of its operations and its cash flows for the year then ended in conformity with International Financial Reporting Standards.

Our audit was conducted for the purpose of forming an opinion on the basic 2005 combined financial statements taken as a whole. The supplemental schedules listed on pages 186 to 189 are presented for the purpose of additional analysis and are not a required part of the basic combined financial statements. These schedules are the responsibility of Company management. Such 2005 schedules have been subjected to the auditing procedures applied in our audit of the basic combined financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic combined financial statements taken as a whole. The 2004 schedules were subjected to auditing procedures by other auditors, whose report dated June 7, 2004, referred to above, stated that such information is fairly stated in all material respects when considered in relation to the basic 2004 combined financial statements taken as a whole.

June 14, 2005

Member of

Deloitte Touche Tohmatsu

Poverty Reduction and Growth Facility Trust Combined balance sheets as at April 30, 2005, and 2004(In thousands of SDRs)
20052004
Assets
Cash and cash equivalents1,945,9022,721,670
Investments (Note 4)3,900,3713,035,128
Loans receivable (Note 5)6,588,0656,699,728
Interest receivable25,66920,915
Total assets12,460,00712,477,441
Liabilities and resources
Borrowings (Note 6)7,411,6517,512,656
Interest payable47,47734,518
Other liabilities6,3994,483
Total liabilities7,465,5277,551,657
Resources4,994,4804,925,784
Total liabilities and resources12,460,00712,477,441
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
Poverty Reduction and Growth Facility Trust Combined statements of income and changes in resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Balance, beginning of the year4,925,7844,898,250
Investment income (Note 7)98,37375,377
Interest on loans32,96133,587
Interest expense(126,912)(106,300)
Other expenses(2,986)(3,286)
Operational income/(loss)1,436(622)
Contributions (Note 8)26,66834,326
Transfers from the Special Disbursement Account (Note 10)40,59251,530
Transfers through the Special Disbursement Account to the PRGF-HIPC Trust (Note 10)(57,700)
Net income/changes in resources68,69627,534
Balance, end of the year4,994,4804,925,784
The accompanying notes are an integral part of these financial statements.
Poverty Reduction and Growth Facility Trust Combined statements of cash flows for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Cash flows from operating activities
Net income68,69627,534
Adjustments to reconcile net income to cash generated by operations
Changes in interest receivable(4,754)(1,936)
Changes in interest payable and other liabilities14,875(3,262)
Cash from credit to members:
Loan disbursements(770,672)(865,215)
Loan repayments882,335832,783
Net cash provided by/(used in) operating activities190,480(10,096)
Cash flows from investment activities
Net (disposal)/acquisition of investments(865,243)169,924
Net cash (used in)/provided by investment activities(865,243)169,924
Cash flows from financing activities
Borrowings769,614864,978
Repayment of borrowings(870,619)(784,176)
Net cash (used in)/provided by financing activities(101,005)80,802
Cash and cash equivalents, beginning of year2,721,6702,481,040
Cash and cash equivalents, end of year1,945,9022,721,670
The accompanying notes are an integral part of these financial statements.

Poverty Reduction and Growth Facility Trust Notes to the combined financial statements as at April 30, 2005, and 2004

1. Nature of operations

The Poverty Reduction and Growth Facility Trust (PRGF Trust or the Trust), for which the IMF is Trustee, was established in December 1987 and was extended and enlarged in February 1994 to provide loans on concessional terms to qualifying low-income developing country members. The resources of the Trust are held separately from the assets of all other accounts of, or administered by, the IMF and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

The operations of the Trust are conducted through a Loan Account, a Reserve Account, and a Subsidy Account. Combining balance sheets and statements of income and changes in resources for each of these accounts are provided in Note 13 to these financial statements.

Loan Account

The resources of the Loan Account consist of the proceeds from borrowings, repayments of principal, and interest payments on loans extended by the Trust.

Reserve Account

The resources of the Reserve Account consist of amounts transferred by the IMF from the Special Disbursement Account and net earnings from investment of resources held in the Reserve Account and in the Loan Account.

The resources held in the Reserve Account are to be used by the Trustee, in the event that borrowers’ principal repayments and interest payments, together with the authorized interest subsidy, are insufficient to repay loan principal and interest on borrowings of the Loan Account. The Trustee reviews the adequacy of the Reserve Account semiannually to determine whether sufficient resources are available to meet all obligations to the lenders to the Loan Account.

Subsidy Account

The resources held in the Subsidy Account consist of contributions to the Trust, including transfers of net earnings from the PRGF Administered Accounts, SDR 400 million transferred by the IMF from the Special Disbursement Account, net earnings on loans made to the Trust for the Subsidy Account, and the net earnings from investment of Subsidy Account resources.

The resources available in the Subsidy Account are drawn by the Trustee to pay the difference, with respect to each interest period, between the interest due from the borrowers under the Trust and the interest due on Loan Account borrowings. To the extent that resources in the Subsidy Account are insufficient for subsidy operations, the Trustee will transfer to the Subsidy Account resources in the PRGF-HIPC Trust Account not earmarked for assistance under PRGF-HIPC operations.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the PRGF Trust are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000, and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (one SDR was equal to 1.45183 U.S. dollars as of April 30, 2004).

Foreign currency translation

Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are reported using the closing exchange rates. Exchange differences arising from the settlement of transactions at rates different from those at the originating date of the transaction and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are included in the determination of net income.

Cash and cash equivalents

Cash and cash equivalents include short-term deposits with a maturity of less than ninety days. These deposits are denominated in SDRs or other currencies and are carried at cost, which approximates fair value. Interest on these instruments varies and is based on prevailing market rates.

Investments

Investments are made in fixed-term deposits, domestic government bonds of the euro zone, Japan, the United Kingdom, and the United States, and obligations of multilateral organizations. For deposits, the Trust may invest only in obligations issued by institutions with a credit rating of A and above. For other investments, the Trust may invest only in obligations issued by an agency of a government and a multilateral organization with a minimum credit rating of AA.

Investments in debt securities, classified as available-for-sale securities, are measured initially at cost, including transaction costs. Subsequent to initial recognition, all available-for-sale assets are remeasured to fair value, based on the quoted market price at the balance sheet date. Gains and losses arising from a change in the fair value of available-for-sale investments are recognized in the statement of income.

Investment income comprises interest income and realized and unrealized gains and losses on investments, including currency valuation differences arising from exchange rate movements against the SDR.

Loans

Loans in the Trust are initially recorded at the amount disbursed provided that the present value of the cash flows from stated interest due and the Subsidy Account is equal to or exceeds the disbursed amount. Thereafter, the carrying value of the loans is amortized cost.

Loans are repayable in 5½ to 10 years in semiannual installments. Interest on loans accrues at the stated interest rate of ½ of 1 percent per annum. It is the Trust’s policy to exclude from income, interest on loans that are six months or more overdue. At each balance sheet date, the loans are reviewed to determine whether there is objective evidence of loan impairment. If any such evidence exists, an impairment loss is recognized to the extent that the present value of estimated future cash flows falls below the carrying amount.

Contributions

Contributions are reflected as increases in resources after the achievement of specified conditions and are subject to bilateral agreements stipulating how the resources are to be used.

Transfers

Internal transfers of resources within the IMF are accounted for under the accrual method of accounting.

Administrative costs

The expenses of conducting the activities of the Trust are borne by the General Resources Account of the IMF. In financial years 2005 and 2004, the reimbursements for these costs have been waived.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

Accounting and reporting developments

In December 2003, the International Accounting Standards Board revised International Accounting Standard 39, “Financial Instruments: Recognition and Measurement,” which will become effective for financial year 2006. Upon adoption of the revised standard, and as permitted by the transition provisions, investments previously classified as available-for-sale will be reclassified as securities at fair-value-through-profit-and-loss. After the reclassification, changes in fair value of the investments would continue to be recognized in the income statement.

3. Financial risk management

In providing financial assistance to eligible country members and conducting its operations, the Trust is exposed to various types of risks, including credit, interest rate, exchange rate, and liquidity risks.

Credit risk refers to potential losses on credit outstanding owing to the inability, or unwillingness, of member countries to make loan repayments. To mitigate credit risk, the amount that eligible member countries may borrow is limited to 140 percent of their IMF quotas under three-year arrangements. Disbursements under PRGF arrangements are linked to performance criteria and the IMF, as trustee, conducts periodic reviews to ensure that such criteria are met. To protect the lenders to the Trust, resources are accumulated in the Reserve Account. These resources are available to repay the lenders in the event of delayed or nonpayment by borrowers.

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. Interest rate risk on the Trust’s investments is managed by limiting the investment portfolio to a weighted-average effective duration that does not exceed three years.

Exchange rate risk is the exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on the Trust’s financial position and cash flows. Exchange rate risk on the Trust’s investments is managed by investing in securities denominated in SDRs or in the constituent currencies, with the same composition, of the SDR valuation basket.

Liquidity risk is the risk of non-availability of resources to meet the Trust’s financing needs and obligations. The Trust conducts semiannual reviews to determine the adequacy of the resources accumulated in the Subsidy and Reserve accounts to meet liquidity needs. Resources in the Subsidy Account are expected to exceed estimated needs and the balance in the Reserve Account is projected to increase until it reaches the level sufficient to cover all outstanding PRGF Trust obligations to lenders.

4. Investments

Investments consisted of the following at April 30:

20052004
(In thousands of SDRs)
Fixed-term deposits1,185,595234,845
Debt securities2,714,7762,800,283
Total3,900,3713,035,128

The maturities of the investments are as follows at April 30:

20052004
(In thousands of SDRs)
Less than 1 year3,635,0602,831,390
1–3 years228,811168,542
3–5 years36,500
Over 5 years35,196
Total3,900,3713,035,128

5. Loans receivable

Resources of the Loan Account are committed to qualifying members for a three-year period, upon approval by the Trustee of three-year arrangements in support of the members’ macroeconomic and structural adjustment programs. Interest on the outstanding loans, which is repayable in ten equal semiannual installments beginning 5½ years after disbursement, is set at the rate of ½ of 1 percent per annum. At April 30, 2005, the resources of the Loan Account included cumulative advances from the Reserve Account of SDR 75.2 million resulting from the nonpayment of principal by Zimbabwe (SDR 74.7 million at April 30, 2004). Scheduled repayments of loans by borrowers, including Zimbabwe’s overdue obligations, are summarized below:

Period of repayment, financial year ending April 30
(In thousands of SDRs)
2006854,789
2007726,142
2008815,876
2009820,642
2010836,220
2011 and beyond2,459,161
Overdue75,235
Total6,588,065

As of April 30, use of credit in the Trust by the largest users was as follows:

20052004
(In millions of SDRs and percent of total PRGF credit)
Largest user of credit1,028.215.6%916.113.7%
Three largest users of credit2,095.431.8%1,920.428.7%
Five largest users of credit2,655.940.3%2,512.037.5%

The five largest users of credit as of April 30, 2005, were Pakistan, Zambia, the Democratic Republic of the Congo, Ghana, and Tanzania.

