Chapter

Appendix VIII: Financial Statements of the General Department—General Resources Account, Special Drawing Rights Department, Subsidy Account, Trust Fund, and Staff Retirement Fund

Author(s):
International Monetary Fund
Published Date:
September 1979
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Report of the External Audit Committee

General Department

General Resources Account

Washington, D.C.

June 29, 1979

Authority for the Audit

The audit for the year ended April 30, 1979 was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have examined the balance sheet of the International Monetary Fund, General Department—General Resources Account, as at April 30, 1979, and the related statements of income and expense, reserves and changes in financial position for the year then ended.

Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, after evaluating the extent and results of the tests which we observed to have been carried out by the Internal Auditor, and such other auditing procedures as we deemed necessary in the circumstances.

Audit Opinion

In our opinion, the financial statements referred to above give a true and fair view of the financial position of the International Monetary Fund, General Department—General Resources Account, as at April 30, 1979, and the results of its operations and transactions and changes in reserves and financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ Harold E. Hayes, Chairman (Canada)

/s/ Stefan Svavarsson (Iceland)

/s/ Gamini C. B. Wijeyesinghe (Sri Lanka)

General Department

(Note 1) General Resources Account Balance Sheet

as at April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

Assets19791978
Gold with Depositories (Note 2)4,054,521,9244,507,056,460
Special Drawing Rights1,289,908,9761,371,080,136
Currencies and Securities (Notes 3 and 4)39,566,726,68135,355,508,778
Subscriptions to Capital—Receivable
Balances of initial quotas—not due7,700,00031,847,187
Balances of increases in quota—not due (Contra)6,003,000,000
7,700,0006,034,847,187
Charges Receivable from Members (Note 4)152,298,213188,640,922
Other Assets (Notes 2 and 6)9,917,38713,505,002
Total Assets45,081,073,18147,470,638,485
Capital, Reserves, and Liabilities
Capital
Subscriptions of members39,011,200,00032,346,400,000
Reserves (Note 7)760,109,459713,961,091
Subscriptions in Respect of Increases in
Quotas Consented to But Not Yet
Effective (Contra)6,003,000,000
Indebtedness (Note 5)
Oil facility4,256,676,8056,328,726,384
General Arrangements to Borrow
and other borrowing777,254,0001,730,000,000
5,033,930,8058,058,726,384
Remuneration Payable to Members (Note 4)171,742,842200,859,098
Interest Payable on Indebtedness93,745,621130,751,564
Other Liabilities (Note 6)10,344,45416,940,348
Total Capital, Reserves, and Liabilities45,081,073,18147,470,638,485
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
/s/ W.O. HabermèierTreasurer
/s/ J. De LarosiereManaging Director
General Department Statement of Income and Expense

for the year ended as at April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Operational Income
Periodic charges (Note 4)678,101,586786,609,533
Interest on holdings of special drawing rights57,121,42339,800,980
Service charges6,195,93011,836,565
Other11,873,3201,327,746
753,292,259839,574,824
Operational Expense
Remuneration (Note 4)171,742,842200,859,098
Interest on indebtedness458,072,124537,076,618
Other3,891,8273,651,218
633,706,793741,586,934
Net Operational Income119,585,46697,987,890
Administrative Expense
Administrative budget (Note 8)
Personnel
Salaries33,414,85232,614,664
Other (Note 6)20,439,73418,692,128
53,854,58651,306,792
Travel
Business4,247,5864,385,656
Other3,523,7743,750,667
7,771,3608,136,323
Other
Communications1,988,6811,894,907
Building occupancy2,587,6612,138,269
Books and printing971,250960,810
Supplies and equipment (Note 2)1,273,305711,977
Data processing services1,189,4851,256,271
Miscellaneous1,580,9281,192,916
9,591,3108,155,150
Total administrative budget71,217,25667,598,265
Less amounts recovered from:
Participants in the Special Drawing Rights Department1,700,480900,003
Trust Fund900,000800,000
2,600,4801,700,003
Net administrative budget68,616,77665,898,262
Fixed property (Note 2)21,46812,822
Amortization of past service liabilities (Note 6)4,711,1554,392,696
Net valuation adjustment87,699207,436
Total Administrative Expense73,437,09870,511,216
Net Income46,148,36827,476,674
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
General Resources Account Statement of Reserves

for the year ended April 30, 1979

(Note 7)

