Chapter

A. Activities of the Fund

Author(s):
International Monetary Fund
Published Date:
September 1969
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This note supplements the information given in Chapter 3 on the activities of the Fund during the past year other than those related to the acceptance of the Amendment of the Fund’s Articles of Agreement and to the stabilization of prices of primary products. For some aspects of its operations, data covering the period since the Fund’s inception are included.1

Membership

Membership in the Fund rose to 111 during the year under review, with the addition of Botswana on July 24, 1968, with a quota of $3 million; Lesotho, on July 25, 1968, with a quota of $3 million; Malta, on September 11, 1968, with a quota of $10 million; and Mauritius, on September 23, 1968, with a quota of $16 million. The Board of Governors approved the terms and conditions for the admission of Swaziland to membership. Applications for membership from Cambodia and Southern Yemen were under consideration at the end of the fiscal year. The aggregate of Fund quotas on April 30, 1969, including the quotas of new members and increases in quotas shown in Table 43, was $21,231 million, compared with $21,119 million a year earlier.

Executive Directors

A list of the Executive Directors and Alternate Executive Directors and their voting power as of April 30, 1969 is given in Appendix II; changes in membership of the Executive Board during 1968/69 are shown in Appendix III.

Managing Director

Mr. Pierre-Paul Schweitzer was appointed to a second five-year term as Managing Director and Chairman of the Board of Executive Directors of the Fund, effective September 1, 1968.

Article VIII

Three countries accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement during 1968/69: Argentina, with effect from May 14, 1968; Singapore, with effect from November 9, 1968; and Malaysia, with effect from November 11, 1968. There are presently 34 members that have rendered their currencies convertible under the Articles of Agreement, as listed in Table 42.

Table 42.Countries That Have Accepted Article VIII, April 30, 1969
MemberEffective Date of Acceptance
ArgentinaMay 14, 1968
AustraliaJuly 1, 1965
AustriaAugust 1, 1962
BelgiumFebruary 15, 1961
BoliviaJune 5, 1967
CanadaMarch 25, 1952
Costa RicaFebruary 1, 1965
DenmarkMay 1, 1967
Dominican RepublicAugust 1, 1953
El SalvadorNovember 6, 1946
FranceFebruary 15, 1961
GermanyFebruary 15, 1961
GuatemalaJanuary 27, 1947
GuyanaDecember 27, 1966
HaitiDecember 22, 1953
HondurasJuly 1, 1950
IrelandFebruary 15, 1961
ItalyFebruary 15, 1961
JamaicaFebruary 22, 1963
JapanApril 1, 1964
KuwaitApril 5, 1963
LuxembourgFebruary 15, 1961
MalaysiaNovember 11, 1968
MexicoNovember 12, 1946
NetherlandsFebruary 15, 1961
NicaraguaJuly 20, 1964
NorwayMay 11, 1967
PanamaNovember 26, 1946
PeruFebruary 15, 1961
Saudi ArabiaMarch 22, 1961
SingaporeNovember 9, 1968
SwedenFebruary 15, 1961
United KingdomFebruary 15, 1961
United StatesDecember 10, 1946

Quotas

During the year under review, four members—Burma, Cyprus, Panama, and Trinidad and Tobago—increased their quotas under the Compensatory Financing Decision. That Decision specifies that the Fund is willing to give sympathetic consideration to requests for adjustment of quotas of certain primary exporting countries, and in particular countries with relatively small quotas, where adjustment would be appropriate to make them more adequate in the light of fluctuations in export proceeds and other relevant criteria. The increase in the quota of Panama under the Compensatory Financing Decision took into account the increase provided for under the First Resolution of the Board of Governors relating to Increases in Quotas of Members—Fourth Quinquennial Review, and which it had not taken up before the period for consent lapsed on April 30, 1968.

In addition, the quotas of Burma and 15 other members were increased under the First Resolution of the Board of Governors relating to Increases in Quotas of Members—Fourth Quinquennial Review, adopted March 31, 1965, which provided for a general increase of 25 percent for all members.2 Of those increases, 14 were for members that had elected to increase their quotas in five equal annual installments, and one completed the total increase for a member that had initially elected to pay in five installments but decided, after payment of three installments, to accelerate payment as provided in the Resolution. Further, Burma consented to the increase in its quota authorized under this Resolution within the period specified for consent; the increase became effective upon payment of the increased subscription.

Increases in quotas during the fiscal year 1968/69, shown in Table 43, together with the quotas of the four new members, aggregated $112 million.

Par Values

In contrast with the previous year, when 17 member countries changed their par values in accordance with the provisions of the Fund Agreement, only one such change took place in 1968/69: on the proposal of the Government of Iceland, in which the Fund concurred, the par value of the Icelandic króna was changed from IKr 57 per U.S. dollar to IKr 88 per U.S. dollar, effective November 12, 1968. This represented a devaluation of 35.2 percent and followed by a year a devaluation of 24.6 percent in the króna, when Iceland altered its par value in agreement with the Fund after the devaluation of the pound sterling.

An initial par value for the Gambian pound, at the rate of £G 1 equals US$2.40, was established by agreement between the Government of The Gambia and the Fund, effective July 8, 1968. This did not involve any change in the existing exchange rate. In accordance with a proposal by the Government of Lesotho for an initial par value for its currency, which is the South African rand, the Fund noted on December 20, 1968 that the par value of the South African rand, as established in agreement with the Fund effective February 14, 1961, was Rl equals US$1.40.

The United Kingdom communicated to the Fund proposals for par values for certain non-metropolitan territories in respect of which the United Kingdom had accepted the Articles of Agreement. The Sheikdoms of Qatar and Dubai had introduced a new currency known as the Qatar/Dubai riyal to replace the Indian rupee, which they had used as local currency until the devaluation of the Indian rupee on June 6, 1966. The Fund agreed to the proposal for an initial par value, effective March 11, 1969, of 1 Qatar/ Dubai riyal equals US$0.21, the same exchange value as the Indian rupee prior to June 6, 1966. The Fund also concurred in the proposal for a par value for the new decimal currency unit, the pa’anga, introduced by Tonga to replace the Tongan pound. This par value is 1 pa’anga equals US$1.12 and became effective March 11, 1969. The new unit re-established the one-for-one relationship that had existed between the Tongan and Australian currencies before the introduction of decimal units.

Table 43.Increases in Quotas, Fiscal Year Ended April 30, 1969(In millions of U.S. dollars)
MemberQuota on May 1, 1968New Quota in Accordance withEffective Date of Change
General Increase in QuotasCompensatory Financing Decision
Algeria69.0072.001Apr. 25, 1969
Burma30.0038.0048.00May 27, 1968 Aug. 19, 1968
Cameroon16.6017.40 2May 14, 1968
Central African
Republic8.509.00 2May 11, 1968
Chad8.509.00 2May 2, 1968
Congo (Brazzaville)8.509.00 2June 24, 1968
Cyprus15.0020.00June 19, 1968
Dahomey8.509.00 2June 17, 1968
Dominican Republic29.2032.00 3Jan. 2, 1969
Gabon8.509.00 2June 4, 1968
Ivory Coast17.4018.201Mar. 25, 1969
Luxembourg16.6017.40 2Aug. 16, 1968
Malaysia115.00120.001Mar. 24, 1969
Mauritania9.009.501Apr. 22, 1969
Morocco82.8086.401Apr. 15, 1969
Niger8.509.00 2Aug. 30, 1968
Panama11.2528.004Feb. 17, 1969
Trinidad and Tobago25.0044.00May 17, 1968
Upper Volta8.509.002May 22, 1968

After payment of fourth of five annual installments.

After payment of third of five annual installments.

After completion of payment under the general increase in quotas, subsequent to earlier payment of three installments.

Increase under the Compensatory Financing Decision and in the light of the First Resolution of the Board of Governors on Increases in Quotas of Members—Fourth Quinquennial Review.

After payment of fourth of five annual installments.

After payment of third of five annual installments.

After completion of payment under the general increase in quotas, subsequent to earlier payment of three installments.

Increase under the Compensatory Financing Decision and in the light of the First Resolution of the Board of Governors on Increases in Quotas of Members—Fourth Quinquennial Review.

Table 44.Purchases of Currencies from the Fund, Fiscal Year Ended April 30, 1969(In millions of U.S. dollars)
Member PurchasingUnder Stand-By ArrangementsUnder Decision on Compensatory FinancingOther Purchase TransactionsTotal
Afghanistan5.254.8010.05
Bolivia11.0011.00
Brazil75.0075.00
Burma4.504.50
Burundi3.003.00
Ceylon19.5019.50
Chile27.0027.00
Colombia33.5033.50
Dominican Republic6.006.00
Ecuador7.007.00
El Salvador3.003.00
France745.00745.00
Ghana12.0012.00
Guatemala3.003.00
Iceland3.757.5011.25
Indonesia35.7535.75
Iran15.2715.27
Korea12.5012.50
Liberia3.903.90
Mali5.005.00
Mauritius4.004.00
Morocco60.0060.00
Nicaragua19.0019.00
Pakistan40.0040.00
Panama5.204.199.39
Peru40.0040.00
Philippines27.5027.50
Rwanda3.003.00
Somalia1.201.20
South Africa128.19128.19
Sudan7.507.50
Trinidad and Tobago4.754.75
Tunisia4.114.11
Turkey27.0027.00
United Kingdom1,400.001,400.00
Uruguay20.0020.00
Total1,910.918.55919.392,838.85

Fund Transactions

Purchases

During the past fiscal year 36 members purchased currencies from the Fund amounting to $2,839 million.3 This was more than double the amount of $1,348 million purchased in 1967/68 and established a new record. Table 44 sets out members’ purchases of currencies during the fiscal year ended April 30, 1969.