6. Borrowings

The Trust borrows on such terms and conditions as agreed between the Trustee and the lenders. Interest rates on borrowings as at April 30, 2005, were at a weighted average rate of 1.69 percent per annum (1.40 percent per annum as at April 30, 2004). The principal amounts of the borrowings are repayable between 5½ and 16 years after the first drawing.

Scheduled repayments of borrowings are summarized below:

Period of repayment, financial year ending April 30
(In thousands of SDRs)
20061,506,062
2007984,181
2008828,799
2009827,633
2010832,087
2011 and beyond2,432,889
Total7,411,651

The following summarizes the borrowing agreements concluded as of April 30:

Amount undrawn
20052004
(In thousands of SDRs)
Loan Account4,092,4564,856,812
Subsidy Account58,43565,167

7. Investment income

Investment income comprised the following at April 30:

20052004
(In thousands of SDRs)
Interest income142,021119,077
Realized losses, net(7,915)(70,151)
Unrealized (losses)/gains, net(35,427)26,647
Exchange rate losses, net(306)(196)
Total98,37375,377

8. Contributions

The Trustee accepts contributions for the Subsidy Account on such terms and conditions as agreed between the Trustee and the contributors. At April 30, 2005, cumulative contributions received, including transfers from the Special Disbursement Account, amounted to SDR 2,456.7 million (SDR 2,430.0 million at April 30, 2004).

9. Commitments under loan arrangements

An arrangement under the PRGF is a decision of the IMF, as Trustee, that gives a member the assurance that the Trust stands ready to provide foreign exchange or SDRs during a specified period and up to a specified amount in accordance with the terms of the decision. At April 30, 2005, undrawn balances under 31 loan arrangements amounted to SDR 1,315.0 million (SDR 2,088.9 million under 36 arrangements at April 30, 2004).

10. Related-party transactions

The expenses of conducting the business of the Trust are paid by the General Resources Account of the IMF and reimbursed by the Trust through the Special Disbursement Account; transfers corresponding to these expenses are made from the Reserve Account to the Special Disbursement Account when and to the extent needed. The Executive Board of the IMF decided to forgo such reimbursement to the General Resources Account, amounting to SDR 54.4 million and SDR 57.7 million for the financial years ended April 30, 2005, and 2004, respectively. For the financial year ended April 30, 2004, the Executive Board decided that an amount equivalent to the expenses should be transferred from the Reserve Account, through the Special Disbursement Account, to the PRGF-HIPC Trust. (No such decision was made for the financial year ended April 30, 2005.)

Cumulative transfers from the IMF, through the Special Disbursement Account, to the Reserve Account and Subsidy Account as of April 30, 2005, amounted to SDR 2,630.0 million and SDR 400 million, respectively (SDR 2,589.0 million and SDR 400 million, respectively, as of April 30, 2004). The Subsidy Account also receives contributions from member countries that had placed deposits in the Poverty Reduction and Growth Facility Administered Accounts at low interest rates. Net investment income transferred from the Poverty Reduction and Growth Facility Administered Accounts to the Subsidy Account amounted to SDR 0.3 million and SDR 1.9 million for the financial years 2005 and 2004, respectively.

11. Loans under the Saudi Fund for Development Special Account

The Saudi Fund for Development (SFD) Special Account was established at the request of the SFD to provide supplementary financing in association with loans under the PRGF Trust. The SFD makes funds available after a bilateral agreement between it and a recipient country has been effected. The SFD places funds, denominated in SDRs, in the SFD Special Account for disbursement to a recipient country simultaneously with disbursements under a PRGF arrangement. These loans are repayable in ten equal semiannual installments commencing 5½ years after the date of disbursement and interest on these loans is set at a rate of ½ of 1 percent per annum.

The cumulative receipts and uses of resources for the Saudi Fund for Development Special Account were SDR 100.9 million as of April 30, 2005 (SDR 97.9 million at April 30,2004).

12. Subsequent event

On June 11, 2005, the G-8 finance ministers proposed an initiative that would involve debt relief, leading to full debt cancellation of outstanding obligations, of member countries eligible for HIPC assistance. Under this proposal, the cost of meeting the obligations of the eligible members would be met from existing IMF resources. In situations where other existing and projected debt relief obligations cannot be met from existing IMF resources (for example, for the protracted arrears cases such as Liberia, Somalia, and Sudan), donors have committed to providing the extra resources necessary. IMF resources that will be considered to finance this debt relief operation consist of available resources already earmarked to provide debt relief or provide concessional financing (SDA, PRGF, and PRGF-HIPC resources) for an estimated amount of approximately SDR 4.0 billion as of April 30, 2005. The precise modalities of the proposal have not yet been developed. The G-8 finance ministers call upon all shareholders to support the debt relief proposals which would be put to the 2005 Annual Meetings.

13. Combining balance sheets and statements of income and changes in resources

The balance sheets and statements of income and changes in resources for each of the accounts in the PRGF Trust are presented below:

Note 13Poverty Reduction and Growth Facility Trust Combining balance sheets as at April 30, 2005, and 2004(In thousands of SDRs)
Loan AccountReserve AccountSubsidy AccountCombined
20052004200520042005200420052004
Assets
Cash and cash equivalents627,730888,4571,050,1191,057,4451,043,8211,945,9022,721,670
Investments (Note 4)885,595234,8462,252,1081,999,165762,668801,1173,900,3713,035,128
Loans receivable (Note 5)6,588,0656,699,7286,588,0656,699,728
Accrued account transfers23,27520,20256,19648,095(79,471)(68,297)
Interest receivable23,82719,8661,789961538825,66920,915
Total assets7,520,7627,602,3723,198,5503,098,3401,740,6951,776,72912,460,00712,477,441
Liabilities and resources
Borrowings (Note 6)7,391,7217,488,70719,93023,9497,411,6517,512,656
Interest payable47,40734,484703447,47734,518
Other liabilities6,3994,4836,3994,483
Total liabilities7,445,5277,527,67420,00023,9837,465,5277,551,657
Resources75,23574,6983,198,5503,098,3401,720,6951,752,7464,994,4804,925,784
Total liabilities and resources7,520,7627,602,3723,198,5503,098,3401,740,6951,776,72912,460,00712,477,441
Poverty Reduction and Growth Facility Trust Combining statements of income and changes in resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
Loan AccountReserve AccountSubsidy AccountCombined
20052004200520042005200420052004
Balance, beginning of the year74,69865,5433,098,3403,066,5201,752,7461,766,1874,925,7844,898,250
Investment income (Note 7)61,64648,85636,72726,52198,37375,377
Interest on loans32,96133,58732,96133,587
Interest expense(126,828)(104,912)(84)(1,388)(126,912)(106,300)
Other expenses(1,491)(1,711)(1,495)(1,575)(2,986)(3,286)
Net operational income/(loss)(93,867)(71,325)60,15547,14535,14823,5581,436(622)
Contributions (Note 8)26,66834,32626,66834,326
Transfers from the Special
Disbursement Account (Note 10)40,59251,53040,59251,530
Transfers through the Special
Disbursement Account to the
PRGF-HIPC Trust (Note 10)(57,700)(57,700)
Transfers between:
Loan and Reserve Accounts5379,155(537)(9,155)
Loan and Subsidy Accounts93,86771,325(93,867)(71,325)
Net income/changes in resources5379,155100,21031,820(32,051)(13,441)68,69627,534
Balance, end of the year75,23574,6983,198,5503,098,3401,720,6951,752,7464,994,4804,925,784
Schedule 1Poverty Reduction and Growth Facility Trust Schedule of outstanding loans as at April 30, 2005(In thousands of SDRs)
PRGF Loan AccountStructural Adjustment Facility1
MemberBalancePercentBalancePercent
Albania65,8461.00
Armenia131,5722.00
Azerbaijan102,0931.55
Bangladesh148,5002.25
Benin39,5030.60
Bolivia89,1031.35
Burkina Faso77,8621.183160.69
Burundi33,5500.51
Cambodia59,0640.90
Cameroon202,0813.06
Cape Verde7,3800.11
Central African Republic21,1840.32
Chad63,5020.96
Congo, Democratic Republic of the526,7678.00
Congo, Republic of12,0290.18
Côte d’Ivoire192,1702.92
Djibouti13,3570.20
Dominica4,2050.06
Ethiopia115,0221.75
Gambia, The15,6000.24
Georgia165,7452.52
Ghana294,7994.47
Guinea71,7691.09
Guinea-Bissau9,1490.14
Guyana62,3920.95
Haiti6,0700.09
Honduras128,8771.96
Kenya116,0771.76
Kyrgyz Republic136,3862.07
Lao People’s Democratic Republic23,3980.36
Lesotho24,5000.37
Macedonia, former Yugoslav Republic of17,1820.26
Madagascar154,0582.34
Malawi39,9050.61
Mali87,8451.33
Mauritania54,7080.83
Moldova27,7200.42
Mongolia27,3840.42
Mozambique124,0401.88
Nepal14,2600.22
Nicaragua149,9952.28
Niger84,2901.28
Pakistan1,028,22415.61
Rwanda58,7880.89
São Tomé and Príncipe1,9020.03
Senegal125,7891.91
Sierra Leone125,0301.90
Somalia8,84019.43
Sri Lanka38,3900.58
Tajikistan87,8341.33
Tanzania265,7024.03
Togo15,2040.23
Uganda119,9681.82
Vietnam166,4802.53
Yemen, Republic of198,1503.01
Zambia540,4308.2036,35079.88
Zimbabwe75,2351.14
Total loans outstanding6,588,065100.0045,506100.00
Schedule 2Poverty Reduction and Growth Facility Trust Cumulative contributions to and resources of the Subsidy Account as at April 30, 2005(In thousands of SDRs)
Contributor1Amount
Direct contributions to the Subsidy Account
Argentina24,802
Australia7,938
Bangladesh532
Canada186,098
China9,200
Czech Republic10,004
Denmark38,299
Egypt10,002
Finland22,684
Germany132,832
Iceland3,200
India7,891
Ireland5,262
Italy154,666
Japan506,997
Korea32,733
Luxembourg8,954
Morocco7,284
Netherlands99,278
Norway28,074
Sweden110,887
Switzerland41,205
Turkey7,000
United Kingdom316,564
United States126,079
Total direct contributions to the Subsidy Account1,898,465
Net income transferred from PRGF Administered Accounts
Austria40,455
Belgium77,953
Botswana1,352
Chile2,910
Greece25,941
Indonesia5,003
Iran, Islamic Republic of1,346
Portugal3,328
Total net income transferred from PRGF Administered Accounts158,288
Total contributions received2,056,753
Transfers from Special Disbursement Account400,000
Total contributions received and transfers from Special Disbursement Account2,456,753
Cumulative net income of the Subsidy Account896,587
Resources disbursed to subsidize Trust lending(1,632,645)
Total resources of the Subsidy Account1,720,695
Schedule 3Poverty Reduction and Growth Facility Trust Schedule of borrowing agreements as at April 30, 2005(In thousands of SDRs)
MemberInterest rate (in percent)Amount of agreementAmount drawnOutstanding balance
Loan Account
Prior to enlargement of PRGF
CanadaFixed1300,000300,00037,660
France0.502800,000800,00050,476
GermanyVariable3700,000700,00085,469
ItalyVariable3370,000370,00034,546
JapanVariable32,200,0002,200,000273,786
KoreaVariable365,00065,0002,207
NorwayVariable390,00090,0005,927
Total prior to enlargement of PRGF4,525,0004,525,000490,071
For enlargement of PRGF
BelgiumVariable3350,000242,331241,223
CanadaVariable3400,000348,483298,959
ChinaVariable3200,000153,492124,802
DenmarkVariable3100,000100,000100,000
EgyptVariable3155,600100,00073,773
FranceVariable32,100,0001,048,363910,777
GermanyVariable32,050,000995,532896,943
ItalyVariable31,010,000692,641670,819
JapanVariable32,934,8002,341,2772,132,171
KoreaVariable327,70027,70023,700
NetherlandsVariable3450,000140,355140,355
NorwayVariable360,00060,00044,942
OPEC Fund for International DevelopmentVariable332,965436,99033,173
Spain—Bank of SpainVariable3425,000123,946123,946
Spain—Government of Spain(ICO)Fixed67,00067,00055,772
SwitzerlandVariable3401,700194,199144,700
Total for enlargement of PRGF10,764,7656,672,3096,016,055
Resources held pending repayment885,595
Total—Loan Account15,289,76511,197,3097,391,721
Subsidy Account
Malta0.501,3651,3651,365
Spain—Governmemt of Spain(ICO)0.5067,00011,22811,228
Pakistan0.5010,0007,3377,337
Total—Subsidy Account78,36519,93019,930
Schedule 4Poverty Reduction and Growth Facility Trust Status of loan arrangements as at April 30, 2005(In thousands of SDRs)
MemberDate of arrangementExpiration dateAmount agreedUndrawn balance
AlbaniaJun. 21,2002Nov. 20, 200528,0004,000
AzerbaijanJul. 6,2001Jul. 4,200567,58012,870
BangladeshJun. 20,2003Jun. 19,2006400,330251,830
BurkinaFasoJun. 11,2003Aug. 15, 200624,08010,320
BurundiJan. 23, 2004Jan. 22, 200769,30035,750
Cape VerdeApr. 10, 2002Jul. 31,20058,6401,260
ChadFeb. 16, 2005Feb. 15, 200825,20021,000
Congo, Democratic Republic of theJun. 12,2002Jun. 11,2005580,00053,233
Congo, Republic ofDec. 6, 2004Dec. 5, 200754,99047,130
DominicaDec. 29, 2003Dec. 28, 20067,6883,483
Gambia, TheJul. 18,2002Jul. 17,200520,22017,330
GeorgiaJun. 4,2004Jun. 3,200798,00070,000
GhanaMay 9, 2003May 8, 2006184,500105,450
GuyanaSep. 20, 2002Sep. 12, 200654,55027,790
HondurasFeb. 27, 2004Feb. 26, 200771,20040,687
KenyaNov. 21, 2003Nov. 20, 2006225,000150,000
Kyrgyz RepublicMar. 15, 2005Mar. 14, 20088,8807,620
MaliJun. 23,2004Jun. 22,20079,3306,670
MongoliaSep. 28, 2001Jul. 31,200528,49016,280
MozambiqueJul. 6,2004Jul. 5,200711,3608,120
NepalNov. 19, 2003Nov. 18, 200649,91035,650
NicaraguaDec. 13, 2002Dec. 12, 200597,50041,780
NigerJan. 31, 2005Jan. 30, 20086,5805,640
RwandaAug. 12, 2002Feb. 11, 20064,0001,142
SenegalApr. 28, 2003Apr. 27, 200624,27013,860
Sierra LeoneSep. 26, 2001Jun. 25,2005130,84014,003
Sri LankaApr. 18, 2003Apr. 17, 2006269,000230,610
TajikistanDec. 11, 2002Dec. 10, 200565,00019,600
TanzaniaAug. 16, 2003Aug. 15, 200619,6008,400
UgandaSep. 13, 2002Sep. 12, 200513,5004,000
ZambiaJun. 16,2004Jun. 15,2007220,09549,521
2,877,6331,315,029

Deloitte

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Independent Auditors’ Report

To the Board of Governors

of the International Monetary Fund

Washington, DC

We have audited the accompanying balance sheet as of April 30, 2005, and the related statements of income, changes in resources, and cash flows for the year then ended of the following entities:

Poverty Reduction and Growth Facility Administered Accounts (the “Accounts”)

  • Austria

  • Belgium

  • Botswana

  • Greece

  • Indonesia

  • Islamic Republic of Iran

  • Portugal

These financial statements are the responsibility of Accounts management. Our responsibility is to express an opinion on these financial statements based on our audit. The Accounts’ financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 7, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Accounts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the financial position of the Poverty Reduction and Growth Facility Administered Accounts at April 30, 2005, and the results of their operations and their cash flows for the year then ended in conformity with International Financial Reporting Standards.

June 14, 2005

Member of

Deloitte Touche Tohmatsu

Poverty Reduction and Growth Facility Administered Accounts Balance sheets as at April 30, 2005, and 2004(In thousands of SDRs)
AustriaBelgiumBotswana
200520042005200420052004
Assets
Cash and cash equivalents1,3994,713
Investments (Note 4)3,60110,287
Advance payments to the PRGF Trust Subsidy Account3167
Interest receivable
Total assets5,03115,067
Liabilities and resources
Deposits (Note 5)5,00015,000
Interest payable3167
Total liabilities5,03115,067
Resources
Total liabilities and resources5,03115,067
GreeceIndonesiaIran, I.R. ofPortugal
20052004200520042005200420052004
Assets
Cash and cash equivalents25,0001,5711,8382,754
Investments (Note 4)25,0003,4294,7356,010
Advance payments to the
PRGF Trust Subsidy Account233242
Interest receivable1921
Total assets25,19225,0015,0236,6058,806
Liabilities and resources
Deposits (Note 5)25,00025,0005,0006,5738,764
Interest payable28233242
Total liabilities25,02825,0005,0236,6058,806
Resources1641
Total liabilities and resources25,19225,0015,0236,6058,806
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
Poverty Reduction and Growth Facility Administered Accounts Statements of income and changes in resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
AustriaBelgiumBotswana
200520042005200420052004
Balance, beginning of the year223
Investment income (Note 4)2073351,227104
Other expenses(6)(13)(4)
Interest expense on deposits(51)(102)(399)(115)
Operational income/(loss)150220828(15)
Transfers to the
PRGF Trust Subsidy Account(150)(220)(1,051)15
PRGF HIPC Trust
Net income/changes in resources(223)
Balance, end of the year
GreeceIndonesiaIran, I.R. ofPortugal
20052004200520042005200420052004
Balance, beginning of the year153
Investment income (Note 4)84510402781136143
Other expenses(3)(4)(4)(6)
Interest expense on deposits(26)(28)(2)(25)(33)(44)
Operational income554824025529993
Transfers to the
PRGF Trust Subsidy Account(55)(67)(454)(5)(52)(99)(93)
PRGF HIPC Trust(252)
Net income/changes in resources163(52)
Balance, end of the year1641
The accompanying notes are an integral part of these financial statements.
Poverty Reduction and Growth Facility Administered Accounts Statements of cash flows for the years ended April 30, 2005, and 2004(In thousands of SDRs)
AustriaBelgiumBotswana
20052004 (unaudited)20052004 (unaudited)20052004 (unaudited)
Cash flows from operating activities
Net income/(loss)(223)
Adjustments to reconcile net income to cash generated by operations
Changes in interest payable(36)(35)(2)(116)
Changes in interest receivable and other assets3635225116
Net cash used in operating activities
Cash flow from investment activities
Net disposal of investments6,6867,4564,893
Net cash provided by/(used in) investment activities6,6867,4564,893
Cash flow from financing activities
Repayment of deposits(10,000)(10,000)(80,000)(6,894)
Net cash used by financing activities(10,000)(10,000)(80,000)(6,894)
Cash and cash equivalents, beginning of year4,7137,25780,0002,001
Cash and cash equivalents, end of year1,3994,713
GreeceIndonesiaIran, I.R. ofPortugal
20052004 (unaudited)20052004 (unaudited)20052004 (unaudited)20052004 (unaudited)
Cash flows from operating activities
Net income/(loss)163(52)
Adjustments to reconcile net income to cash generated by operations
Changes in interest payable(15)28(17)(23)(10)(8)
Changes in interest receivable and other assets15(191)6923108
Net cash used in operating activities
Cash flow from investment activities
Net disposal/(acquisition) of investments4,968(25,000)3,4291201,2751,454
Net cash provided by/(used in) investment activities4,968’25,000)3,4291201,2751,454
Cash flow from financing activities
Repayment of deposits(7,000)(5,000)(2,191)(1,753)
Net cash used by financing activities(7,000)(5,000)(2,191)(1,753)
Cash and cash equivalents, beginning of year2,03225,00025,0001,5711,4512,7543,053
Cash and cash equivalents, end of year25,0001,5711,8382,754
The accompanying notes are an integral part of these financial statements.