Amounts expressed in special drawing rights

(Note 2)

Special Reserve19791978
Balance at beginning of year348,381,388320,904,714
Add net income for year46,148,36827,476,674
Balance at end of year394,529,756348,381,388
General Reserve
Balance at beginning and end of year365,579,703365,579,703
Total Reserves760,109,459713,961,091
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
General Resources Account Statement of Changes in Financial Position

for the year ended April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Resources were applied to:
Increase in currency holdings:
Changes in holdings which did not
affect amounts on which the Fund
levies charges or pays
remuneration7,160,793,0642,398,558,829
Changes in holdings which reduced
creditor positions on which the
Fund pays remuneration243,247,1482,321,861,231
Changes in holdings which
decreased amounts on which
the Fund levies charges(3,192,822,309)(1,375,812,152)
4,211,217,9033,344,607,908
Repayments of borrowing:
Oil facility2,072,049,579373,361,251
General Arrangements to Borrow
and Swiss National Bank1,730,000,000
3,802,049,579373,361,251
Decrease in the excess of other
liabilities over other assets8,640,58221,391,661
8,021,908,0643,739,360,820
Resources were provided by:
Subscriptions:
Increases in quotas6,655,000,0003,101,600,000
Quotas of new members9,800,00028,300,000
Borrowing:6,664,800,0003,129,900,000
General Arrangements to Borrow
and Swiss National Bank777,254,000730,000,000
Sales of gold452,534,536451,970,610
Decrease in holdings of
special drawing rights81,171,160(599,986,464)
Net income46,148,36827,476,674
8,021,908,0643,739,360,820
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

General Department

Under the Articles of Agreement, the General Department consists of the General Resources Account, the Special Disbursement Account, and the Investment Account. The Special Disbursement Account and the Investment Account are not operative. All operations and transactions on the account of the Fund are conducted through the General Resources Account.

General Resources Account

Assets held in the General Resources Account comprise gold, currencies of the Fund’s member countries, and special drawing rights (SDRs). The Fund’s resources in the General Resources Account are made available to members in accordance with the Fund’s policies either in the form of currencies or SDRs which members purchase against the payment of their own currencies. The amount of such use is related to a member’s quota in the Fund.

In addition to purchases under the Fund’s regular facilities, members may use the Fund’s resources under decisions on compensatory financing (to assist members, particularly primary exporters, encountering payments difficulties produced by temporary shortfalls attributable to circumstances beyond their control) and buffer stock financing (to assist members in connection with the financing of international buffer stocks of primary products), the extended Fund facility (to provide medium-term assistance to members to make structural adjustments in their economies), and the supplementary financing facility (to assist members facing serious payments imbalances that are large in relation to their quotas). Members were also able to use the oil facility (for balance of payments problems caused by increases in the cost of petroleum and petroleum products). Use of the Fund’s resources is dependent on members having a balance of payments need.

Gold transactions, receipt of SDRs in payment of charges and repurchases by members, and use of SDRs by the Fund, take place through the General Resources Account.

2. Accounting Practices

Unit of Account

The accounts of the General Resources Account are expressed in terms of the SDR, the currency value of which is determined by a standard basket of the currencies of sixteen members. Members’ currencies and securities are converted into equivalent amounts of SDRs on the basis of representative rates of exchange determined in accordance with decisions of the Executive Board. Gold with depositories is valued on the basis that one unit of special drawing rights is equivalent to 0.888671 gram of fine gold.

Property, Furniture, and Equipment

The established policy of the Fund is to charge as an expense of each accounting period the total costs incurred for fixed property, furniture, and equipment. As at April 30, 1979, the net balance of the Fund’s property accounts, at cost, which had been charged to expense, amounted to SDR 63,868,664 (SDR 63,568,569 at April 30, 1978).

Income and Expense

The Fund maintains its books of accounts on an accrual basis and accordingly follows a policy of recognizing income as it is earned and of recording expenses, as they are incurred. It is the practice of the Fund to make all calculations on the basis of the exact number of days in the financial year.