The figure of $2,839 million includes $1,911 million purchased by 28 members under the terms of stand-by arrangements, $9 million by 2 members under the Decision on Compensatory Financing, and $919 million by 9 members in other transactions. The last includes a purchase by South Africa of $62 million in July 1968, the first purchase made exclusively in a member’s super gold tranche.4 Three members—Korea, Mauritius, and Trinidad and Tobago—purchased currency from the Fund for the first time, the last covering the payment of the gold subscription consequent upon an increase in quota. Purchases by France and the United Kingdom made up about 75 percent of total purchases during the year and accounted for the sharp increase over 1967/68.

The largest purchase during the fiscal year, $ 1,400 million, was made by the United Kingdom in June 1968 and was for the full amount available under the stand-by arrangement for the United Kingdom. The purchase was comprised of the currencies of 16 member countries. In connection with this purchase the Fund replenished its holdings of currencies of 12 member countries in the amount of $365 million by the sale of gold and borrowed $476 million in currencies of 5 member countries under the General Arrangements to Borrow (GAB).

The second largest purchase, made by France for an amount of $745 million and equivalent to its gold tranche position 5 at the time, also took place in June 1968; it was comprised of the currencies of 14 member countries. Again, the Fund replenished its resources by sales of gold, this time to 11 members, totaling $182 million, and by borrowing 5 currencies to a total of $265 million under the GAB. The Fund also agreed to a proposal by France to transfer its claim on the Fund under the GAB, $140 million, to four other GAB participants (Belgium, Deutsche Bundesbank, the Netherlands, and Italy).

Stand-By Arrangements

During the past fiscal year the Fund approved stand-by arrangements authorizing purchases up to $541 million for 25 developing countries in support of programs of economic stabilization, and $1,911 million was purchased by 28 members under stand-by arrangements in effect during the fiscal year (including those approved in the previous year). Table 45 gives data on these arrangements. Some particulars of arrangements approved during 1968/69 for members that did not have such arrangements approved in the previous year are given below.

Afghanistan. In July 1968 the Fund approved a stand-by arrangement for Afghanistan, authorizing purchases up to $7 million, representing 24 percent of Afghanistan’s quota. The arrangement was in support of a program to reduce the deficit in the country’s balance of payments in the current year and to achieve external equilibrium over the longer term. An amount of $5.25 million had been purchased by April 30, 1969. This was the third stand-by arrangement agreed by the Fund for Afghanistan.

Ceylon. A stand-by arrangement for Ceylon, effective in May 1968, authorized purchases up to $19.5 million, representing 25 percent of Ceylon’s quota. The arrangement was in support of exchange reform measures which came into effect at the same time. By the end of the fiscal year the total amount available under the arrangement had been purchased. This was the third stand-by arrangement agreed for Ceylon.

Ecuador. The stand-by arrangement for Ecuador, which became effective in April 1969, was for $ 18 million, representing 72 percent of Ecuador’s quota. The arrangement was in support of a stabilization program centered on a fiscal policy of restraint in expenditures combined with administrative measures to boost the yield of the existing tax structure. One purchase of $7 million was made under the arrangement during the fiscal year. This was the seventh stand-by arrangement agreed for Ecuador.

Pakistan. The stand-by arrangement for Pakistan, which became effective in October 1968, authorized purchases up to $75 million, representing about 40 percent of Pakistan’s quota. The arrangement was in support of measures aimed at sustained economic growth and the fuller utilization of the country’s productive capacity. Under the arrangement one purchase of $40 million took place during the fiscal year 1968/69. This was the third stand-by arrangement agreed for Pakistan.

Table 45.Fund Stand-By Arrangements for Members, Fiscal Year Ended April 30, 1969(In millions of U.S. dollars)
MemberTotal Number of Stand-Bys Agreed for MemberDate of InceptionDate of ExpirationAmount Approved 1967/68Amount Not Drawn at ExpirationAmount Approved 1968/69Amount Not Drawn April 30,1969
Afghanistan3July 10, 1968July 9, 19697.001.75
Argentina7Apr. 15, 1968Apr. 14, 1969125.00125.00
Bolivia11Dec. 2, 1967Dec. 1, 1968120.008.00
Jan. 16,1969Jan.15, 197020.009.00
Brazil7Apr. 29, 1968Apr. 28, 196987.5012.50
Apr. 29,1969Apr. 28, 197050.0050.00
Burundi5Mar. 28, 1968Mar. 27, 19696.001.00
Apr. 19, 1969Apr. 18, 19704.002.00
Ceylon3May 6, 1968May 5, 196919.50
Chile11Mar. 1, 1968Feb. 28, 196946.00
Apr. 19, 1969Apr. 18, 197040.0040.00
Colombian11Apr. 19, 1968Apr. 18, 196933.50
Apr. 19, 1969Apr. 18, 197033.2533.25
Congo, Dem. Rep.1July 6, 1967July 5, 196827.0027.00
Costa Rica5Aug 17, 1967Aug. 16, 196815.5012.75
Ecuador7Apr. 7, 1969Apr. 6, 197018.0011.00
El Salvador8Dec. 5, 1967Dec. 4, 196810.002.00
Ghana3May 25, 1967May 24, 196825.00
May 28, 1968May 27, 196912.00
Guatemala5Apr. 16, 1968Apr. 15, 196910.007.00
Guyana3Feb. 15, 1968Feb. 14, 19694.004.00
Mar. 29, 1969Mar. 28, 19704.004.00
Honduras10Jan. 1, 1968Dec. 31, 196811.0011.00
Feb. 1, 1969Jan. 31,197011.0011.00
Indonesia4Feb. 19, 1968Feb. 18, 196951.75
Apr. 4, 1969Apr. 3, 197070.0070.00
Korea5Apr. 11, 1968Apr. 10, 196925.0012.50
Apr. 15,1969Dec. 31, 196925.0025.00
Liberia6Jun. 1, 1967May 31, 19684.40
Jun. 1, 1968May 31, 19693.200.40
Mali3Aug. 21, 1967Aug. 20, 1968 26.503.505.00
MaliAug. 12, 1968Aug. 11, 1969
Morocco5Oct. 27, 1967Oct. 26, 196850.00
Oct. 27, 1968Oct. 26, 196927.0017.00
New Zealand1Oct. 25, 1967Oct. 24, 196887.0027.00
Nicaragua7Mar. 1, 1968Feb. 28, 196919.00
Pakistan3Oct. 17, 1968Oct. 16, 196975.0035.00
Panama3May 8, 1968May 7, 196933.00
Jan. 16, 1969Jan. 15, 19703.201.00
Paraguay9Jan. 1, 1968Dec. 31, 19688.008.00
Jan. 1, 1969Dec. 31, 19697.507.50
Peru15Aug. 18, 1967Aug. 17, 196842.5075.0035.00
Nov. 8, 1968Nov. 7, 1969
Philippines7Mar. 27, 1968Mar. 26, 196927.50
Rwanda4Apr. 20, 1968Apr. 19, 19693.002.002.00
Apr. 28, 1969Apr. 27, 1970
Sierra Leone3Jan.17.1968Jan. 16, 19693.603.602.502.50
Mar. 28, 1969Mar. 27, 1970
Somalia6Jan. 19, 1968Jan. 18,19697.005.3046.006.00
Jan. 20. 1969Jan. 19. 1970
Sudan3Sept. 14, 1967Sept. 13, 196810.0012.004.50
Dec. 5. 1968Dec. 4, 1969
Tunisia5Dec. 27, 1967Dec. 26, 19689.616.006.00
Jan. 1, 1969Dec. 31, 1969
Turkey8Apr. 1. 1968Dec. 31, 196827.00
United Kingdom8Nov. 30, 1967Nov. 29, 19681,400.00
Uruguay4Mar. 1, 1968Feb. 28, 196925.005.00________
Total2,227.36275.15541.15373.90

Extended to January 15, 1969.

Canceled by Mali on August 12, 1968.

Canceled by Panama on January 16, 1969.

Including augmentations totaling $2 million.

Extended to January 15, 1969.

Canceled by Mali on August 12, 1968.

Canceled by Panama on January 16, 1969.

Including augmentations totaling $2 million.

Panama. A stand-by arrangement for Panama, effective in May 1968, authorized purchases up to $3 million. This arrangement was canceled as from January 16, 1969 and was replaced by a new arrangement effective on the same date for $3.2 million, representing about 28 percent of Panama’s quota at that time. Both arrangements were in support of efforts to ensure Panama’s continued economic growth under conditions of financial stability. The first arrangement was fully utilized, and $2.2 million had been purchased under the current arrangement by April 30, 1969. Apart from these two stand-by arrangements, Panama has had one earlier, which expired unutilized in July 1966.

Stand-by arrangements approved during 1968/69 for Bolivia, Brazil, Burundi, Chile, Colombia, Ghana, Guyana, Honduras, Indonesia, Korea, Liberia, Mali, Morocco, Paraguay, Peru, Rwanda, Sierra Leone, Somalia, the Sudan, and Tunisia continued to provide financial support that the Fund had made available to those members in the form of stand-by arrangements in the preceding year; those for Bolivia, Guyana, Honduras, and Korea were for the same amounts; those for Indonesia, Peru, and the Sudan were for larger amounts; all the others were for smaller amounts. All but one of the stand-by arrangements approved during the year were for a period of 12 months; that for Korea was approved in April 1969 for approximately 8 months, in order to place the arrangement on a calendar-year basis.