Poverty Reduction and Growth Facility Administered Accounts Notes to the financial statements as at April 30, 2005, and 2004

1. Nature of operations

At the request of certain member countries, the IMF established the Poverty Reduction and Growth Facility Administered Accounts (“PRGF Administered Accounts” or “Administered Accounts”) for the benefit of the Subsidy Account of the PRGF Trust and PRGF-HIPC Trust Account. The Administered Accounts comprise deposits made by contributors. The difference between interest earned by the Administered Accounts and the interest payable on deposits is transferred to the Subsidy Account of the PRGF Trust and PRGF-HIPC Trust Account.

The resources of each Administered Account are held separately from the assets of all other accounts of, or administered by, the IMF and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the Administered Accounts are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000 and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (1.45183 U.S. dollars as of April 30, 2004).

Cash and cash equivalents

Cash and cash equivalents include short-term deposits with a maturity of less than ninety days. These deposits are denominated in SDRs or other currencies and are carried at cost, which approximates fair value. Interest received on these instruments varies and is based on prevailing market rates.

Investments

Investments are made in debt securities which are classified as available-for-sale securities.

The available-for-sale investments are measured initially at cost, including transaction costs. Subsequent to initial recognition, all available-for-sale assets are remeasured to fair value based on the quoted market price at the balance sheet date. Gains and losses arising from a change in the fair value of available-for-sale investments are recognized in the statement of income.

Investment income comprises interest income and realized and unrealized gains and losses on investments, including currency valuation differences arising from exchange rate movements against the SDR.

Transfers

Internal transfers of resources within the IMF are accounted for under the accrual method of accounting.

Administrative costs

The expenses of conducting the activities of the Administered Accounts are incurred and borne by the General Resources Account of the IMF.

Accounting and reporting developments

In December 2003, the International Accounting Standards Board revised International Accounting Standard 39, “Financial Instruments: Recognition and Measurement,” which will become effective for financial year 2006. Upon adoption of the revised standard, and as permitted by the transition provisions, investments previously classified as available-for-sale will be reclassified as securities at fair-value-through-profit-and-loss. After the reclassification, changes in fair value of the investments would continue to be recognized in the income statement.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

3. Financial risk management

In conducting their operations, the PRGF Administered Accounts are exposed to various types of risks, including interest rate and exchange rate risks.

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. Interest rate risk on the PRGF Administered Accounts’ investments is managed by limiting the investment portfolio to a weighted-average effective duration that does not exceed three years.

Exchange rate risk is the exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on the PRGF Administered Accounts’ financial position and cash flows. Exchange rate risk on the investments is managed by investing in securities denominated in SDRs or in the constituent currencies, with the same composition of the SDR valuation basket.

4. Investments

Investments consisted of the following at April 30:

20052004
(In thousands of SDRs)
Fixed-term deposits25,000
Debt securities8,33619,726
Total33,33619,726

The maturities of the Administered Accounts’ investments are as follows at April 30:

20052004
(In thousands of SDRs)
Less than 1 year32,83319,395
1–3 years503331
Total33,33619,726

Investment income comprised the following at April 30:

20052004
(In thousands of SDRs)
Interest income1,0942,928
Realized losses, net(115)(696)
Unrealized (losses)/gains, net(119)144
Total8602,376

5. Deposits

Austria

The Administered Account Austria was established on December 27, 1988, for the administration of resources deposited in the account by the Austrian National Bank. Two deposits (one of SDR 60.0 million made on December 30, 1988, and one of SDR 50.0 million made on August 10, 1995) are to be repaid in ten equal semiannual installments beginning five and a half years after the date of each deposit and ending at the end of the tenth year after the date of each deposit. The deposits bear interest at a rate of ½ of 1 percent a year. The first deposit from Austria has been repaid in full.

Belgium

The Administered Account Belgium was established on July 27, 1988, for the administration of resources deposited in the account by the National Bank of Belgium. Four deposits (SDR 30.0 million made on July 29, 1988; SDR 35.0 million made on December 30, 1988; SDR 35.0 million made on June 30, 1989; and SDR 80.0 million made on April 29, 1994) have an initial maturity of six months and are renewable by the IMF on the same basis. The final maturity of each deposit, including renewals, will be ten years from the initial dates of the individual deposits. The deposits bear interest at a rate of ½ of 1 percent a year. In accordance with an addendum to the account, effective on July 24, 1998, the maturities of the first three deposits will be extended by the National Bank of Belgium, for further periods of six months, provided that the total maturity period of each deposit does not exceed five years. The deposits are invested by the IMF as administrator, and the IMF as administrator pays the National Bank of Belgium interest on each deposit at an annual rate of ½ of 1 percent. The difference between the interest paid to the National Bank of Belgium and the interest earned on the deposits (net of any cost to the IMF) was retained in the account and invested. As of January 31, 2001, the Ministry of Finance of Belgium authorized a transfer of SDR 8.2 million in net earnings to the PRGF-HIPC Trust. All deposits have been repaid in full.

Botswana

The Administered Account Botswana was established on July 1, 1994, for the administration of resources deposited in the account by the Bank of Botswana. The deposit, totaling SDR 6.9 million, is to be repaid in one installment ten years after the date of deposit. The deposit bears interest at a rate of 2 percent a year. The deposit was repaid in full on March 1, 2004.

Greece

The Administered Account Greece was established on November 30, 1988, for the administration of resources deposited in the account by the Bank of Greece. Two deposits of SDR 35.0 million each (December 15, 1988, and April 29, 1994) are to be repaid in ten equal semiannual installments beginning five and a half years after the date of deposit and will be completed at the end of the tenth year after the date of the deposits. The deposits bear interest at a rate of ½ of 1 percent a year. The two deposits from Greece have been repaid in full.

Indonesia

The Administered Account Indonesia was established on June 30, 1994, for the administration of resources deposited in the account by Bank Indonesia. The deposit, totaling SDR 25.0 million, is to be repaid in one installment ten years after the date the deposit was made. The interest payable on the deposit is equivalent to that obtained for the investment of the deposit less 2 percent a year. Upon maturity in June 2004, the deposit was reinvested for another ten years (according to the amendment of the instrument) and investment income of 2 percent per annum (or any lesser amount if investment returns are below 2 percent) transferred to the PRGF-HIPC Trust.

Islamic Republic of Iran

The Administered Account Islamic Republic of Iran was established on June 6, 1994, for the administration of resources deposited in the account by the Central Bank of the Islamic Republic of Iran (CBIRI). The CBIRI has made five annual deposits, each of SDR 1.0 million. All of the deposits are to be repaid at the end of ten years after the date of the first deposit. Each deposit bears interest at a rate of ½ of 1 percent a year. All deposits have been repaid in full.

Portugal

The Administered Account Portugal was established on May 16, 1994, for the administration of resources deposited in the account by the Banco de Portugal (BdP). The BdP has made six annual deposits, each of SDR 2.2 million. Each deposit is to be repaid in five equal annual installments beginning six years after the date of the deposit and will be completed at the end of the tenth year after the date of the deposit. Each deposit bears interest at a rate of ½ of 1 percent a year.

6. Related-party transactions

The difference between the income earned by the Administered Accounts on the amounts invested and the interest payable on the deposits of the Administered Accounts, net of any cost, is transferred to the Subsidy Account of the PRGF Trust and the PRGF-HIPC Trust Account. As of April 30, 2005, and 2004, net investment income transferred from the Administered Accounts to the Subsidy Account amounted to SDR 0.3 million and SDR 1.9 million, respectively. Transfers to PRGF-HIPC Trust amounted to SDR 0.3 million as of April 30, 2005 (there were no transfers as of April 30, 2004).

Deloitte

Deloitte & Touche LLP

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555 12th Street, NW

Washington, DC 20004-1207

USA

Tel: +1 202 879 5600

Fax: +1 202 879 5309

www.deloitte.com

Independent Auditors’ Report

To the Board of Governors

of the International Monetary Fund

Washington, DC

We have audited the accompanying combined balance sheet of the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries Trust and Related Accounts (the “Company”) as of April 30, 2005, and the related combined statements of income, changes in resources, and cash flows for the year then ended. These combined financial statements are the responsibility of Company management. Our responsibility is to express an opinion on these combined financial statements based on our audit. The Company’s combined financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 7, 2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material mis-statement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the combined financial position of the Poverty Reduction and Growth Facility-Heavily Indebted Poor Countries Trust and Related Accounts at April 30, 2005, and the combined results of their operations and their cash flows for the year then ended in conformity with International Financial Reporting Standards.

Our audit was conducted for the purpose of forming an opinion on the basic 2005 combined financial statements taken as a whole. The supplemental schedules listed on pages 204 to 207 are presented for the purpose of additional analysis and are not a required part of the basic combined financial statements. These schedules are the responsibility of Company management. Such 2005 schedules have been subjected to the auditing procedures applied in our audit of the basic combined financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic combined financial statements taken as a whole. The 2004 schedules were subjected to auditing procedures by other auditors, whose report dated June 7, 2004, referred to above, stated that such information is fairly stated in all material respects when considered in relation to the basic 2004 combined financial statements taken as a whole.