3. Currencies and Securities with Depositories

Each member has the option to substitute nonnegotiable and noninterest-bearing securities for that amount of the member’s currency held by the Fund which is in excess of ¼ of 1 per cent of the member’s quota.

A currency held by the Fund is revalued whenever that currency is used by the Fund in a transaction with another member, or for such other purposes as the Fund may decide. All currency holdings are revalued as at April 30 each year. Whenever the Fund revalues its holdings of a member’s currency, an account receivable or an account payable is established for the amount of currency payable by or to the member in order to maintain the value of the currency in terms of the SDR. The balances of the accounts receivable or payable are included as part of the Fund’s currency holdings. At April 30, 1979, accounts receivable amounted to SDR 1,818,697,327 and accounts payable amounted to SDR 739,571,340.

4. Operational Transactions

During the year ended April 30, 1979, members’ purchases amounted to SDR 3,720 million of which SDR 2,480 million was in the reserve tranche, SDR 485 million was under the Fund’s regular policies, SDR 465 million was under compensatory financing, SDR 48 million was under buffer stock financing, and SDR 242 million was under the extended Fund facility. Over the same period, repurchases by members totaled SDR 4,859 million. Purchases in the reserve tranche made after April 1, 1978 are not subject to repurchase.

Outstanding purchases of members were as follows (in millions of SDRs):

April 30
19791978
Reserve tranche3141,358
Regular facilities2,3163,420
Compensatory financing2,9452,668
Buffer stock financing48
Extended Fund facility407175
Oil facility4,2406,313
Total10,27013,934

The Fund levies charges on its holdings of a member’s currency to the extent that the holdings (i) have been acquired under a policy that has been the subject of an exclusion, or (ii) exceed the member’s quota after deducting holdings that are the subject of an exclusion. Remuneration is paid on the amounts by which 75 per cent of a member’s quota on April 1, 1978, adjusted for increases or decreases in the member’s quota after that date, exceeds the Fund’s holdings of the member’s currency after deducting amounts that are the subject of an exclusion. At April 30, 1979 the total holdings on which the Fund levies charges amounted to SDR 8,873 million and total creditor positions on which the Fund pays remuneration amounted to SDR 3,773 million.

Members incur certain obligations to the Fund with the use of Fund resources from the General Resources Account. One member, Democratic Kampuchea, has not fulfilled its financial obligations to repurchase a part of the Fund’s holdings of the member’s currency, to pay charges on currency balances held by the Fund, and to submit information on monetary reserves.

At April 30, 1979 unpaid charges receivable from Democratic Kampuchea amounted to SDR 2,632,396 and are included in the balance sheet as charges receivable and as a deferred credit; SDR 1,882,511 of these charges relates to previous periods and has been deducted from income for the current year. On December 19, 1978 the Executive Board decided that Democratic Kampuchea may not make use of the general resources of the Fund until such time as Democratic Kampuchea is fulfilling its obligations under the Articles of Agreement to which Article XXVI, Section 2(a), applies.

5. Indebtedness

Oil Facility

The Fund has entered into borrowing agreements with various members and Switzerland, or institutions within their territories, under which these lenders agreed to provide the Fund with specified currencies to finance purchases of currencies from the Fund by other members under the oil facility. The outstanding borrowings carry interest rates of 7 per cent for amounts called under the 1974 borrowing agreements and 7¼ per cent for amounts called under the 1975 borrowing agreements. Any calls made by the Fund under these agreements are repayable in installments beginning not later than 3Vi years, to be completed not later than 7 years, after the date of the calls, except that the calls under the borrowing agreements with Canada and the Deutsche Bundesbank are repayable at the end of five years.

Supplementary Financing Facility

The supplementary financing facility entered into force on February 23, 1979. The Fund has entered into borrowing agreements with 14 members, or institutions within their territories, and with the Swiss National Bank under which the lenders have agreed to make resources available to the Fund, at call, up to SDR 7.784 billion over the next five years to finance purchases by members under this facility. Interest to be paid by the Fund on amounts borrowed under the borrowing agreements is based on the average yield on U.S. Government securities with a maturity of five years. At April 30, 1979 the Fund had not borrowed resources under these arrangements.