Compensatory Financing of Export Fluctuations

The marked upturn in export earnings experienced by primary producing countries in 1968 was accompanied by diminishing recourse to the facility for compensatory financing of export fluctuations as the year progressed. The data presented in Table 46 cover transactions under the facility since the amendment of the Compensatory Financing Decision in September 1966. By comparison with the relative large and frequent use of the facility in the fiscal year 1967/68, only two members (Afghanistan and Iceland) made purchases in 1968/69; the latter availed itself of the extension of purchasing limits from 25 percent to 50 percent of quota provided for in the amended Decision. The export sectors of both of these economies are concentrated on commodities of a special character and were affected by production difficulties (particularly in Iceland) and by developments running counter to the general trend in world markets for primary products.

Repurchases relating to purchases under the Decision were made by several members during the past fiscal year. In addition to repurchases under the standard 3- to 5-year rule with respect to purchases made prior to September 1966, two members made repurchases, in part or to the full extent as recommended in paragraph (7) of the amended Decision. Under this provision, the Fund recommends that, as soon as possible after the end of each of the four years following a purchase, the member repurchase an amount approximately equal to one half of the amount by which exports may exceed the medium-term trend in exports; such repurchases also contribute to reduction in fluctuations in export availabilities for members. One member repurchased an amount equivalent to an outstanding compensatory purchase in advance of the expiry of the 12-month period for calculation of an export excess.

Table 46.Purchases and Repurchases Under the Amended Decision on Compensatory Financing of Export Fluctuations, Fiscal Years Ended April 30, 1967-69(In millions of U.S. dollars)
MemberDate of PurchasesAmount of PurchasesRepurchases
Fiscal year 1966/67
Dominican RepublicDec.6.60
GhanaDec.17.250.751,2
CeylonMar.19.50
ColombiaMar.18.90
Total62.25
Fiscal year 1967/68
New ZealandMay29.2029.20 2
HaitiAug.1.30
Dec.1.00
Syrian Arab RepublicSept.9.50
BurmaNov.7.50
IcelandNov.3.75
IraqNov.17.50 317.50
IndiaDec.90.0030.501,2
GuatemalaFeb.6.25 3
UruguayFeb.9.50
United Arab RepublicMar.23.00
CeylonApr.19.30
ColombiaApr.1.903
Total219.70
Fiscal year 1968/69
AfghanistanJune4.80
IcelandNov.3.75
Total8.55
Cumulative Total290.5077.95

Repurchases in accordance with paragraph (7) of the amended Decision.

Repurchases during fiscal year 1968/69.

Reclassification. See Annual Report, 1968, pages 101-102.

Repurchases in accordance with paragraph (7) of the amended Decision.

Repurchases during fiscal year 1968/69.

Reclassification. See Annual Report, 1968, pages 101-102.

Repurchases in respect of purchases under the facility consequently exceeded new purchases in the fiscal year 1968/69, and the total use of Fund resources outstanding under the Decision declined after November 1968. At April 30, 1969, the amount outstanding, including $5 million under the Decision before amendment, was $218 million, compared with $285 million a year earlier.

Fund Policy with Respect to the Use of Its Resources and Stand-By Arrangements

During the past year the Executive Directors undertook a detailed review of Fund policy with respect to the use of its resources and stand-by arrangements. The review confirmed the usefulness of the stand-by technique and underlined the need for the Fund to continue to apply its policy, including the tranche policy,6 in a flexible manner while ensuring uniformity of treatment among all members. A set of conclusions was reached and it was decided that future Fund policies and practices on the use of its resources should be guided by the approach in these conclusions. The texts of the relevant Board Decision and the conclusions are reproduced in Appendix I. These conclusions are briefly explained below. However, in order to put them in the proper perspective, it may be useful to outline some aspects of the development of the Fund’s policies regarding stand-by arrangements.

The stand-by arrangement, as a form of Fund financial assistance, is not mentioned in the Articles of Agreement. It was established in 1952 in response to a general feeling that a technique was needed whereby members that did not have an immediate need to use the Fund’s resources, but felt that they might need to make use of them in the near future, could be assured of prompt financial assistance from the Fund if and when the need arose. A problem that engaged considerable attention from the outset was how the use of such a technique could be reconciled with the need to provide appropriate safeguards against improper use of Fund resources. It should be recalled that in the early days of the Fund the question was considered whether the Fund could challenge a representation made under Article V, Section 3(a), by a member that was not ineligible to use the Fund’s resources on the ground that the representation was not consistent with the Articles.7 It was decided that if the Fund finds, after reviewing a purchase request, that the member’s representation is not consistent with the Articles it may reject or postpone the request or accept it subject to conditions. As far as the stand-by technique was concerned, this clearly meant that any unqualified commitment to refrain from the exercise of its rights of review and challenge whenever requests were made would involve an invalid abdication by the Fund of its responsibility. However, it was concluded that the Fund could give a limited commitment, e.g., an assurance that a member that was not ineligible to use the Fund’s resources could make purchases during a specific period and up to a specified amount without further review by the Fund at the time of a request, if the member’s position, policies, and prospects, including any understandings reached with the member, were such as to satisfy the Fund that there would be no improper use of the Fund’s resources during the specified period.8 Stand-by arrangements going beyond the gold tranche have thus from the beginning incorporated understandings to safeguard the proper use of the Fund’s resources. These understandings have also served another and associated purpose. It soon became evident that a stand-by arrangement need not be confined to serving a precautionary need but that, with the incorporation of appropriate understandings, it could be an effective instrument for the provision of financial and technical assistance to members experiencing balance of payments difficulties and having both an immediate and a prospective need for financing. These understandings have taken many forms but may be grouped into three types, namely, provisions that (1) phase the resources committed under the stand-by arrangement, (2) limit the member’s right to purchase by performance clauses, and (3) call for consultation between the member and the Fund but without limiting the right of the member to purchase. These provisions are explained below.

Before a stand-by arrangement is concluded, discussions are normally held between the member’s authorities and a Fund staff mission in the member country, following which the member presents to the Fund in a letter of intent a program setting out the policies to be followed during the period of the stand-by arrangement and the over-all result expected to be achieved by the program. A previous Annual Report9 discussed these programs at some length. Here it will suffice to emphasize that it has always been regarded as important for these programs to be as specific as possible in order to maximize their effectiveness as a guide for action. In particular, this has involved the formulation in quantitative terms of the targets for the main policy variables which lend themselves to measurement.

At least for stand-by arrangements going into the upper credit tranches, it has been normal practice, especially since 1960, to treat some of the key policies in the member’s program as performance criteria and to cover them by a performance clause in the stand-by arrangement that makes the member’s right to purchase contingent upon observance of the performance criteria. The number of performance criteria covered by performance clauses has varied considerably in the past. Most commonly they have included the extent of credit expansion by the central bank or, at times, the banking system. Other performance criteria frequently used relate to the extent of reliance on the banking system by the government, the amount of new short-term and medium-term foreign borrowing, the minimum level of net foreign reserves that must be maintained, as well as the avoidance of specified restrictive measures in the exchange and trade fields.

Failure to observe the performance criteria is a signal that the position, policies, and prospects of the member should be reviewed, and therefore the member undertakes to consult with the Fund before requesting further purchases. The deviation may be justified in the light of developments not expected at the inception of the program and may not be inconsistent with its objectives. In these circumstances the restoration of the right to purchase need not involve a change in policies but only the amendment of the performance criteria. Alternatively, the deviations may indicate the need for stronger or additional measures, in which case the member and the Fund review the nature of such action. The right to purchase is restored when new understandings are reached on the circumstances in which further purchases may be made, and amended performance criteria are established.

It has also been the practice in all but a few stand-by arrangements to include phasing, i.e., a provision that the total specified amount should become available at quarterly or other periodic intervals, although the Fund may accelerate the availability at the member’s request. Because programs designed to strengthen the balance of payments require implementation over a period of time, it is logical that the amount that the member is permitted to purchase should be phased so as to ensure that resources will be available as needed in accordance with the interests of the program. The existence of phasing also reinforces the importance of the performance clauses.

The recent review concluded that stand-by arrangements that did not go beyond the first credit tranche and thus involved only a moderate use of the Fund’s resources would in future not include phasing or performance clauses. Nor would phasing or performance clauses be applicable to purchases not beyond the first credit tranche, even though the full amount of the stand-by arrangement involved higher tranches. These conclusions will serve to make practice fully uniform in an area where in the past there had been some inconsistency of treatment.

The review also concluded that, where use of Fund resources beyond the first credit tranche was involved, stand-by arrangements should include phasing and performance clauses. The availability of Fund resources in the higher credit tranches requires a greater degree of assurance that the disequilibrium in the balance of payments is being rectified, and the stand-by arrangement is granted to support particular policies that the member has stated it would maintain. If these policies are changed so as to impair the character of the program, there should be an opportunity for the Fund to review with the member the situation and the possible need for amended policies before further use of the Fund’s resources is made.

It was recognized, however, that there might be exceptional cases when it was essential that the full amount of the stand-by arrangement be promptly available, making it necessary to dispense with phasing. In these instances the stand-by arrangement will nevertheless include performance clauses, and the member will be required to consult the Fund in order to reach understandings, if needed, on new or amended performance criteria even if there is no amount that could still be purchased under the stand-by arrangement. This consultation will include a discussion by the Executive Directors that could culminate in a communication of their views to the member under Article XII, Section 8, of the Fund Agreement.

The review by the Executive Directors also dealt with the question of the number and content of performance criteria. It was considered highly undesirable that there should be any unnecessary proliferation of performance criteria. However, it was considered impracticable to adopt any general rule as to their number or content in view of the diversity of problems and institutional arrangements of members. It was concluded that performance clauses should cover those performance criteria necessary to evaluate implementation of the program with a view to ensuring the achievement of its objectives, but no others.