June 14, 2005

Member of

Deloitte Touche Tohmatsu

PRGF-HIPC Trust and Related Accounts Combined balance sheets as at April 30, 2005, and 2004(In thousands of SDRs)
20052004
Assets
Cash and cash equivalents503,226590,613
Investments (Note 4)705,406569,013
Interest receivable2,2721,311
Total assets1,210,9041,160,937
Liabilities and resources
Borrowings (Note 5)610,324612,918
Interest payable1,2771,319
Total liabilities611,601614,237
Resources599,303546,700
Total liabilities and resources1,210,9041,160,937
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
PRGF-HIPC Trust and Related Accounts Combined statements of income and changes in resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004
Balance, beginning of the year546,700718,634
Investment income (Note 6)22,40820,879
Interest expense(2,053)(2,075)
Other expenses(254)(339)
Operational income20,10118,465
Contributions received24,45627,287
Disbursements(156,051)(275,141)
Transfers from the Special Disbursement Account164,09757,455
Net income (loss) /changes in resources52,603(171,934)
Balance, end of the year599,303546,700
The accompanying notes are an integral part of these financial statements.
PRGF-HIPC Trust and Related Accounts Combined statements of cash flows for the years ended April 30, 2005, and 2004(In thousands of SDRs)
20052004

(Unaudited)
Cash flows from operating activities
Net income/(loss)52,603(171,934)
Adjustments to reconcile net income to cash generated by operations
Change in interest receivable(961)2,869
Change in interest payable(42)21
Foreign currency translation: Investments(9,406)(5,573)
Borrowings9,4065,573
Net cash provided by/(used in) operating activities51,600(169,044)
Cash flows from investment activities
Net movement of investments(126,987)(246,511)
Net cash used in investment activities(126,987)(246,511)
Cash flows from financing activities
Borrowings3,0006,220
Repayment of borrowing(15,000)
Net cash (used in)/provided by financing activities(12,000)6,220
Cash and cash equivalents, beginning of year590,613999,948
Cash and cash equivalents, end of year503,226590,613
The accompanying notes are an integral part of these financial statements.

Notes to the financial statements as at April 30, 2005, and 2004

1. Nature of operations

The Trust for Special PRGF Operations for the Heavily Indebted Poor Countries and for Interim PRGF Subsidy Operations (the PRGF-HIPC Trust or the Trust) and Related Accounts comprise the PRGF-HIPC Trust Account, the Umbrella Account for HIPC Operations, and the Post-SCA–2 Administered Account. The PRGF-HIPC Trust Account comprises three subaccounts: the PRGF-HIPC, PRGF, and HIPC subaccounts. Combining balance sheets and income statements and changes in resources for each of these accounts are provided in Note 10. Transactions between the above accounts are eliminated on combination in the combined balance sheets and combined income statements and changes in resources.

PRGF-HIPC Trust

The PRGF-HIPC Trust, for which the IMF is Trustee, was established on February 4, 1997, to provide balance of payments assistance to low-income developing members by making grants or loans to eligible members for the purpose of reducing their external debt burden and for interim PRGF subsidy purposes. The resources of the PRGF-HIPC Trust are held separately from the assets of all other accounts of, or administered by, the IMF and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

The operations of the PRGF-HIPC Trust are conducted through the PRGF-HIPC Trust Account and the Umbrella Account for HIPC Operations.

PRGF-HIPC Trust Account and Related Accounts

The resources of the PRGF-HIPC Trust Account consist of grant contributions, borrowings, and other types of investments made by contributors; amounts transferred by the IMF from the Special Disbursement Account and the General Resources Account; and net earnings from investment of resources held in the PRGF-HIPC Trust Account.

The PRGF-HIPC subaccount holds resources that can finance either HIPC operations or interim PRGF subsidy operations; the PRGF subaccount holds resources earmarked for interim PRGF subsidy operations, while the HIPC sub-account holds resources earmarked for HIPC operations. PRGF-HIPC subac-count resources used to finance HIPC operations through the HIPC subaccount are repayable to the PRGF-HIPC subaccount and bear interest at a rate equal to the average return on investments in the Special Disbursement Account.

The resources held in the PRGF-HIPC Trust Account are to be used by the Trustee to make grants or loans to eligible members that qualify for assistance under the HIPC Initiative and for subsidizing the interest rate on interim PRGF operations to PRGF-eligible members.

Umbrella Account for HIPC Operations

The Umbrella Account for HIPC Operations (the Umbrella Account) receives and administers the proceeds of grants or loans made to eligible members that qualify for assistance under the terms of the PRGF-HIPC Trust. Within the Umbrella Account, resources received are administered through the establishment of subaccounts for each eligible member upon the approval of disbursements under the PRGF-HIPC Trust.

The resources of a subaccount of the Umbrella Account consist of (1) amounts disbursed from the PRGF-HIPC Trust Account as grants or loans for the benefit of a member, and (2) net earnings from investment of the resources held in the subaccount.

The resources held in a subaccount of the Umbrella Account are to be used to meet the member’s debt obligations to the IMF, or accounts administered by it, in accordance with the schedule agreed upon by the Trustee and the member for the use of the proceeds of the PRGF-HIPC Trust disbursements.

Post-SCA-2 Administered Account

The Post-SCA-2 Administered Account, which is administered by the IMF on behalf of members, was established on December 8, 1999, for the temporary administration of resources transferred by members following the termination of the second Special Contingent Account (SCA-2) in the General Department of the IMF, prior to the final disposition of those resources.

Resources received from a member’s cumulative SCA-2 contributions, together with the member’s pro rata share of investment returns, shall be transferred to the PRGF-HIPC Trust or to the member, in accordance with the member’s instructions. The assets held in the Post-SCA-2 Administered Account are held separately from the assets and property of all other accounts of, or administered by, the IMF and may not be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the PRGF-HIPC Trust and Related Accounts are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

The financial statements are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the SDR valuation basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000 and the new composition of the SDR valuation basket became effective on January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (one SDR was equal to 1.45183 U.S. dollars as of April 30, 2004).

Foreign currency translation

Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are reported using the closing exchange rates. Exchange differences arising from the settlement of transactions at rates different from those at the originating date of the transaction and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are included in the determination of net income.

Cash and cash equivalents

Cash and cash equivalents include short-term deposits with a maturity of less than ninety days. These deposits are denominated in SDRs or other currencies and are carried at cost, which approximates fair value. Interest received on these instruments varies and is based on prevailing market rates.

Investments

Investments are made in fixed-term deposits; domestic government bonds of the euro zone, Japan, the United Kingdom, and the United States; and obligations of multilateral organizations. For deposits, the Trust may invest only in obligations issued by institutions with a credit rating of A and above. For other investments, the Trust may invest only in obligations issued by an agency of a government and a multilateral organization with a minimum credit rating of AA.

Investments in debt securities, classified as available-for-sale securities, are measured initially at cost, including transaction costs. Subsequent to initial recognition, all available-for-sale assets are remeasured to fair value, based on the quoted market price at the balance sheet date. Gains and losses arising from a change in the fair value of available-for-sale investments are recognized in the statement of income.

Investment income comprises interest income and realized and unrealized gains and losses on investments, including currency valuation differences arising from exchange rate movements against the SDR.

Contributions

Contributions are reflected as increases in resources and are subject to bilateral agreements stipulating how the resources are to be used.

Transfers

Internal transfers of resources within the IMF are accounted for under the accrual method of accounting.

Administrative costs

The expenses of conducting activities of the Trust and related accounts are borne by the General Resources Account of the IMF.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

Accounting and reporting developments

In December 2003, the International Accounting Standards Board revised International Accounting Standard 39, “Financial Instruments: Recognition and Measurement,” which will become effective for financial year 2006. Upon adoption of the revised standard, and as permitted by the transition provisions, investments previously classified as available-for-sale will be reclassified as securities at fair-value-through-profit-and-loss. After the reclassification, changes in fair value of the investments would continue to be recognized in the income statement.

3. Financial risk management

In providing financial assistance to eligible country members and conducting its operations, the Trust is exposed to various types of risks, including interest rate and exchange rate risks.

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. Interest rate risk on the Trust’s investments is managed by limiting the investment portfolio to a weighted-average effective duration that does not exceed three years.

Exchange rate risk is the exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on the Trust’s financial position and cash flows. Exchange rate risk on the Trust’s investments is managed by investing in securities denominated in SDRs or in the constituent currencies, with the same composition of the SDR valuation basket.

4. Investments

Investments consisted of the following at April 30:

20052004
(In thousands of SDRs)
Fixed-term deposits414,213254,807
Debt securities291,193314,206
Total705,406569,013

The maturities of the investments are as follows at April 30:

20052004
(In thousands of SDRs)
Less than 1 year687,839564,272
1–3 years17,5674,741
Total705,406569,013

5. Borrowings

The Trust borrows on such terms and conditions as agreed between the Trust and the lenders. Interest rates on borrowings at April 30, 2005, and 2004 varied between 0 percent and 2 percent a year. The principal amounts of the borrowings are repayable in one installment at their maturity dates. Scheduled repayments of borrowings are summarized below:

Financial year ending April 30
(In thousands of SDRs)
2006
2007310
200820,066
200925,000
2010277,416
2011 and beyond287,532
Total610,324

Borrowings, excluding the effect of foreign currency fluctuations, during the financial year ended April 30, 2005, amounted to SDR 3.0 million (SDR 6.2 million for the financial year ended April 30, 2004). During the year ended April 30, 2005, repayments amounted to SDR 15.0 million (none in 2004).

6. Investment income

Investment income at April 30 comprised:

20052004
(In thousands of SDRs)
Interest income27,87325,978
Realized losses, net(3,418)(7,722)
Unrealized (losses)/gains, net(2,087)2,619
Exchange rate gains, net404
Total22,40820,879

7. Transfers receivable and payable

At April 30, 2005, the HIPC subaccount had transfers payable to the PRGFHIPC subaccount arising from past disbursements to the Umbrella Account under the HIPC Initiative in the amount of SDR 1,316.0 million, including interest (SDR 1,012.0 million at April 30, 2004). Interest payable between subaccounts is eliminated on combination.

8. Related-party transactions

The expenses of conducting the business of the Trust are paid by the General Resources Account of the IMF.

Cumulative transfers from the Special Disbursement Account of the IMF to the PRGF-HIPC Trust amounted to SDR 573.8 million as of April 30, 2005 (SDR 409.7 million as of April 30, 2004). The PRGF-HIPC Trust also receives contributions from member countries that had placed deposits in the Poverty Reduction and Growth Facility Administered Accounts. Net investment income transferred from the Poverty Reduction and Growth Facility Administered Account to the PRGF-HIPC Trust amounted to SDR 0.3 million for financial year 2005 (none in 2004).