General Arrangements to Borrow (GAB)

Ten members, or institutions within their territories, have adhered to the General Arrangements to Borrow under which the Fund may borrow their currencies up to specified amounts. These arrangements first became effective from October 24, 1962 and have been renewed until October 23, 1980. The Fund pays a transfer charge of one-half of one per cent on amounts borrowed under these arrangements and, in addition, pays interest at the rates at which the Fund levies charges on the holdings of currencies resulting from purchases for which it incurred the indebtedness, provided that the rate of interest shall be not less than 4 per cent per annum on any part of the indebtedness. Any calls made by the Fund under the GAB are repayable within five years.

At April 30, 1979 the interest rate being paid by the Fund on indebtedness under the General Arrangements to Borrow was 4 per cent per annum.

Other

The Swiss National Bank entered into a borrowing agreement with the Fund under which it agreed to lend to the Fund U.S. dollars equivalent to SDR 337.5 million for exchange transactions under stand-by arrangements. The other terms and conditions of this borrowing were similar to those of the General Arrangements to Borrow. At April 30, 1979 all amounts borrowed by the Fund from the Swiss National Bank had been repaid.

6. Other Compensations and Benefits

The Fund pays various allowances to or on behalf of Executive Directors and staff including the employer’s contribution to the Staff Retirement Plan. All contributions to the Plan and all other assets, liabilities, and income of the Plan are held separately and can be used only for the benefit of the participants in the Plan and their beneficiaries. The funding of the Plan is based upon a percentage of a notional gross salary, and the employer contributes that part of the costs and expenses of the Plan not provided by the contributions of the participants.

A past service liability amounting to SDR 17,570,796, resulting from certain improvements in the benefits provisions of the Plan and changes in the rates of contribution and funding arrangements which were approved in August 1976, was discharged on September 1, 1976 by a payment from the General Resources Account to the Staff Retirement Plan. This amount is being charged against the income of the General Resources Account over a period of four years. Accordingly, SDR 4,392,696 was charged against income in 1977, 1978, and 1979; the remaining balance of SDR 4,392,708 is included as a deferred charge in Other Assets. A past service liability amounting to SDR 318,459 resulting from additional plan amendments approved in June 1978 was paid and charged against income during the current year.

Experience gains and losses of the Plan, as determined by the actuary engaged by the Pension Committee, are amortized over a period of 15 years. The unamortized experience losses at April 30, 1979 amounted to SDR 26.7 million (calculated at the SDR value of the U.S. dollar on that date). Payments over the next 15 years to amortize the actuarial experience losses are estimated to be approximately SDR 37.1 million (at the April 30, 1979 SDR/US$ rate), of which SDR 2.8 million was paid on May 1, 1979.

Contributions by the employer to the Staff Retirement Fund for the year ended April 30, 1979 amounted to SDR 10,397,949, including SDR 2,609,567 for the amortization of actuarial experience losses (SDR 1,989,282 in 1978) and SDR 1,515,758 to fund cost of living supplements to beneficiaries (SDR 1,208,242 in 1978).

7. Reserves

The Fund determines annually what part of its net income shall be placed to the General Reserve or to the Special Reserve, and what part, if any, shall be distributed. The Fund may use the Special Reserve for any purpose for which it may use the General Reserve, except distribution.

Income from investments in U.S. Government securities was placed to the Special Reserve from November 1, 1957 until February 15, 1972 when the investment program was terminated. A decision by the Executive Board provides that any administrative deficit for any financial year must be written off first against this Reserve.

Net income for the year ended April 30, 1979 has been placed to the Special Reserve by decision of the Executive Board.

8. Administrative Budget

The budget for 1978 has been restated to conform to the 1979 presentation.

Report of the External Audit Committee

Special Drawing Rights Department

Washington, D.C.

June 29, 1979

Authority for the Audit

The audit for the year ended April 30, 1979 was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have examined the balance sheet of the International Monetary Fund, Special Drawing Rights Department as at April 30, 1979, and the related statement of source and use of special drawing rights for the year then ended.

Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, after evaluating the extent and results of the tests which we observed to have been carried out by the Internal Auditor, and such other auditing procedures as we deemed necessary in the circumstances.

Audit Opinion

In our opinion, the financial statements referred to above give a true and fair view of the allocations and holdings of special drawing rights of the International Monetary Fund, Special Drawing Rights Department as at April 30, 1979, and the source and use of special drawing rights for the year then ended on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ Harold E. Hayes, Chairman (Canada)

/s/ Stefan Svavarsson (Iceland)

/s/ Gamini C. B. Wijeyesinghe (Sri Lanka)

Special Drawing Rights Department

(Note 1) Balance Sheet

as at April 30, 1979

Amounts expressed in special drawing rights

ALLOCATIONS AND UNPAID CHARGES19791978
Allocations and Unpaid Charges
Net cumulative allocations of special drawing
rights to participants13,347,560,2009,314,835,400
Charges due but not paid290,144
13,347,560,2009,315,125,544
Holdings
Participants
Holdings above allocations, comprising
Allocations4,085,312,0002,644,257,000
Net receipt of SDRs2,150,197,6371,023,298,554
6,235,509,6373,667,555,554
Holdings below allocations, comprising
Allocations9,262,248,2006,670,578,400
Net use of SDRs3,440,106,6132,394,088,546
5,822,141,5874,276,489,854
Total holdings by participants12,057,651,2247,944,045,408
General Resources Account1,289,908,9761,371,080,136
13,347,560,2009,315,125,544
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
/s/ W.O. HabermeierTreasurer
/s/ J. de LarosièreManaging Director
Statement of Source and Use of Special Drawing Rights

for the year ended April 30, 1979

Amounts expressed in special drawing rights

GeneralTotal
Resources
ParticipantsAccount19791978
Total Holdings at beginning of year7,944,045,4081,371,080,1369,315,125,5449,314,835,400
Source of Special Drawing Rights4,032,724,800
Allocations4,032,724,8004,032,724,800
Transactions with Designation1,079,948,6111,079,948,611398,117,289
Transactions by Agreement1,533,025,7351,533,025,735927,413,052
Net interest71,051,28857,121,423128,172,71196,589,688
Transfers Between Participants and the General
Resources Account
Purchases1,105,921,8751,105,921,875662,125,000
Repurchases501,870,191501,870,191855,072,088
Charges2,463,041717,142,717719,605,758816,300,920
Reimbursement of Special Drawing Rights
Department Expenses (Assessment)1,700,4801,700,480900,003
Remuneration136,279,725136,279,725121,774,346
Reconstitution75,145,18475,145,184474,014,488
Interest on Fund Borrowings
Under General Arrangements to Borrow&#x2014-8,954,1098,954,10917,751,411
Under Oil Facility.10,172,058
Quota Payments18,715,00018,715,000201,400,000
Other
Repayment of Fund Borrowings37,662,71437,662,714
Transfer Charges2,914,7032,914,7031,208,026
Acquisitions to Pay Charges8,379,6208,379,620
Accounts Receivable (Unpaid Charges)290,144
8,094,471,4051,296,549,8119,391,021,2164,583,128,513
Use of Special Drawing Rights
Transactions with Designation1,079,948,6111,079,948,611398,117,289
Transactions by Agreement1,533,025,7351,533,025,735927,413,052
Net Charges128,172,711128,172,71196,589,688
Transfers Between Participants and the General
Resources Account
Purchases1,105,921,8751,105,921,875662,125,000
Repurchases501,870,191501,870,191855,072,088
Charges717,142,7172,463,041719,605,758816,300,920
Reimbursement of Special Drawing Rights
Department Expenses (Assessment)1,700,4801,700,480900,003
Remuneration136,279,725136,279,725121,774,346
Reconstitution75,145,18475,145,184474,014,488
Interest on Fund Borrowings
Under General Arrangements to Borrow8,954,1098,954,10917,751,411
Under Oil Facility10,172,058
Quota Payments18,715,00018,715,000201,400,000
Other
Repayment of Fund Borrowings37,662,71437,662,714
Transfer Charges2,914,7032,914,7031,208,026
Acquisitions to Pay Charges8,379,6208,379,620
Settlement of Unpaid Charges290,144_____290,144
3,980,865,5891,377,720,9715,358,586,5604,582,838,369
Total Holdings at end of year12,057,651,2241,289,908,97613,347,560,2009,315,125,544
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