A stand-by relationship implies the maintenance of close consultation during the period of the stand-by arrangement; this is reflected in a standard paragraph included in the text of each arrangement. In addition, clauses calling for consultation between the member and the Fund in certain circumstances have been included; unlike performance clauses discussed above, they do not, however, limit the member’s right to make purchases under the stand-by arrangement. Such consultations are useful when the member’s policies prove to be inadequate to achieve the objectives of the program, indicating a need for additional measures. The review by the Executive Directors reaffirmed the need for the use of appropriate consultations clauses in stand-by arrangements, both in the first and in the higher credit tranches. In the past, however, the application of consultation clauses has, with some exceptions, been limited to use of the Fund’s resources under stand-by arrangements and to the period of the stand-by arrangement. It was concluded that, in future, periodic consultation with the member should take place as long as the member is making use of the Fund’s resources beyond the first credit tranche, whether or not the use results from a stand-by arrangement.

Finally, it was considered desirable . that stand-by documents (i.e., the stand-by arrangement itself and the letter of intent which describes the member’s program) do not include language having a contractual flavor. This is in order to avoid the misconception that stand-by arrangements are international agreements between members and the Fund. Stand-by arrangements are Fund decisions that are adopted after the member has declared its intentions and that prescribe the circumstances in which specified amounts may be purchased by the member in the future. Failure to adhere to the performance criteria, for example, will mean that for the time being the circumstances in which purchases may be made no longer exist but it does not in any sense constitute a violation by the member of an international obligation.

Waivers

Any purchase or stand-by arrangement that would result in an increase in the Fund’s holdings of a member’s currency by more than 25 percent of its quota during any 12-month period (except to the extent that the Fund’s holdings of the member’s currency are less than 75 percent of its quota) requires a waiver under Article V, Section 4, of the Articles of Agreement. A waiver is also required for any purchase or stand-by arrangement the use of which would increase the Fund’s holdings of a member’s currency beyond 200 percent of its quota.

In the fiscal year 1968/69, such waivers were granted for the purchase of currency by Burma and Iceland and for all stand-by arrangements, except those for Brazil, Liberia, Rwanda, Sierra Leone, the Sudan, and Tunisia. Waivers relating to Fund holdings of members’ currencies exceeding 200 percent of their quotas were granted in connection with stand-by arrangements approved for Ceylon and Ghana. The arrangements for these two member countries were for amounts equivalent to 25 percent and 17.4 percent of quota, respectively. The Fund’s holdings of these members’ currencies prior to the stand-by arrangements were at 205 percent and 192.5 percent of quota, including nearly 50 percent and 24 percent, respectively, on account of purchases under the Compensatory Financing Decision.

Table 47.Repurchases of Currencies from the Fund, Fiscal Year Ended April 30, 1969(In millions of U.S. dollars)
Member RepurchasingRepurchases in Respect ofVoluntary RepurchasesOther RepurchasesTotal
Purchases under stand-by arrangementsSchedule approved by FundArticle V, Section 7(b)
Afghanistan2.732.73
Argentina7.627.62
Bolivia8.008.00
Brazil25.0055.0080.00
Burundi2.000.192.19
Canada64.7964.79
Ceylon10.0010.00
Chile28.0028.00
Colombia13.503.506.2523.25
Costa Rica5.004.500.259.75
Cyprus0.110.080.20
Dominican Republic7.507.50
Ecuador8.000.258.25
Finland89.6989.69
Ghana0.750.75
Guatemala2.651.243.357.25
Haiti1.800.191.99
Honduras2.492.49
India90.0030.507.50128.00
Indonesia27.4027.40
Iran15.2715.27
Jordan0.2910.29
Liberia3.001.404.40
Mali4.001.005.00
Morocco4.804.80
Nepal1.541.54
New Zealand0.090.0829.1134.9964.27
Nigeria3.083.08
Pakistan14.001.9015.90
Panama0.810.81
Peru42.4442.44
Rwanda3.003.00
Somalia7.400.948.34
Sudan6.250.606.85
Syrian Arab Republic10.002.4212.42
Tanzania0.120.030.15
Tunisia5.800.816.61
Turkey−3.06 2−3.062
Uganda0.420.42
United Arab Republic24.0024.00
United Kingdom385.00122.50507.50
United States284.25284.25
Yugoslavia22.501.5024.00
Zambia0.220.22
Total218.07701.7988.63350.41183.42 31,542.33

Less than $5,000.

Reversal of part of the amount repurchased in 1967/68, which was included among repurchase data for that year.

Of which $155.68 million was in respect of quota increases.

Less than $5,000.

Reversal of part of the amount repurchased in 1967/68, which was included among repurchase data for that year.

Of which $155.68 million was in respect of quota increases.

Repurchases

Total repurchases made by 43 members during the fiscal year ended April 30, 1969 amounted to $1,542 million. (See Tables 47 and 48.) This represented the largest amount repurchased in any fiscal year since the beginning of the Fund’s operations. The repurchases made by the United Kingdom and the United States, amounting to $792 million, accounted for 51 percent of the total.

The sum of $218 million, or 14 percent of the total, was repurchased in respect of purchases under stand-by arrangements; of this amount $34 million was repurchased before the expiration of one year, $114 million before or at the expiration of two years, and the remainder of $70 million before or at the expiration of three years from the date of purchase.

An amount of $702 million was repurchased in accordance with schedules approved by the Fund, which provided for repurchase within five years from the date of the drawing. Repurchases in this group include those by the United Kingdom—$85 million, $100 million, and $200 million in August and November 1968 and in February 1969—in respect of the purchase of $1,400 million in May 1965. These repurchases, together with sales of sterling by the Fund to other members in December 1967 and April 1969, reduced the outstanding balance of this purchase by $404 million to $996 million. As a result of the U.K. repurchases the Fund repaid its GAB creditors nearly all the amounts borrowed from them in May 1965. Coincidental with the aforementioned repurchases, the United Kingdom also reduced proportionately its commitment to Switzerland in respect of the amount equivalent to $40 million made available by that country in May 1965.

Voluntary repurchases were made in accordance with Executive Board Decision No. 7-(648) by 8 members and amounted to $350 million.10 Of this amount $284 million was repurchased by the United States in November and December 1968, reducing the Fund’s holdings of U.S. dollars to 75 percent of the U.S. quota. Guatemala and Nigeria also repurchased the balance of outstanding gold tranche purchases made in August 1965 and April 1968, respectively. Voluntary repurchases of $30.5 million and $29.1 million were made by India and New Zealand, respectively, on account of purchases under the Compensatory Financing Decision.

Table 48.Comparative Table of Repurchases from the Fund, Fiscal Years Ended April 30, 1968 and 1969
Fiscal Year 1967/68Fiscal Year 1968/69
Number of repurchasesAmount in millions of U.S. dollarsNumber of repurchasesAmount in millions of U.S. dollars
Repurchases in respect of
Purchases under
stand-by
arrangements31704.4923218.07
Schedules approved by Fund66258.6795701.79
Article V,
Section 7(b)826.461388.63
Voluntary repurchases546.018350.41
Other repurchases2179.8719183.42
Total1311,115.511581,542.33

Total repurchases also included $89 million in discharge of obligations incurred under Article V, Section7(b), of the Fund Agreement. This Article provides that, subject to certain limitations, a member shall repurchase an amount of the Fund’s holdings of its currency equivalent to one half of any increase in the Fund’s holdings of its currency that has occurred during the Fund’s financial year, plus or minus one half of any increase or decrease in its monetary reserves during the same period.

Repurchases in respect of purchases made in connection with quota increases amounted to $156 million.

The Executive Directors agreed to the requests of 6 members to schedule their repurchases for payment over periods up to five years from the date of purchase. The Directors also agreed to one member’s request for postponement of the discharge of its repurchase obligation incurred under Article V, Section 7(b), of the Fund Agreement, to coincide with scheduled repurchases.

In January 1969 Cuba completed payment of the fifth and final installment due under the settlement agreement between Cuba and the Fund.

Summary of Members’ Purchases and Repurchases, 1947-69

Since the beginning of Fund operations in 1947 until April 30, 1969, 68 member countries purchased currencies from the Fund and 4 were granted stand-by arrangements without making purchases. Aggregate purchases of currencies from the Fund amounting to $17.4 billion and repurchases of $9.2 billion are listed in Table 49.

Purchases made by 61 members have been fully or partly repaid, either through repurchases with gold, with convertible currencies, or as a result of purchases of their currencies by other members. On April 30, 1969, the total amount of members’ purchases not yet repurchased was $4.7 billion.11 Purchases above 75 percent of quota amounting to $2.3 billion and involving 35 members had been outstanding for one year or less, $0.9 billion concerning 35 members were in their second and third years, and $1.5 billion, in respect of 20 members, in their fourth and fifth years. Outstanding purchases, above 75 percent of quota, by time period outstanding at the end of each fiscal year, for the r i last ten years, are shown in Chart 37. The significant increases in the balances outstanding for one year or less in the fiscal years 1961/62, 1964/65, 1965/66, and 1968/69 reflect purchases by the United Kingdom and, for 1968/69, also by France.

Purchases outstanding as of April 30 of each year and amounts not drawn under stand-by arrangements in effect on the same date are shown in Chart 38.