9. Subsequent event

On June 11, 2005, the G-8 finance ministers proposed an initiative that would involve debt relief, leading to full debt cancellation of outstanding obligations, of member countries eligible for HIPC assistance. Under this proposal, the cost of meeting the obligations of the eligible members would be met from existing IMF resources. In situations where other existing and projected debt relief obligations cannot be met from existing IMF resources (for example, for the protracted arrears cases such as Liberia, Somalia, and Sudan), donors have committed to providing the extra resources necessary. IMF resources that will be considered to finance this debt relief operation consist of available resources already earmarked to provide debt relief or provide concessional financing (SDA, PRGF, and PRGF-HIPC resources) for an estimated amount of approximately SDR 4.0 billion as of April 30, 2005. The precise modalities of the proposal have not yet been developed. The G-8 finance ministers call upon all shareholders to support the debt relief proposals, which would be put to the 2005 Annual Meetings.

10. Combining balance sheets and statements of income and changes in resources

The balance sheets and statements of income and changes in resources for the accounts and subaccounts in the PRGF-HIPC Trust and Related Accounts are presented below.

PRGF-HIPC Trust and Related Accounts Combining balance sheets as at April 30,2005, and 2004(In thousands of SDRs)
20052004
PRGF-HIPC Trust Account SubaccountUmbrella Account for HIPC operationsPost-SCA-2 Administered AccountCombined totalPRGF-HIPC Trust AccountUmbrella Account for HIPC operationsPost-SCA-2 Administered AccountCombined total
PRGF-HIPCPRGFHIPCCombined
Assets
Cash and cash equivalents110,63312,931123,564338,46041,202503,226197,165353,01740,431590,613
Investments541,79713,609555,406150,000705,406569,013569,013
Transfers to and from subaccounts1,316,300(1,316,300)
Interest receivable5295291,5012422,2726824701591,311
Total assets1,969,25926,540(1,316,300)679,499489,96141,4441,210,904766,860353,48740,5901,160,937
Liabilities and resources
Borrowings610,324610,324610,324612,918612,918
Interest payable1,2771,2771,2771,3191,319
Total liabilities611,601611,601611,601614,237614,237
Accumulated resources1,357,65826,540(1,316,300)67,898489,96141,444599,303152,623353,48740,590546,700
Total liabilities and resources1,969,25926,540(1,316,300)679,499489,96141,4441,210,904766,860353,48740,5901,160,937
PRGF-HIPC Trust and Related Accounts Combining statements of income and changes in resources for the years ended April 30,2005, and 2004(In thousands of SDRs)
20052004
PRGF-HIPC Trust Account SubaccountUmbrella Account for HIPC operationsPost-SCA-2 Administered AccountCombined totalPRGF-HIPC Trust AccountUmbrella Account for HIPC operationsPost-SCA-2 Administered AccountCombined total
PRGF-HIPCPRGFHIPCCombined
Balance, beginning of the year22,254(1,011,958)152,623353,48740,590546,700257,128421,30940,197718,634
Investment income32,86550614,26417,29085422,40815,0155,22663820,879
Interest expense(2,053)(19,107)(2,053)1(2,053)(2,075)(2,075)
Other expenses(244)(10)(254)(254)(339)(339)
Operational income/(loss)30,568496(19,107)11,9577,29085420,10112,6015,22663818,465
Contributions received20,6663,79024,45624,45627,28727,287
Grants(285,235)(285,235)285,235(202,093)202,093
Disbursements(156,051)(156,051)(275,141)(275,141)
Transfers from the Special Disbursement Account164,097164,097164,09757,700(245)57,455
Net income/changes in resources215,3314,286(304,342)(84,725)136,47485452,603(104,505)(67,822)393(171,934)
Balance, end of the year1,357,65826,540(1,316,300)67,898489,96141,444599,303152,623353,48740,590546,700
Schedule 1Post-SCA-2 Administered Account Holdings, interest, and transfers for the year ended April 30, 2005(In thousands of SDRs)
MemberBalance beginning of yearInterest earnedTransfers to PRGF-HIPC TrustBalance end of year
Argentina5,5141165,630
Dominican Republic1,020221,042
Jordan1,159241,183
Trinidad and Tobago2,490522,542
Vanuatu49150
Venezuela30,35863930,997
Total at April 30, 200540,59085441,444
Schedule 2PRGF-HIPC Trust Account Contributions and transfers for the years ended April 30, 2005, and 2004(In thousands of SDRs)
Subaccount
PRGF-HIPCPRGFHIPCCombined
Period ended April 30, 2004
Belgium3,7453,745
Belize2020
Fiji2121
Latvia142142
Mexico7,9147,914
Netherlands3,6833,683
Nigeria734734
Norway1,1561,156
Poland2,6302,630
South Africa4,0004,000
St. Vincent and the Grenadines1111
Switzerland3,2283,228
Tonga33
23,6043,68327,287
Transfers from SDA57,70057,700
81,3043,68384,987
Period ended April 30 2005
Belgium3,7313,731
Belize2020
Mexico8,1198,119
Netherlands3,7903,790
Norway1,0891,089
Indonesia251251
Poland258258
South Africa4,0004,000
St. Vincent and the Grenadines1111
Switzerland3,1873,187
20,6663,79024,456
Transfers from SDA164,097164,097
184,7633,790188,553
Schedule 3Umbrella Account for HIPC Operations Grants, interest, disbursements, and changes in resources for the years ended April 30, 2005, and 2004(In thousands of SDRs)
MemberOpening balanceGrants from PRGF-HIPC Trust AccountInterest earnedDisbursementsEnding balance
Period ended April 30, 2004
Benin9,6871224,5535,256
Bolivia32,0464598,85823,647
Burkina Faso20,63626610,01910,883
Cameroon4223,019221,4741,989
Chad172,850152,390492
Congo, Democratic Republic of the1,1319567573
Ethiopia2,11618,765333,66217,252
Gambia, The40391
Ghana17015,15011415,253181
Guinea916689428
Guinea-Bissau55
Guyana9,90623,7412558,09325,809
Honduras314,3001114,341
Madagascar2,198609162,195628
Malawi244,628232,8471,828
Mali33,9752918,88125,385
Mauritania16,8832216,94910,155
Mozambique47,5116939,17839,026
Nicaragua1,23269,2752643,57167,200
Niger1,82418,239334,75315,343
Rwanda871880
Senegal2725,636396,17419,528
Sierra Leone14,09514,75012523,6015,369
Tanzania55,68872915,77540,642
Uganda52,94669617,27336,369
Zambia118,8271783118,1331,477
421,309202,0935,226275,141353,487
Period ended April 30, 2005
Benin5,256752,8852,446
Bolivia23,64736211,29412,715
Burkina Faso10,88311,59522910,48512,222
Cameroon1,989181,98423
Chad4921,37558081,064
Congo, Democratic Republic of the5731,131161,138582
Ethiopia17,25219,3643593,60333,372
Gambia, The11
Ghana18169,23990013,86656,454
Guinea281128
Guinea-Bissau55
Guyana25,809174348,74417,516
Honduras4,34113,860686,89911,370
Madagascar62810,804862,1159,403
Malawi1,828101,81028
Mali25,3854299,13316,681
Mauritania10,1551633,8276,491
Mozambique39,0266789,31330,391
Nicaragua67,2001,20213,88354,519
Niger15,34312,2052976,11821,727
Rwanda8023,843823,91820,087
Senegal19,5284,60230113,18111,250
Sierra Leone5,369515,35763
Tanzania40,6426789,87931,441
Uganda36,36954315,18321,729
Zambia1,4771117,200303626118,354
353,487285,2357,290156,051489,961
Schedule 4PRGF-HIPC Trust Account Cumulative contributions and transfers as at April 30, 2005(In thousands of SDRs)
Subaccount
MemberPRGF-HIPCPRGFHIPCCombined
Algeria412412
Australia17,01917,019
Austria9,9819,981
Bangladesh1,1631,163
Barbados250250
Belgium25,93025,930
Belize140140
Brazil11,03311,033
Brunei Darussalam44
Cambodia2727
Canada32,92932,929
China13,13213,132
Colombia1313
Croatia3131
Cyprus544544
Denmark13,06813,068
Egypt3737
Estonia372372
Fiji2121
Finland2,5832,583
France55,89255,892
Gabon458458
Greece2,2002,200
Iceland643643
India390390
Indonesia375375
Ireland3,9373,937
Israel1,1891,189
Italy43,30943,309
Jamaica1,8001,800
Japan98,35598,355
Korea10,62510,625
Kuwait108108
Latvia710710
Luxembourg488488
Malaysia478478
Malta706706
Mauritius4040
Mexico39,97739,977
Morocco4949
Netherlands23,80916,347140,156
New Zealand1,1581,158
Nigeria6,1506,150
Norway12,94212,942
Oman7373
Pakistan105105
Philippines4,5004,500
Poland5,0005,000
Portugal4,4304,430
Russian Federation10,20010,200
Samoa33
San Marino3232
Saudi Arabia978978
Singapore249249
Slovak Republic2,6692,669
Slovenia311311
South Africa20,89520,895
Spain16,55016,550
Sri Lanka1212
St. Vincent and the Grenadines5555
Swaziland2020
Sweden5,3225,322
Switzerland16,01516,015
Thailand350350
Tonga33
Tunisia136136
United Arab Emirates353353
United Kingdom23,55133,83757,388
United States221,932221,932
Vietnam1010
495,49023,809299,116818,415
Transfers from SDA573,794573,794
Transfers from GRA72,45672,456
646,250646,250
1,141,74023,809299,1161,464,665

Deloitte

Deloitte & Touche LLP

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Washington, DC 20004-1207

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Tel: +1 202 879 5600

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www.deloitte.com

Independent Auditors’ Report

To the Board of Governors of the International Monetary Fund

Washington, DC

We have audited the accompanying balance sheet as of April 30, 2005, and the related statements of income, changes in resources, and cash flows for the year then ended of the following entities:

Other Administered Accounts (the “Accounts”)

  • Administered Account Japan

  • Administered Account for Selected Fund Activities - Japan

  • Framework Administered Account for Technical Assistance Activities

  • Administered Account - Spain

  • Supplementary Financing Facility Subsidy Account

  • The Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account

These financial statements are the responsibility of Accounts management. Our responsibility is to express an opinion on these financial statements based on our audit. The Accounts’ financial statements as of and for the year ended April 30, 2004, were audited by other auditors, whose report dated June 7,2004, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing and auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Accounts’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 2005 financial statements present fairly, in all material respects, the financial position of the Other Administered Accounts at April 30,2005, and the results of their operations and their cash flows for the year then ended in conformity with International Financial Reporting Standards.