1. Special Drawing Rights Department

All transactions and operations involving special drawing rights are conducted through the Special Drawing Rights Department. Special drawing rights are allocated by the Fund to members that are participants in the Special Drawing Rights Department in proportion to their quotas in the Fund. Three allocations were made, in 1970, 1971, and 1972, aggregating SDR 9.3 billion. In accordance with Board of Governors Resolution No. 34-3, SDR 4 billion was allocated to participants as of January 1, 1979 and further allocations of SDR 4 billion each year are to be made as of January 1 in 1980 and 1981. Special drawing rights do not constitute claims by holders against the Fund to provide currency, except in connection with the termination of participation or liquidation.

2. Uses of Special Drawing Rights

A participant can use its special drawing rights in transactions and certain operations by agreement with another participant, and in certain operations involving the General Resources Account, such as the payment of charges and the discharge of repurchase obligations. In addition, the Fund ensures, by designating participants to provide freely usable currency in exchange for special drawing rights, that a participant can use its special drawing rights to obtain such currency if it has a need because of its balance of payments or its reserve position or developments in its reserves. A participant is not obliged to provide currency for special drawing rights beyond the point at which its holdings of special drawing rights in excess of its net cumulative allocation are equal to twice its net cumulative allocation or such higher limit as may be agreed between a participant and the Fund. A participant may, however, provide currency in excess of the obligatory limit or any agreed higher limit.

3. Reconstitution Requirements

A participant is required to maintain, over five-year periods ending in successive calendar quarters, a minimum level of average daily holdings of special drawing rights in relation to its average daily net cumulative allocation. For the five-year periods ended on or before December 31, 1978 the required average was 30 per cent; for periods ending after that date the required average is 15 per cent.

4. Interest, Charges, and Assessment

Interest is paid to each holder on its holdings of special drawing rights and charges are levied at the same rate by the Fund on each participant’s net cumulative allocation plus any negative balance of the participant or unpaid charges. Net interest or net charges are settled by crediting or debiting individual holdings accounts on April 30 each year. The Fund is required to pay interest to each holder, whether or not sufficient charges are received. The expenses of conducting the business of the Special Drawing Rights Department are paid by the Fund from the General Resources Account which is reimbursed in special drawing rights at the end of each financial year. For this purpose, the Fund levies an assessment, at the same rate for all participants, on their net cumulative allocations.

5. Suspension of Right to Use Special Drawing Rights

On December 19, 1978 the Executive Board decided to suspend the right of Democratic Kampuchea to use special drawing rights acquired after the date of the suspension because the Fund found that Democratic Kampuchea had failed to meet certain obligations in the Special Drawing Rights Department.

Report of the External Audit Committee

Subsidy Account

Washington, D.C.

June 29, 1979

Authority for the Audit

The audit for the year ended April 30, 1979 was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have examined the statement of financial position of the Subsidy Account administered by the International Monetary Fund, showing the changes in the Account for the year ended April 30, 1979, and the financial position as at that date.

Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, after evaluating the extent and results of the tests which we observed to have been carried out by the Internal Auditor, and such other auditing procedures as we deemed necessary in the circumstances.

Audit Opinion

In our opinion, the financial statement referred to above gives a true and fair view of the operations of the Subsidy Account for the year ended April 30, 1979, and its financial position as at that date, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ Harold E. Hayes, Chairman (Canada)

/s/ Stefan Svavarsson (Iceland)

/s/ Gamini C. B. Wijeyesinghe (Sri Lanka)