Currency Composition of Purchases, Repurchases, Borrowing, and Repayment of Borrowing

In accordance with Decision No. 1371-(62/36) of the Executive Directors regarding the use of currencies in purchases and repurchases adopted in July 1962, members that are purchasing from the Fund, discharging a repurchase commitment, or making a voluntary repurchase are required to consult with the Managing Director on the currencies to be purchased or to be used in repurchase. The Managing Director bases his advice to members on the currency or currencies to be used in a particular transaction with the Fund on consultations with Executive Directors, which take place shortly before each quarter of the Fund’s fiscal year and as the need arises to deal with a particular transaction. As a basis for the quarterly consultations, a tentative “currency budget” is drawn up taking account of the Fund’s anticipated requirements for currencies, the distribution of its currency holdings, and the positions in the Fund of the member countries concerned. In addition, whenever the need arises for the use of currencies in larger transactions that had not been foreseen, the Managing Director holds special consultations with Executive Directors.

Table 49.Summary of Members’ Purchases and Repurchases, Fiscal Years Ended April 30, 1948-69(In millions of U.S. dollars)
Total Purchases

by Members
Total Repurchases

by Members
1948606.04
1949119.44
195051.8024.21
195128.0019.09
195246.2536.58
195366.12184.96
1954231.29145.11
195548.75276.28
195638.75271.66
19571,114.0575.04
1958665.7386.81
1959263.52537.32
1960165.53522.41
1961577.00658.60
19622,243.201,260.00
1963579.97807.25
1964625.90380.41
19651,897.44516.97
19662,817.29406.00
19671,061.28340.12
19681,348.251,115.51
19692,838.851,542.33
Total17,434.45 19,206.64 2

Includes purchases that raised the level of the Fund’s holdings of the drawing members’ currencies to no more than 75 percent of quota. These drawings are not subject to repurchase.

Includes repurchases that reduced the Fund’s holdings of members’ currencies below the amounts originally paid on subscription account and repurchases of members’ currencies paid in settlement of charges. Excludes sales of currencies of members held by the Fund in excess of 75 percent of quota, as a result of previous drawings, and adjustments due primarily to settlement of accounts with countries that have withdrawn from the Fund; these sales and adjustments have the effect of repurchases.

Includes purchases that raised the level of the Fund’s holdings of the drawing members’ currencies to no more than 75 percent of quota. These drawings are not subject to repurchase.

Includes repurchases that reduced the Fund’s holdings of members’ currencies below the amounts originally paid on subscription account and repurchases of members’ currencies paid in settlement of charges. Excludes sales of currencies of members held by the Fund in excess of 75 percent of quota, as a result of previous drawings, and adjustments due primarily to settlement of accounts with countries that have withdrawn from the Fund; these sales and adjustments have the effect of repurchases.

In selecting currencies to be used for purchases by members, account is taken of the balance of payments and reserve positions of members whose currencies are considered for use, as well as the level of the Fund’s holdings of their currencies. In order to be usable in repurchase a currency must be convertible under the Fund Agreement12 and its use must not cause the Fund’s holdings of such currency to rise above 75 percent of the respective member’s quota.

Chart 37.Length of Time for Which Purchases Have Been Outstanding on April 30, 1960-69

(In millions of U.S. dollars)

Chart 38.Outstanding Purchases from the Fund and Amounts Not Purchased Under Existing Stand-By Arrangements, on April 30, 1948-69

(In millions of U.S. dollars)

1 Belgium, Canada, Denmark, France, Italy, Japan, the Netherlands, and Norway.

In selecting the currencies to be used in repurchase by members, primary importance is attached to the level of the Fund’s holdings of particular currencies but account is also taken of the balance of payments positions of the members whose currencies are considered for repurchase. In addition, factors relevant to the particular countries whose currencies may be involved, such as the closeness of trade and payments relations, are taken into account. In practice, the ratio of the member’s reserve position in the Fund to its holdings of gold and foreign exchange is also taken into account.

During the fiscal year 1968/69 the currencies of 20 member countries were sold by the Fund to members purchasing from the Fund and the currencies of 11 members were used in repurchases. Table 50 shows amounts and currencies used in purchases and repurchases effected in the fiscal year. The currency composition of large transactions and those of repurchases in discharge of obligations incurred under Article V, Section 7(b), of the Articles of Agreement are presented in separate columns. The currency of Finland was sold for the first time in the year ended April 30, 1969. The Fund’s holdings of this currency, when it was sold, were above 75 percent of Finland’s quota; the sale and a subsequent repurchase by Finland in March 1969 reduced the Fund’s holdings of Finnish markkaa to 75 percent of quota.

Purchases of deutsche mark, $694 million, accounted for about 25 percent of total purchases in 1968/69; purchases made in U.S. dollars, $634 million, represented about 22 percent of the total; and purchases of 18 other currencies accounted for the remaining 53 percent. The sales of U.S. dollars, together with the voluntary repurchases referred to on page 149 above, reduced the Fund’s holdings of that currency from 91 percent of the U.S. quota at the beginning of the fiscal year to 73 percent at the end. The United States had not had a net creditor position in the Fund since February 1964. Repurchases with deutsche mark and Italian lire, $396 million and $392 million, respectively, each constituted about 25 percent of total repurchases. The lowest level of the Fund’s holdings of a member’s currency used for a drawing in the fiscal year was registered by Austrian schillings; expressed as a percent of Austria’s quota on April 30, 1969, the holdings were equivalent to 9 percent.

Transactions under the General Arrangements to Borrow (GAB) in the year ended April 30, 1969, which are briefly described below, involved the borrowing of $741 million from five countries in June 1968 and repayments totaling $385 million made to six countries on three occasions during the course of the fiscal year. In each instance the borrowing or repayment was in the currency of the country concerned (see Table 51) and associated with Fund sales or repurchase transactions in the same currencies. The $140 million transfer of claims in June 1968 did not involve transactions by the Fund, although it altered the currency composition of the Fund’s liabilities.

Table 50.Purchases and Repurchases in Gold and by Currency, Fiscal Year Ended April 30, 1969(In millions of U.S. dollars)
CurrencyPurchasesRepurchasesNet Purchases(—) Repurchases(+)
FranceUnited KingdomOther CountriesTotalUnited KingdomUnited StatesOther countries (not under Article V, Section 7(b))Under Article V, Section 7(b)1Total
Gold8.161.769.8+69.8
Argentine pesos25.019.544.5−44.5
Australian dollars28.556.011.095.561.0−0.161.0−34.5
Austrian schillings33.023.556.518.4218.4−38.1
Belgian francs54.0107.029.5190.573.5159.350.72.7286.2+95.7
Canadian dollars35.086.042.5163.5−163.5
Danish kroner12.014.05.031.014.525.540.0+9.0
Deutsche mark204.0347.0142.9693.9220.0166.210.1396.3−297.6
Finnish markkaa4.04.0−4.0
French francs27.027.029.19.338.4+11.4
Irish pounds16.58.024.5−24.5
Italian lire108.0221.054.5383.5108.0100.0182.0−1.8391.8+8.3
Japanese yen15.049.055.0119.020.013.10.533.7−85.3
Mexican pesos13.527.040.54.624.6–35.9
Netherlands guilders57.083.08.3148.347.525.066.92.0141.4–6.9
Norwegian kroner6.519.025.5−25.5
South African rand23.019.016.058.0−58.0
Swedish kronor22.054.09.585.524.036.30.560.8−24.7
Pounds sterling4.04.0−4.0
U.S. dollars150.0250.0233.8633 8−633.8
Venezuelan bolívares10.010.0−10.0
Total745.01,400.0693.92,838.9507.5284.3662.088.61,542.3−1,296.6

Including discharge of repurchase obligations incurred in previous years.

Less than $50,000.

Including discharge of repurchase obligations incurred in previous years.

Less than $50,000.

Table 51.Fund Borrowing and Repayment(In millions of U.S. dollars)
Under the General Arrangements to Borrow
BorrowingRepaymentTransfer of claimsUnutilizedOther Borrowing
Dec.MayJuneMayFeb.Aug.Nov.Feb.JuneApr. 30,Aug.
19641965196819671968196819681969196819691966
Belgium30.037.570.030.08.010.019.5+ 10.070.0
Canada15.035.015.035.0200.0
France100.0140.0100.0−140.0550.0
Germany180.0167.5366.0180.043.050.0101.0+ 80.0580.5
Italy5.065.0185.05.018.021.043.0+ 40.0342.0250.0
Japan20.025.020.05.05.010.0245.0
Netherlands40.037.575.040.08.010.019.5+ 10.0115.0
Sweden15.017.545.015.03.04.07.051.5
United Kingdom857.1 1
United States2,000.0
Total405.0525.0741.0405.035.085.0100.0200.05,011.1250.0

Since commitments to lend are expressed in national currency, the U.K. commitment fell from $1,000 million to $857 million with the devaluation of sterling in November 1967.

Since commitments to lend are expressed in national currency, the U.K. commitment fell from $1,000 million to $857 million with the devaluation of sterling in November 1967.

Resources Available for the Financing of Fund Transactions

In assessing the resources that are readily available to the Fund against possible use by member countries, the Fund’s holdings of gold and of usable currencies, on the one side, and the reserve positions of members, on the other, are of major relevance. Beyond that, the gross positions of members in the Fund, that is, for each member the sum of its reserve position in the Fund and its credit tranche position, are of importance in measuring potential demands on the Fund’s resources. In this connection, account must be taken of amounts that have not been drawn under existing stand-by arrangements. However, the elements that have a direct bearing on the actual use of its resources and on the Fund’s ability to supply these resources at a particular time are more numerous than these factors; they include the changes in the balance of payments positions of members and, in particular, the distribution of deficits and surpluses among the members of the Fund, the extent to which member countries use the Fund’s resources to finance deficits, and the extent to which surpluses are accumulated in the form of reserve positions in the Fund. The size of these reserve positions is limited by the size of the quotas of the countries in surplus; however, the resources that are available to the Fund from countries with strong reserve and balance of payments positions have been enlarged by loans from those countries to the Fund under the General Arrangements to Borrow (GAB) or, in one instance, bilaterally. The holdings of usable currencies are, of course, augmented to the extent that the Fund receives such currencies in repurchases on a net basis.