June 14, 2005

Member of Deloitte Touche Tohmatsu

Other Administered Accounts Balance sheets as at April 30, 2005, and 2004
Administered Account JapanAdministered Account for Selected Fund Activities-JapanFramework Administered Account for Technical Assistance ActivitiesAdministered Account-SpainSupplementary Financing Facility Subsidy AccountThe Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account
200520042005200420052004200520042005200420052004
Assets
Cash and cash equivalents122,402120,23521,69122,69923,94818,9122,2832,24018,6847,850
Interest/other receivables40139
Total assets122,402120,23521,69122,69923,94818,912402,2962,24918,6847,850
Liabilities
Other liabilities40
Total liabilities40
Resources
Total resources122,402120,23521,69122,69923,94818,9122,2962,24918,6847,850
The accompanying notes are an integral part of these financial statements.
/s/ Michael G. Kuhn

Director, Finance Department
/s/ Rodrigo de Rato

Managing Director
Other Administered Accounts Statements of income and changes in resources for the years ended April 30,2005, and 2004
Administered Account JapanAdministered Account for Selected Fund Activities-JapanFramework Administered Account for Technical Assistance ActivitiesAdministered Account-SpainSupplementary Financing Facility Subsidy AccountThe Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account
200520042005200420052004200520042005200420052004
Balance, beginning of the year120,235119,03622,69925,03118,91214,6602,2492,3517,8505,441
Interest income2,1671,1995622904381484737199101
Contributions received20,84920,37424,40716,156404011,0512,801
Payments to and on behalf of beneficiaries(22,419)(22,996)(19,809)(12,052)(40)(40)(416)(493)
Operational income/(loss)2,1671,199(1,008)(2,332)5,0364,252473710,8342,409
Transfers to the Special
Disbursement Account (Note 4)(139)
Net income/changes in resources2,1671,199(1,008)(2,332)5,0364,25247(102)10,8342,409
Balance, end of the year122,402120,23521,69122,69923,94818,9122,2962,24918,6847,850
The accompanying notes are an Integral part of these financial statements.
Other Administered Accounts Statements of cash flows for the years ended April 30,2005, and 2004
Administered Account JapanAdministered Account for Selected Fund Activities-JapanFramework Administered Account for Technical Assistance ActivitiesAdministered Account-SpainSupplementary Financing Facility Subsidy AccountThe Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account
20052004

(Unaudited)
20052004

(Unaudited)
20052004

(Unaudited)
20052004

(Unaudited)
20052004

(Unaudited)
20052004

(Unaudited)
Cash flows from operating activities
Net income/(loss)2,1671,199(1,008)(2,332)5,0364,25247(102)10,8342,409
Adjustments to reconcile net income to cash generated by operations
Changes in other liabilities40
Changes in interest receivable and other assets(40)(4)1
Net cash provided by/(used in) operating activities2,1671,199(1,008)(2,332)5,0364,25243(101)10,8342,409
Cash flow from investment activities
Net cash provided by investment activities
Cash flow from financing activities
Net cash used by financing activities
Cash and cash equivalents, beginning of year120,235119,03622,69925,03118,91214,6602,2402,3417,8505,441
Cash and cash equivalents, end of year122,402120,23521,69122,69923,94818,9122,2832,24018,6847,850
The accompanying notes are an Integral part of these financial statements.

Notes to the financial statements as at April 30, 2005, and 2004

1. Nature of operations

At the request of members, the IMF has established special purpose accounts to administer contributed resources and to perform financial and technical services consistent with the purposes of the IMF. The assets of each account and each subaccount are separate from the assets of all other accounts of, or administered by, the IMF and are not to be used to discharge liabilities or to meet losses incurred in the administration of other accounts.

Administered Account Japan

At the request of Japan, the IMF established an account on March 3,1989, to administer resources made available by Japan or other countries with Japan’s concurrence that are to be used to assist certain members with overdue obligations to the IMF. The resources of the account are to be disbursed in amounts specified by Japan and to members designated by Japan.

Administered Account for Selected Fund Activities—Japan

At the request of Japan, the IMF established the Administered Technical Assistance Account—Japan on March 19,1990, to administer resources contributed by Japan to finance technical assistance to member countries. On July 21,1997, the account was renamed the Administered Account for Selected Fund Activities—Japan and amended to include the administration of resources contributed by Japan in support of the IMF’s Regional Office for Asia and the Pacific (OAP). The resources of the account designated for technical assistance activities are used with the approval of Japan and include the provision of scholarships. The resources designated for the OAP are used as agreed between Japan and the IMF for certain activities of the IMF with respect to Asia and the Pacific through the OAP. Disbursements can also be made from the account to the General Resources Account to reimburse the IMF for qualifying technical assistance projects and OAP expenses.

Framework Administered Account for Technical Assistance Activities

The Framework Administered Account for Technical Assistance Activities (“the Framework Account”) was established by the IMF on April 3,1995, to receive and administer contributed resources that are to be used to finance technical assistance consistent with the purposes of the IMF. The financing of technical assistance activities is implemented through the establishment and operation of subaccounts within the Framework Account. Resources are to be used in accordance with the written understandings between the contributor and the Managing Director. Disbursements can also be made from the Framework Account to the General Resources Account to reimburse the IMF for its costs incurred on behalf of technical assistance activities financed by resources from the Framework Account.

Subaccount for Japan Advanced Scholarship Program

At the request of Japan, this subaccount was established on June 6,1995, to finance the cost of studies and training of nationals of member countries in macroeconomics and related subjects at selected universities and institutions. The scholarship program focuses primarily on the training of nationals of Asian member countries, including Japan.

Rwanda—Macroeconomic Management Capacity Subaccount

At the request of Rwanda, this subaccount was established on December 20,1995, to finance technical assistance to rehabilitate and strengthen Rwanda’s macroeconomic management capacity.

Australia—IMF Scholarship Program for Asia Subaccount

At the request of Australia, this subaccount was established on June 5, 1996, to finance the cost of studies and training of government and central bank officials in macroeconomic management so as to enable them to contribute to their countries’ achievement of sustainable economic growth and development. The program focuses primarily on the training of nationals of Asian countries.

Switzerland Technical Assistance Subaccount

At the request of Switzerland, this subaccount was established on August 27,1996, to finance the costs of technical assistance activities of the IMF that consist of policy advice and training in macroeconomic management.

French Technical Assistance Subaccount

At the request of France, this subaccount was established on September 30,1996, to cofinance the costs of training in economic fields for nationals of certain member countries.

Denmark Technical Assistance Subaccount

At the request of Denmark, this subaccount was established on August 25,1998, to finance the costs of technical assistance activities of the IMF that consist of advising on policy and administrative reforms in the fiscal, monetary, and related statistical fields.

Australia Technical Assistance Subaccount

At the request of Australia, this subaccount was established on March 7, 2000, to finance the costs of technical assistance activities of the IMF that consist of advising on the design of policy and administrative reforms in the fiscal, monetary, and related statistical fields, as well as to provide training in the formulation and implementation of macroeconomic and financial policies.

The Netherlands Technical Assistance Subaccount

At the request of the Netherlands, this subaccount was established on July 27, 2000, to finance projects that seek to enhance the capacity of the members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

The United Kingdom Department for International Development (DFID) Technical Assistance Subaccount

At the request of the United Kingdom, this subaccount was established on June 29, 2001, to finance projects that seek to enhance the capacity of the members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

Italy Technical Assistance Subaccount

At the request of Italy, this subaccount was established on November 16,2001, to finance projects that seek to enhance the capacity of certain members to formulate and implement policies related to fiscal, financial, and statistical standards and codes, including training programs and projects that strengthen the legal and administrative framework in these core areas.

Pacific Financial Technical Assistance Centre Subaccount

At the request of Australia and New Zealand, this subaccount was established on May 22, 2002, to finance activities of the Pacific Financial Technical Assistance Centre that seek to enhance the capacity of Pacific island countries and territories to formulate and implement policies related to macroeconomic, fiscal, monetary, financial, and statistical fields, including training and activities that strengthen the legal and administrative framework in these core areas.

Africa Regional Technical Assistance Centers Subaccount

At the request of France, Germany, Italy, the Netherlands, Norway, Sweden, and the United Kingdom, this subaccount was established on August 9,2002, to finance activities of the Africa Regional Technical Assistance Centers that seek to support the Poverty Reduction Strategy Paper process in sub-Saharan African countries by fostering the capacity for sound macro-economic management, strong fiscal institutions and financial systems, and timely and accurate collection and dissemination of economic data, including training and activities that strengthen the legal and administrative framework in these core areas. The resources of this subaccount are contributed by the above governments and other governments or official agencies, including the Russian Federation, Luxembourg, China, and Switzerland, that reached an understanding with the IMF subsequent to the establishment.

Sweden Technical Assistance Subaccount

At the request of Sweden, this subaccount was established on November 25, 2002, to finance projects that seek to enhance the capacity of members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

China Technical Assistance Subaccount

At the request of the People’s Republic of China, this subaccount was established on May 23, 2003, to finance projects that seek to enhance the capacity of members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

Technical Assistance Subaccount for Iraq

At the request of Australia, Canada, Italy, and the United Kingdom, this subaccount was established on July 22, 2003, to finance technical assistance activities that seek to enhance the capacity of Iraq to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and activities that strengthen the legal and administrative framework in these core areas. The resources of this subaccount are contributed by the above governments and the government of Sweden, which reached an understanding with the IMF subsequent to the establishment.