Subsidy Account

(Note 1) Statement of Financial Position

Changes during year and Position as at April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Balance at beginning of year58,746,35250,630,093
Contributions received (Note 2)23,668,09235,437,047
Interest earned on investments3,259,5132,404,139
Valuation loss(988,127)(2,218,982)
25,939,47835,622,204
84,685,83086,252,297
Less: Subsidy payments (Note 3)24,950,43127,505,945
Balance at end of year59,735,39958,746,352
Balance represented by:
Currency on deposit2,297,3382,524,655
Investments in United States Government obligations, at cost
(market value SDR 55,473,545—1979, SDR 54,559,105—1978)55,829,89354,715,759
Accrued interest receivable1,608,1681,505,938
Total assets59,735,39958,746,352
The accompanying notes are an integral part of the financial statement.
The accompanying notes are an integral part of the financial statement.
/s/ W.O. HabermeierTreasurer
/s/ J. de LarosièreManaging Director

Notes to the Financial Statement

1. Purpose

The Subsidy Account, which is administered by the Fund, was established to assist the most seriously affected (MSA) members to meet the interest cost of using resources made available through the Fund’s oil facility for 1975. The assets of the Subsidy Account are separate from the assets of all other accounts of the Fund and are not used to discharge liabilities or to meet losses incurred in the administration of other accounts.

2. Accounting Practices

The accounts of the Subsidy Account are expressed in terms of the SDR, the currency value of which is determined by a standard basket of currencies of sixteen members.

Currency contributions to the Subsidy Account are converted to equivalent amounts of SDRs on the basis of exchange rates against the SDR at the time of receipt. Cumulative contributions to the Subsidy Account at April 30, 1979 amounted to SDR 120,938,311.

It is the practice of the Fund to make all calculations on the basis of the exact number of days in the financial year.

3. Subsidy Payments

The rate of subsidy for the financial years ended April 30, 1976 through 1979 was set by the Fund at five per cent per annum of the average daily balances in each year of the Fund’s holdings of recipient members’ currencies subject to the schedule of charges applicable to the oil facility for 1975. Subsidy payments are made after the end of each financial year in U.S. dollars at the SDR/US$ rate determined for the date of payment. Subsidy payments for the financial year ended April 30, 1979 amounted to SDR 19,099,585 and were made on May 31, 1979.

Report of the External Audit Committee

Trust Fund

Washington, D.C.

June 29, 1979

Authority for the Audit

The audit for the year ended April 30, 1979 was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have examined the balance sheet of the Trust Fund administered by the International Monetary Fund as at April 30, 1979, and the related statements of income and expense and trust resources for the year then ended.

Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, after evaluating the extent and results of the tests which we observed to have been carried out by the Internal Auditor, and such other auditing procedures as we deemed necessary in the circumstances.

Audit Opinion

In our opinion, the financial statements referred to above give a true and fair view of the financial position of the Trust Fund as at April 30, 1979, and of the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ Harold E. Hayes, Chairman (Canada)

/s/ Stefan Svavarsson (Iceland)

/s/ Gamini C. B. Wijeyesinghe (Sri Lanka)

Trust Fund

(Note 1) Balance Sheet

as at April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Assets
Gold18,370,198
Sight deposits40,56127,748
Term deposits534,534,618
Investments, at cost (market value SDR 235,576,501—1979, SDR 545,409,986—1978)232,464,576542,876,475
Loans (Note 3)969,864,424299,809,000
Accrued interest on investments and term deposits21,449,8552,698,486
Accrued interest on loans1,536,003434,669
Total1,759,890,037864,216,576
Trust Resources and Liabilities
Trust resources (Note 4)1,751,394,949864,216,576
Liabilities—
Undistributed profits from sale of gold8,495,088
Total1,759,890,037864,216,576
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
/s/ W.O. HabermeierTreasurer
/s/ J. de LarosièreManaging Director
Statement of Income and Expense

for the year ended April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Income:
Net proceeds realized from the sale of gold928,701,768668,761,378
Investment income43,458,37632,233,823
Interest income on loans3,704,818792,763
975,864,962701,787,964
Expense:
Administrative expense (Note 2):
Staff salaries and benefits, and other services834,746725,395
Gold weighing and handling charges58,57067,230
Data processing services5,6825,434
Other1,0021,941
Total administrative expense900,000800,000
Exchange valuation loss20,634,24234,897,408
21,534,24235,697,408
Net income954,330,720666,090,556
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Trust Resources

for the year ended April 30, 1979

Amounts expressed in special drawing rights

(Note 2)