A member whose currency the Fund holds in excess of 75 percent of quota may experience a substantial improvement in its balance of payments position, and the Fund may sell the member’s currency to another member, thus increasing the use of its resources. Whether the Fund’s liquidity is affected by this depends, of course, on the balances available in that currency, the strength of its recovery, and the extent to which this is accompanied by deficits elsewhere that are wholly or partially financed by the Fund.

The Fund’s holdings of usable currencies have also been augmented, in accordance with the provisions of Article VII of the Fund Agreement, by borrowings of currencies from members. The General Arrangements to Borrow, which enable the Fund to supplement its resources by borrowing up to $6 billion 13 in currencies of ten industrial member countries, first went into effect on October 24, 1962 and were renewed on October 15, 1965 for an additional four-year period, subject to review in the light of further experience in October 1968. After that review the Executive Directors concluded that there was no need for amendment or modification of the arrangements.

In connection with the purchases by the United Kingdom in December 1964, May 1965, and June 1968, the Fund borrowed $405 million, $525 million, and $476 million, respectively, under the provisions of the GAB. Also in June 1968, the Fund borrowed $265 million in connection with the purchase by France and consented to the transfer of that member’s claim on the Fund under the GAB, in the amount of $140 million, to four other GAB participants. In May 1967 the Fund repaid the total amount borrowed in December 1964; subsequent repayments on four occasions since February 1968, totaling $420 million, reduced the indebtedness resulting from the May 1965 borrowing to $105 million. The total of the Fund’s indebtedness under the GAB outstanding as of April 30, 1969 was $846 million. Details are shown in Table 51, together with borrowing under the arrangement concluded with Italy in August 1966.

The amount unutilized under the GAB, amounting to $5,011 million, does not appear in the Fund’s balance sheet. Gold holdings, including general deposits of gold and investments in U.S. Government short-term securities (which, upon termination of the investment can be used to acquire the same quantity of gold used in the investment) amounted to $3,371 million. On the same date members’ reserve positions in the Fund amounted to $6,078 million.

On a number of occasions, mainly in connection with larger purchases, the Fund has sold gold in order to replenish its holdings of currencies. In the past fiscal year sales, amounting to a total of $547 million, were made in connection with purchases by France and the United Kingdom in June 1968. These sales of gold were equivalent to 24 percent of the purchase by France and 26 percent of that by the United Kingdom.

The Fund’s gold holdings showed a net decrease of $445 million during the year. In addition to sales of gold of $547 million, interest payments in gold under the loan agreement with Italy and the GAB were $17 million, and transfer charges paid on these borrowings amounted to about $4 million. The amount of gold received during 1968/69 was $123 million. Of this total $70 million was acquired from members in discharge of their repurchase obligations under Article V, Section 7(b), of the Fund Agreement and of other repurchases, about $22 million was paid to the Fund in connection with quota subscriptions, and the remainder, $31 million, was received in payment of charges levied by the Fund.

In recent years members have increasingly been willing to establish and maintain reserve positions in the Fund. Such positions are created by the sale of a member’s currency when the Fund’s holding of that currency is below 100 percent of quota. For most countries the sale of their currency leads to a conversion of that currency into a reserve currency, and this conversion tends to bring about a substitution of a reserve position in the Fund for foreign exchange reserves previously held by the member whose currency is purchased from the Fund. For a reserve currency country, the reserve position in the Fund acquired by the sale of its currency usually gives rise to a corresponding increase in the liabilities in its own currency to the purchasing member.

Consultations with Members

Member countries that avail themselves of the transitional arrangements of Article XIV, Section 2, of the Fund Agreement are required to consult annually with the Fund on the need for the continued retention of their exchange restrictions. During the fiscal year 1968/69, Article XIV consultations were completed with 46 countries; with others consultation procedures had been initiated but were not complete by the end of the fiscal year. Several of the consultations under Article XIV were combined with discussions of new financial programs or included reviews of such programs already being implemented. Consultations were also held with 23 member countries that have accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Fund Agreement. Executive Board Decision No. 1034-(60/27) of June 1, 1960 14 laid stress on the merit of holding periodic discussions between the Fund and individual members even though no questions arise involving action under Article VIII.

These periodic exchanges of views are of key importance to both the Fund and the members and serve as a valuable instrument of international monetary collaboration. The consultations keep member authorities advised on the Fund’s current policies and on developments of interest in other areas and help to make members’ policies more responsive to the aims of the international community. At the same time, the procedure provides opportunities for detailed review by the Fund of the economic and financial problems and policies of its individual members, and when such matters arise enables the Fund to deal more expeditiously with a member’s request for financial assistance or proposals for changes in par value or the exchange system.

Technical Assistance

The Fund continued to provide extensive technical assistance to member countries in fields closely related to its work during the year and there was some further broadening in the forms of assistance made available. As in earlier years, much of the work carried on under the technical assistance programs was aimed at providing advice in the development and execution of appropriate financial policies, institutional reforms in banking and fiscal systems, and improvements in statistical reporting and analysis. Representatives of the Fund continued to serve abroad assisting countries in carrying out stabilization programs, while experts in monetary and fiscal management drawn in large part from outside the Fund’s own staff served as in earlier years in advisory, technical, or executive positions in a number of countries.

The Fiscal Affairs Department provided technical assistance during the year to 22 countries, an increase of 5 over 1967/68. Actual assignments totaled 44, an increase of 14. Most were undertaken by members of the Fund’s panel of fiscal experts but 17 were fulfilled by staff members. Slightly more than half of these assignments were for periods of six months or more. In meeting two of the requests, the innovation of teams of fiscal experts was introduced, with a senior staff member being assigned to coordinate relations between the experts and the government, as well as between the fiscal assistance program and other institutions providing technical assistance in allied fields.

The assistance given covered a wide range of fiscal issues, including all aspects of the budget, government accounting, tax policy, tax legislation, and tax administration. Its coverage extended to local government programs in the area of financial relations with the central government, as well as to central government areas proper. As in earlier years it involved a continuous three-way dialogue among the host countries, the experts, and the Fund staff. Since the commencement of these activities in 1964 the Department has provided technical assistance to 35 countries.

Technical assistance provided through the Central Banking Service program continued to be made available on a scale comparable to that of preceding years. During the year ended April 30, 1969, 39 countries (6 more than in 1967/68) received assistance in the form of either advisory missions, made up generally of staff members sent to provide aid on specific problems, or through the assignment of experts to serve in executive, advisory, or technical positions in the central banks of member countries.

The topics covered by advisory missions included studies related to the uses of monetary policy instruments, the mobilization of financial savings, the regulation and control of bank credit, and central bank reorganization and reform. In several instances, advisory missions helped to prepare legislation in the banking field and also carried out extensive investigations both insitu and at headquarters. Since the establishment of the Central Banking Service in 1964, such missions have visited 33 countries—including 7 for the first time in 1968/69.

Assignments of experts for extended periods to assist in the organization and development of monetary institutions continued to be an important aspect of the technical assistance program of the Central Banking Service, with 60 assignments manned by outside experts during the year. This was an increase from 57 assignments in the year ended April 30, 1968. However, past progress in getting some of the newer institutions through their initial organization stages has begun to be reflected in a gradual shift in the demand for experts toward more specialized and technical assignments instead of senior management positions. The gradual replacement of Fund-supported experts by local officials has reinforced this shift as the outside experts are freed from general administrative and current duties to focus on specific problems that can be attacked only when the basic institutional structure has sufficiently evolved.

Although hampered to some extent by the necessarily independent nature of the executive and operating responsibilities to which many of the experts serving under the Central Banking Service program are assigned, there has been a significant increase in efforts to foster closer contacts between experts—usually senior officers recruited from relatively more experienced institutions—and the Fund staff. A number of inspection visits during the year supplemented the advisory support that has been available on an informal basis to the experts from the staff and that has increasingly been drawn upon by the experts.

Closer contacts between staff members and the officials of countries receiving technical assistance have proved to be both necessary and valuable, and on-the-spot identification and evaluation of requests for technical assistance through preliminary staff visits as well as visits during the course of the project have become a routine operating procedure of both the Fiscal Affairs Department and the Central Banking Service.

Assistance to member countries in the field of statistics was provided by the Bureau of Statistics through 4 staff missions and through assistance in recruiting statistical advisors who could be made available to serve in member countries under the Fund’s regular technical assistance programs. A major new direction of the technical aid activities of the Bureau is a program to establish or improve central bank bulletins, i.e., bulletins that bring together the statistics necessary for the analysis of the balance of payments and other aspects of the countries’ economies. The Bureau began the operational phases of this work early in 1969 with visits to 13 countries, half the number contemplated as eventual participants in this program.

Efforts to improve the compilation and reporting of balance of payments statistics were continued during the past fiscal year. Technicians from the Balance of Payments Division undertook short-term assignments ranging up to a month’s duration in 11 countries in Africa and the Middle East, and an advisor on balance of payments statistics was provided to an Asian country under the technical assistance program.

The IMF Institute

During the past fiscal year, the IMF Institute continued its training activities, making full use of its facilities. Two courses that had started in 1967/68 were completed in 1968/69. In addition, the Institute conducted four new courses, which were attended by 95 officials from Fund member countries. As a consequence, the Institute again ran two courses simultaneously during the greater part of the year.