Canada Technical Assistance Subaccount

At the request of Canada, this subaccount was established on January 28, 2004, to finance projects that seek to enhance the capacity of members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

Middle East Regional Technical Assistance Center Subaccount

At the request of France and Lebanon, this subaccount was established on August 20, 2004, to finance the technical assistance activities of the Middle East Regional Technical Assistance Center (METAC). METAC seeks to support the efforts of the participating countries/territories to achieve effective macroeconomic management, strong fiscal institutions and financial systems, and timely and accurate collection and dissemination of economic data, including training and activities that strengthen the legal and administrative framework in these areas. The current METAC’s participating countries/territories include the Islamic Republic of Afghanistan, Iraq, Jordan, Lebanon, Libya, Sudan, Syria, West Bank and Gaza, and Yemen. The resources of this subaccount are contributed by the above governments and other governments or official agencies, including Egypt and Kuwait, that reached an understanding with the IMF subsequent to the establishment.

Technical Assistance Subaccount to Support Macroeconomic and Financial Policy Formulation and Management

At the request of Norway, this subaccount was established on September 29, 2004, to finance projects that seek to enhance the capacity of members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas. The activities to be financed from the Subaccount will seek in the first instance to enhance the capacity of Poverty Reduction and Growth Facility—eligible countries to formulate and implement the strategies needed to achieve the goals described in their Poverty Reduction Strategy Papers in those core areas of competence of the Fund, including strengthening their anti-money-laundering and countering-the-financing-of-terrorism legislation and implementation capacity, and improving central bank functions and operations in low-income countries.

Spain Technical Assistance Subaccount

At the request of Spain, this subaccount was established on March 2, 2005, to finance projects that seek to enhance the capacity of members to formulate and implement policies in the macroeconomic, fiscal, monetary, financial, and related statistical fields, including training programs and projects that strengthen the legal and administrative framework in these core areas.

Administered Account—Spain

At the request of Spain, the IMF established an account on March 20, 2001, to receive and disburse resources up to $1 billion contributed by Spain for Argentina. The resources of this account are to be used to assist Argentina in the implementation of the adjustment program supported by the IMF under the Stand-By Arrangement for Argentina approved on March 10, 2000, and augmented on January 12, 2001.

Supplementary Financing Facility Subsidy Account

The Supplementary Financing Facility Subsidy Account administered by the IMF was established in December 1980 to assist low-income developing country members to meet the costs of using resources made available through the IMF’s Supplementary Financing Facility and under the policy on exceptional use. All repurchases due under these policies were scheduled for completion by January 31,1991, and the final subsidy payments were approved in July 1991. However, two members (Liberia and Sudan) overdue in the payment of charges remain eligible to receive previously approved subsidy payments of SDR 2.2 million when their overdue charges are settled. Accordingly, the Account remains in operation and has retained amounts for payment to these members after the overdue charges are paid.

The Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account

The Post-Conflict Emergency Assistance Subsidy Account for PRGF-Eligible Members was established in May 2001 to administer contributed resources for the purpose of providing assistance to PRGF-eligible members in support of their adjustment efforts. The account was amended on January 21, 2005, to provide for the subsidization of emergency assistance for natural disasters for PRGF-eligible members. Contributions to this account will be used to provide grants to PRGF-eligible members that have made post-conflict and natural disaster emergency assistance purchases under the IMF General Resources Account, effectively subsidizing the basic rate of charge on these purchases to 0.5 percent per annum. The subsidy to each eligible member would be prorated if resources are insufficient to reduce the basic rate of charge to 0.5 percent.

2. Summary of significant accounting policies

Basis of accounting

The financial statements of the Other Administered Accounts are prepared in accordance with International Financial Reporting Standards (IFRS). Specific accounting principles and disclosure practices are explained further below.

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Unit of account

Administered Account Japan, Administered Account for Selected Fund Activities—Japan, and Framework Administered Account for Technical Assistance Activities, and Administered Account—Spain

These accounts are expressed in U.S. dollars. All transactions and operations of these accounts, including the transfers to and from the accounts, are denominated in U.S. dollars, except for transactions and operations in respect of the OAP, which are denominated in Japanese yen, or transactions in other currencies as agreed between Japan and the IMF. Contributions denominated in other currencies are converted into U.S. dollars upon receipt of the funds.

The Supplementary Financing Facility Subsidy Account, the Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account

These accounts are expressed in terms of SDRs. The value of the SDR is determined by the IMF each day by summing the values in U.S. dollars, based on market exchange rates, of the currencies in the basket. The IMF reviews the SDR valuation basket every five years. The latest review was completed in October 2000 and the composition of the SDR valuation basket became effective from January 1, 2001. The currencies in the basket as of April 30, 2005, and 2004 and their amounts were as follows:

CurrencyAmount
Euro0.4260
Japanese yen21.0000
Pound sterling0.0984
U.S. dollar0.5770

As of April 30, 2005, one SDR was equal to 1.51678 U.S. dollars (one SDR was equal to 1.45183 U.S. dollars as of April 30, 2004).

Transactions and operations of the accounts are denominated in SDRs. Contributions denominated in other currencies are converted into SDRs upon receipt of the funds.

Cash and cash equivalents

Cash and cash equivalents include short-term deposits with a maturity of less than ninety days. These deposits are carried at cost, which approximates fair value. Interest on these instruments varies and is based on prevailing market rates.

Contributions

Bilateral contributions are reflected as increases in resources after the achievement of specified conditions and are subject to bilateral agreements stipulating how the resources are to be used.

Payments to and on behalf of beneficiaries

Payments to and on behalf of beneficiaries are recognized when the specified conditions in the respective agreements are achieved.

Transfers

Internal transfers of resources within the IMF are accounted for under the accrual method of accounting.

Foreign currency translation

Foreign currency transactions are recorded at the rate of exchange on the date of the transaction. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are reported using the closing exchange rates. Exchange differences arising from the settlement of transaction at rates different from those at the date of the transaction and unrealized foreign exchange differences on unsettled foreign currency monetary assets and liabilities are included in the determination of net income.

Administrative expenses

The expenses of conducting the activities of the Other Administered Accounts are incurred and borne by the General Department of the IMF. To help defray the expenses incurred by the IMF in the administration of the Administered Account for Selected Fund Activities—Japan and the Framework Administered Account for Technical Assistance Activities, reimbursement equal to 13 percent of the expenses financed from the accounts is paid to the General Resources Account from these accounts. The Administered Account—Spain pays the General Resources Account an annual fee of $40,000 for administrative costs incurred. As at April 30, 2005, the administrative costs for the Administered Account for Selected Fund Activities—Japan amounted to $2.3 million ($2.8 million at April 30, 2004), and for the Framework Administered Account for Technical Assistance Activities $2.2 million ($1.6 million at April 30, 2004). These amounts are included in payments to and on behalf of beneficiaries on the statements of income and changes in resources.

Comparatives

When necessary, comparative figures have been reclassified to conform with changes in the presentation of the current year.

3. Cumulative contributions and disbursements

The cumulative contributions to and disbursements from these administered accounts are as follows:

AccountApril 30, 2005April 30, 2004
Cumulative contributionsCumulative disbursements1Cumulative contributionsCumulative disbursements1
(In millions of U.S. dollars)
Administered Account Japan135.272.5135.272.5
Administered Account for Selected Fund Activities–Japan245.3231.7224.4209.3
Technical assistance217.7207.2200.6188.3
Scholarships18.315.815.713.4
Office of Asia and Pacific9.38.78.17.6
Framework Administered Account for Technical Assistance Activities82.760.658.340.8
Subaccount for Japan Advanced Scholarship Program13.212.311.710.5
Rwanda–Macroeconomic Management Capacity Subaccount1.51.61.51.6
Australia–IMF Scholarship Program for Asia Subaccount3.43.02.62.6
Switzerland Technical Assistance Subaccount16.112.111.410.0
French Technical Assistance Subaccount1.20.50.80.5
Denmark Technical Assistance Subaccount5.63.93.81.6
Australia Technical Assistance Subaccount0.30.10.3
The Netherlands Technical Assistance Subaccount5.14.33.22.6
The United Kingdom DFID Technical Assistance Subaccount6.65.44.44.2
Italy Technical Assistance Subaccount2.81.02.80.5
Pacific Financial Technical Assistance Centre Subaccount2.82.62.31.5
Africa Regional Technical Assistance Centers Subaccount14.910.08.74.8
Sweden Technical Assistance Subaccount1.10.51.10.1
China Technical Assistance Subaccount0.20.10.2
Canada Technical Assistance Subaccount1.50.61.5
Technical Assistance Subaccount for Iraq4.52.12.00.3
Middle East Regional Technical Assistance Subaccount1.30.5
Technical Assistance Subaccount to Support Macroeconomic and Financial Policy Formulation and Management0.6
Spain Technical Assistance Subaccount
(In millions of U.S. dollars)
Administered Account–Spain835.5835.6835.5835.6
(In millions of SDRs)
The Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account20.62.39.61.9

4. Transfer of resources

Resources of the Supplementary Financing Facility Subsidy Account in excess of the remaining subsidy payments are to be transferred to the Special Disbursement Account. At April 30, 2005, and 2004, subsidy payments totaling SDR 2.2 million had not been made to Liberia and Sudan and were being held pending the payment of overdue charges by these members.

5. Accounts termination

Administered Account Japan

The account can be terminated by the IMF or by Japan at any time. Any remaining resources in the account at termination are to be returned to Japan.

Administered Account for Selected Fund Activities—Japan

The account can be terminated by the IMF or by Japan at any time. Any resources that may remain in the account at termination, net of accrued liabilities under technical assistance projects or in respect of the OAP, are to be returned to Japan.

Framework Administered Account for Technical Assistance Activities

The Framework Account or any subaccount thereof may be terminated by the IMF at any time. The termination of the Framework Account shall terminate each subaccount thereof. A subaccount may also be terminated by the contributor of the resources to the subaccount. Termination shall be effective on the date that the IMF or the contributor, as the case may be, receives notice of termination. Any balances, net of the continuing liabilities and commitments under the activities financed, that may remain in a subaccount upon its termination are to be returned to the contributor.

Administered Account—Spain

The account will be terminated when Argentina repays all the resources that were disbursed from the account to Argentina, or at an earlier time as agreed between Spain and the IMF, following consultations between Spain and Argentina. Any remaining resources in the account at termination are to be returned to Spain.

The Post-Conflict and Natural Disaster Emergency Assistance Subsidy Account

The account can be terminated by the IMF at any time. Any remaining balances after discharge of all obligations of the account upon the account’s termination are to be returned to the contributors in proportion to their contributions.

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