The main task of the Institute remained the preparation and presentation of the courses on financial analysis and policy. These courses were given in English, in French, and in Spanish, and each lasted 20 weeks. The first course, which started on September 30, 1968, was conducted in French, and was attended by 21 officials from 17 member countries, mostly French-speaking African countries. The course that began on December 2, 1968 was presented in Spanish; of the 23 participants, 22 came from member countries in the Western Hemisphere. The third course, which began on March 3, 1969, was given in English to 28 participants from 28 member countries. The courses on financial analysis and policy draw extensively on the experience gained by the Fund in its contacts with member countries, and they are geared to the needs of developing countries. These courses cover the use of various instruments of financial policy on the basis of modern tools of economic analysis and explain Fund procedures and policies.

From September 9 to November 15, 1968, the Institute presented its second course on public finance to a group of 23 participants coming from 18 different countries. This course, which was given in English with the collaboration of the Fiscal Affairs Department, consisted of a survey of the field of public finance, with emphasis on the problems of developing countries.

The eight-week course on balance of payments methodology, given in English, ended on June 7, 1968. The next course on this subject, also in English, was held from May 5 to June 27, 1969. These courses, which are given in cooperation with the Fund’s Balance of Payments Division, describe the principles and methods of compiling balance of payments statistics.

In addition to its regular courses, the Institute provided lectures to a number of other institutes. During the past fiscal year, two staff members gave lectures in the training program of the Center for Latin American Monetary Studies (CEMLA) in Mexico City. The Fund also arranged a program of lectures for the participants in the above program during their visit to Washington. Several staff members were assigned to give lectures at the Latin American Institute for Economic and Social Planning in Santiago, Chile, at the African Institute for Economic Development and Planning in Lomé, Togo, and at the Asian Institute for Economic Development and Planning in Bangkok, Thailand.

The Institute also received during the past year groups of officials, bankers, professors, and students from member countries, and provided them with lectures and source material.

The program of the IMF Institute for the period August 1969 to July 1970 includes six courses: three courses on financial analysis and policy (in English, French, and Spanish), two courses on balance of payments methodology (in English and French), and a course on public finance (in English).

Relations with Other International Organizations

Cooperation with other international and regional organizations in the economic field constitutes an important aspect of Fund activities and is reflected in attendance of Fund staff at meetings of these organizations at the plenary, committee, and working group levels, by the reciprocal exchange of information and pertinent documents, and by other staff contacts at the working level. Those organizations with which the Fund has common interests were also represented at the joint Annual Meetings of the Boards of Governors of the Fund and the International Bank for Reconstruction and Development (IBRD) and affiliates, held in September-October 1968.

The Fund continued to maintain close relations with the United Nations and its relevant organs, including the General Assembly, the Economic and Social Council (ECOSOC) and its Committee for Development Planning, the regional Economic Commissions, the United Nations Development Program, and the United Nations Conference on Trade and Development (UNCTAD). The Managing Director addressed the Forty-Fifth Session, resumed, of the ECOSOC on the occasion of his presentation of the Annual Report of the Fund in November 1968. He also attended the joint meeting of the UN Administrative Committee on Coordination (ACC) and the Committee for Program and Coordination, held in Bucharest in July 1968. The Deputy Managing Director attended a meeting of the ACC in New York in October 1968, and staff members have participated in the activities of ACC subcommittees.

At the invitation of the UNCTAD at its Second Session in New Delhi, the Fund is preparing a study on commercial credits—their adaptation to promote development as well as trade, control of their acceptance and use, and the possible implications of a softening of their terms for development aid. The Fund’s interest in problems related to foreign indebtedness and the financing of exports was also reflected in the attendance of a staff representative at the meetings of the Union d’Assureurs des Crédits Internationaux (Berne Union) and at a United Nations Round Table on Export Credits in March 1969. Fund representatives have also participated in meetings of the Trade and Development Board and various committees of UNCTAD.

Members of the staff attended meetings of two of the UN Specialized Agencies—the International Labor Organization and the Food and Agriculture Organization—including meetings of the latter’s subsidiary bodies and study groups concerned with jute, kenaf, and allied fibers; hard fibers; and bananas. Also in the commodity area, the Fund was represented at the first and second sessions of the UN Sugar Conference held in Geneva in 1968 and meetings of the UNCTAD Committee on Commodities.

The Fund has continuing close contacts with the Contracting Parties to the General Agreement on Tariffs and Trade (GATT); the Organization for Economic Cooperation and Development (OECD), including its Economic Policy Committee, Economic and Development Review Committee, Development Assistance Committee, the Board of Management of the European Monetary Agreement, Committee for Invisible Transactions, and the Ad Hoc Group of Financial Statisticians; the Organization of American States, especially its Inter-American Committee on the Alliance for Progress (CIAP) in connection with CIAP’s country reviews and other matters of mutual interest; the African, Asian, and Inter-American Development Banks; and the Bank for International Settlements (BIS). The Managing Director continued to participate in the Ministerial Meetings of the Group of Ten and the OECD, and took part in discussions on monetary problems with officials and members of the Board of Directors of the BIS.

As in previous years, consultations took place with the Contracting Parties to the GATT in connection with their consideration of import restrictions, import surcharges, and import deposit requirements maintained for balance of payments reasons by 13 countries. Fund representatives also attended the Twenty-Fifth Session and meetings of various subsidiary bodies of the GATT.

In the course of its collaboration with the IBRD, with which it has a special relationship, the Fund participated in meetings convened under the auspices of the Bank relating to the coordination of aid to developing countries—the India and Pakistan Consortia, Consultative Groups for Colombia, Korea, and Tunisia, preconsultative groups for certain other countries, and the Aid Group for Ceylon—and the IBRD participated in the meetings on aid to Ghana convened and chaired by the Fund. Similarly, the Fund participated in meetings of the Inter-Governmental Group on Indonesia convened by the Netherlands Government to coordinate aid to that country, in the OECD-sponsored Consortium on Turkey, and also in meetings convened by the Governments of France and the United Kingdom on the debts of Indonesia and Ghana, respectively. As noted in Chapter 3, the two organizations cooperated on a joint study on Stabilization of Prices of Primary Products, pursuant to Resolutions adopted by the respective Boards of Governors at their 1967 and 1968 Annual Meetings. The Fund and Bank have also extended the scope of their joint administrative services to include the operation of a Joint Computer Center, which commenced operations in November 1968.

Staff

At the end of the fiscal year, the Fund’s regular staff numbered 927, compared with 858 a year earlier. During the year 181 new staff members, both regular and temporary, were appointed from 47 member countries. Nationals of 78 countries were on the staff on April 30, 1969. These figures do not include Assistants to Executive Directors.

Income, Expenditures, and Reserves

Except for income from investment, which is credited directly to the Special Reserve, almost all the income of the Fund is operating income. It is derived from the charges paid by members in gold or currencies. The charges levied on the Fund’s holdings of members’ currencies in excess of their quotas, the service charge due on purchases of currency from the Fund, and the stand-by charge are all payable in gold, except that the stand-by charge may, at the members’ option, be paid in U.S. dollars. However, the provisions of Article V, Section 8(f), of the Fund Agreement permit total or partial payment in national currencies, if members’ monetary reserves are equal to less than one half of the value of their quotas.

The rate of charges levied on the Fund’s holdings of members’ currencies in excess of their quotas is based on the amount by which the quota level is exceeded by the holdings and also on the time period during which balances have been outstanding. The present schedule of charges, set forth in Table 52, has been in effect since May 1, 1963. The last annual review of this schedule was made in April 1969; it remains in effect without change. In addition to the foregoing, a service charge is levied equal to ½ of 1 percent on any amount purchased from the Fund. Further, there is a stand-by charge equivalent to ¼ of 1 percent per annum on the amount of a stand-by arrangement the use of which would increase the Fund’s holdings of the member’s currency above the level of its quota. The proceeds of stand-by charges are considered income by the Fund only after the expiration or cancellation of the stand-by arrangement, because of possible refunds and other adjustments that may have to be made during the life of the arrangement.

Table 52.Charges on Transactions Effected After May 1, 1963
Charges in percent per annum 1 for period stated and for portion of holdings in excess of quota by (percent)
More than……..050100
But not more than. .50100
Service charge0.50.50.5
0 to 3 months0.00.00.0
3 to 6 months2.02.02.0
½ to 1 year2.02.02.5
1 to 1½ years2.02.53.0
1½ to 2 years2.53.03.5
2 to 2½ years3.03.54.0 2
2½ to 3 years3.54.0 24.5
3 to 3½ years4.0 24.55.0
3½ to 4 years4.55.0
4 to 4½ years5.0

Except for service charge which is payable once per transaction and stated as percent of amount of transaction.

Point at which the Fund and the member consult.

Except for service charge which is payable once per transaction and stated as percent of amount of transaction.

Point at which the Fund and the member consult.

The largest portion of the Fund’s income has been provided by payments of charges on balances of members’ currencies held by the Fund in excess of their respective quotas. On April 30, 1969, 35 members were subject to such charges, compared with 32 members on April 30, 1968. Aggregate payments of these charges during the fiscal year 1968/69 amounted to $107 million, of which $84 million was paid by 7 members in their own currencies in accordance with the provisions of Article V, Section 8(f); the remainder was paid in gold. During the preceding fiscal year similar charges amounted to $82 million, of which $61 million was paid in members’ own currencies and the balance in gold. Since the beginning of Fund operations 57 members have been subject to such charges. The remainder of the Fund’s income stems mainly from service charges payable on all purchases from the Fund. These charges amounted to a total of $14 million for the fiscal year ended April 30, 1969, compared with $7 million during 1967/68. Stand-by charges account for only a small portion of the Fund’s annual income and such charges totaled $1 million during the fiscal year 1968/69, compared with $5 million in 1967/68. The actual income derived from stand-by charges in the fiscal year under review, after cancellation or expiration of the arrangements, amounted to $0.4 million, whereas in 1967/68 the amount was $0.6 million.

Since the year ended April 30, 1965, the Fund’s expenditures have included those incurred in connection with borrowings under the General Arrangements to Borrow (GAB) and a borrowing from Italy. The Fund’s payments in gold of transfer charges in connection with the activation of the GAB in respect of two purchases in June 1968 amounted to $4 million. Interest payments, also in gold, in accordance with paragraph 3(b) of the loan agreement with Italy and paragraph 9(b) of the GAB amounted to a total of $17 million, compared with $12 million in the preceding year. Income is shown in Table 53, together with the manner of its disposal.

Table 53.Income and Expenditure, Fiscal Years Ended April 30, 1960-69(In millions of U.S. dollars)
1960196119621963196419651966196719681969
Income 1
Operational—service and stand-by charges, etc.4.13.511.76.64.911.815.67.17.414.6
On balances in excess of quotas16.911.021.424.431.535.965.782.582.0107.5
Total21.014.633.131.036.447.781.389.689.4122.1
Expenditure Administrative (and property)6.97.48.29.613.117.620.721.421.828.9
Operational4.616.117.811.922.3
Total6.97.48.29.613.122.236.839.233.751.3
Net Income 214.17.225.021.523.225.544.550.455.770.8

Excludes income from investments transferred to the Special Reserve.

Transferred to General Reserve until the fiscal year ended April 30, 1968. Of the $55.7 million net income in that year, $18.3 million was transferred to General Reserve and $37.5 million was distributed under the provisions of Article XII, Section 6(a) and (b), of the Fund Agreement at the rate of 1½ percent to members that had a super gold tranche position in the Fund during the 1968 fiscal year. (See Annual Report,1968, page 22.) Pending Board of Governors’ action, the net income for the fiscal year ended April 30, 1969 has been provisionally transferred to the General Reserve. The Executive Directors have submitted to the Board of Governors, for action at its Annual Meeting, September 29 to October 3, 1969, a recommendation that, of the $70.8 million net income earned in the fiscal year ended April 30, 1969, $38.9 million be transferred to General Reserve and $31.9 million be distributed to members at the same rate and on the same basis as for the previous fiscal year.

Excludes income from investments transferred to the Special Reserve.

Transferred to General Reserve until the fiscal year ended April 30, 1968. Of the $55.7 million net income in that year, $18.3 million was transferred to General Reserve and $37.5 million was distributed under the provisions of Article XII, Section 6(a) and (b), of the Fund Agreement at the rate of 1½ percent to members that had a super gold tranche position in the Fund during the 1968 fiscal year. (See Annual Report,1968, page 22.) Pending Board of Governors’ action, the net income for the fiscal year ended April 30, 1969 has been provisionally transferred to the General Reserve. The Executive Directors have submitted to the Board of Governors, for action at its Annual Meeting, September 29 to October 3, 1969, a recommendation that, of the $70.8 million net income earned in the fiscal year ended April 30, 1969, $38.9 million be transferred to General Reserve and $31.9 million be distributed to members at the same rate and on the same basis as for the previous fiscal year.

Reserves

Except in the year ended April 30, 1948, the Fund operated with annual losses each year from the beginning of operations in 1946 until the fiscal year 1956/57. These operating losses were charged to the Fund’s capital, which is the sum of members’ quotas. On April 30, 1956, the total of these charges amounted to $14.2 million. In order to raise current revenue the Executive Directors decided on January 28, 1956 to invest part of the Fund’s gold holdings in U.S. Government securities, with the guarantee that the same quantity of gold can be reacquired at any time upon termination of the investment.

The Executive Directors decided on November 27, 1959 to continue the investment program in order to build up a reserve against future deficits and to establish a Special Reserve to which the income from investments earned from November 1, 1957 would be placed. During the fiscal year 1968/69 the Fund continued to invest $800 million of its gold holdings in U.S. Government securities. The income derived from such investments amounted to $47 million, which was credited to the Special Reserve. On April 30, 1969, the Special Reserve amounted to $309 million.

Since 1957/58 the Fund has had a surplus of income over expenditure in each fiscal year. In April 1958 the Executive Directors decided to establish a General Reserve, and beginning with that month, and at the end of each month thereafter, the Fund’s net income has been transferred provisionally to the General Reserve, pending action by the Board of Governors with respect to each fiscal year at the following Annual Meeting.

At the end of the Fund’s fiscal year ended April 30, 1968, the General Reserve amounted to $291.3 million. The Executive Directors recommended to the Board of Governors in August 1968 that $37.5 million be distributed to members that had had a super gold tranche position in the Fund at a rate of 1½ percent on the amount by which 75 percent of each member’s quota exceeded the average of the Fund’s holdings of its currency during the fiscal year ended April 30, 1968, and that the remainder of the net income of that fiscal year, namely, $18.3 million, be allocated to the General Reserve. On October 4, 1968 the Board of Governors approved this recommendation and payments were made to 33 member countries. In accordance with the provisions of Article XII, Section 6(b), of the Articles of Agreement, payment to each member was made in the member’s own currency. This was the first occasion on which a distribution of the Fund’s net income was made.

For the fiscal year 1968/69 the Fund’s operating income was $122 million. The increase of $33 million over the income of $89 million in the previous year reflected the service charges on large purchases and charges paid on the increased amount of currencies held by the Fund in excess of members’ quota levels. Total expenditure for the same period, at $51 million, reflected the effect of the increased use of the GAB. The net income of $71 million, the highest in the history of the Fund, was provisionally transferred to the General Reserve pending action by the Board of Governors. The balance in that account was $325 million on April 30, 1969.

Administrative Budget and Audit

The administrative budget approved by the Executive Directors for the period May 1, 1969 to April 30, 1970 is presented in Appendix IV. Comparative income and expenditure figures for the fiscal years ended April 30, 1967, 1968, and 1969 are given in Appendix V.

The Executive Directors requested the Governments of Costa Rica, Ethiopia, and France to nominate members of the Audit Committee for 1969. The following nominations were made and confirmed: Mr. Claudio Guerrero, Deputy Director, Accounting Department, Central Bank of Costa Rica; Mr. Teferra Liben, Chief Auditor, Inland Revenue Department of Ethiopia; Mr. André Vails, Inspecteur des Finances, Ministry of Economy and Finance of France. The report of the Committee is submitted separately. Appendix VI gives the Auditors’ Certificate, together with the audited Balance Sheet as at April 30, 1969 and the audited Statement of Income and Expenditure for the fiscal year.

Publications

During 1968/69 the Fund continued to add to the range of its publications with the issuance of the first two volumes in its new series of books on African economies, the publication of three new pamphlets, and the issuance of an interim, consolidated version of the Fund’s Articles of Agreement, as amended by the proposals approved by the Board of Governors in May 1968. At the end of the fiscal year preparations were well advanced for the publication of a 20-year history of the Fund, to be issued in three volumes, and of a further volume in the series on African economies.

Regular publications issued during the fiscal year were as follows:

Annual Report of the Executive Directors for the Fiscal Year Ended April 30,1968 (with French and Spanish editions and a shorter German edition).

Balance of Payments Yearbook, Volume 20, 1963-67, also available in a hardbound edition.

Direction of Trade, monthly, issued jointly with the International Bank for Reconstruction and Development, with an annual edition covering 1963-67.

Finance and Development, quarterly, issued jointly with the International Bank for Reconstruction and Development (English, French, and Spanish editions).

International Financial News Survey, weekly.

International Financial Statistics, monthly (in an English edition and in a combined English, French, and Spanish edition).

Nineteenth Annual Report on Exchange Restrictions.

Schedule of Par Values, 46th issue.

Staff Papers, Volume XV, Nos. 2 and 3, and Volume XVI, No. 1. Summary Proceedings of the Twenty-Third Annual Meeting of the Board of Governors.

As noted, the first two volumes in the Fund’s new series of books on African countries, Surveys of African Economies, were published during the fiscal year. Volume 1 covered five countries in Equatorial Africa (Cameroon, the Central African Republic, Chad, Congo (Brazzaville), and Gabon); and Volume 2 included four countries in East Africa (Kenya, Tanzania, Uganda, and Somalia). These new books, which describe the economies of selected African countries and their arrangements for regional cooperation, are being issued in English and French editions.

The number of publications in the Fund’s Pamphlet Series was raised to 13 with the issuance of 3 new pamphlets, Interpretation by the Fund, Reform of the Fund, and Special Drawing Rights. All the pamphlets in this series have been, or are in the process of being, issued in English, French, and Spanish.

In September 1968 the Fund published Articles of Agreement of the International Monetary Fund, as Modified by the Proposed Amendment, a consolidated version of the Fund Articles incorporating the proposals approved by the Board of Governors in May 1968. This interim edition of the Articles of Agreement, published in French and Spanish as well as in English, was prepared in a form to show the changes that would be made to the text of the Agreement by the Proposed Amendment.

The Fund has continued its policy of making available to universities in developing countries one free copy of each of its four subscription publications—Balance of Payments Yearbook, Direction of Trade, International Financial Statistics, and Staff Papers. These publications are also available to university libraries, faculty members, and students at a reduced subscription rate of $10 a year for all four periodicals, or $3 a year for any one of them. The normal annual rates for each publication range from $6 to $10, for a total subscription of $33.50 a year. Except for the Surveys of African Economies, other publications mentioned above are available free of charge.

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