19791978
Balance at beginning of year864,216,576396,495,877
Net income for year954,330,720666,090,556
Total resources before distribution of profits to developing countries1,818,547,2961,062,586,433
Distribution of profits to developing countries (Note 4)
Amount disbursed62,057,738222,555,762
Amount pending disbursement8,495,088
70,552,826222,555,762
Contributions received3,400,47924,185,905
Balance at end of year1,751,394,949864,216,576
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

1. Purpose

The Trust, which is administered by the Fund as Trustee, was established in 1976 to provide balance of payments assistance on concessional terms to eligible members that qualify for assistance. The resources of the Trust are separate from the assets of all other accounts of the Fund and are not used to discharge liabilities or to meet losses incurred in the administration of other accounts.

2. Accounting Practices

Unit of Account

The accounts of the Trust Fund are expressed in terms of the special drawing right (SDR), the currency value of which is determined by a standard basket of currencies of sixteen members.

Calculations

It is the practice of the Fund to make all calculations on the basis of the exact number of days in the accounting year.

Administrative Expense

The expenses of conducting the business of the Trust Fund that are paid from the General Resources Account of the IMF are reimbursed by the Trust on the basis of a reasonable estimate of these expenses by the IMF.

3. Loans

Loans are made from the Trust Fund to those eligible members that qualify for assistance in accordance with the provisions of the Trust Instrument. Each loan disbursement is repayable in ten semiannual installments which shall begin not later than the end of the first six months of the sixth year, and be completed at the end of the tenth year, after the date of disbursement. Interest on the outstanding loan balances is charged at the rate of one-half of one per cent per annum.

4. Trust Resources

The International Monetary Fund has decided that the Trustee will undertake other activities in connection with the distribution of profits from the sale of gold for the benefit of developing members. Each recipient’s share is calculated on the basis of the shares of each eligible member in total IMF quotas as of August 31, 1975 and on the basis of the actual profits realized in the gold auctions. At April 30, 1979 the Trust resources include the equivalent of SDR 243.8 million for direct distribution of profits to certain developing members, subject to decisions by the Fund as Trustee.

Report of the External Audit Committee

Staff Retirement Fund

Washington, D.C

June 29, 1979

Authority for the Audit

The audit for the year ended April 30, 1979 was carried out pursuant to Section 20(b) of the By-Laws of the International Monetary Fund.

Scope of the Audit

We have examined the balance sheet of the Staff Retirement Fund administered by the International Monetary Fund as at April 30, 1979, and the related statement of changes in reserves for the year then ended.

Our examination was made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records, after evaluating the extent and results of the tests which we observed to have been carried out by the Internal Auditor, and such other auditing procedures as we deemed necessary in the circumstances.

Audit Opinion

In our opinion, the financial statements referred to above give a true and fair view of the financial position of the Staff Retirement Fund as at April 30, 1979, and of the changes in reserves for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year.

External Audit Committee:

/s/ Harold E. Hayes, Chairman (Canada)

/s/ Stefan Svavarsson (Iceland)

/s/ Gamini C. B. Wijeyesinghe (Sri Lanka)

Staff Retirement Fund

(Note 1) Balance Sheet

as at April 30, 1979

Amounts expressed in U.S. dollars

19791978
Assets
Cash at banks63,62824,856
Investments (Note 2)
Bonds (market value $53,674,073—1979, $48,701,923—1978)58,120,30752,102,965
Stocks (market value $74,703,015—1979, $57,608,756—1978)76,628,87662,859,502
Total134,749,183114,962,467
Accrued interest on bonds, accrued contributions receivable,
and miscellaneous accounts receivable759,280643,794
Total Assets135,572,091115,631,117
Reserves and Liabilities
Reserves
Participants’ Account25,616,36821,782,780
Accumulation Account63,511,81852,308,376
Retirement Reserve Account46,441,42041,534,435
Total Reserves135,569,606115,625,591
Accounts Payable2,4855,526
Total Reserves and Liabilities135,572,091115,631,117
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.
/s/ W.O. HabermeierTreasurer
/s/ J. de LarosièreManaging Director
Statement of Changes in Reserves

for the year ended April 30, 1979

Amounts expressed in U.S. dollars

19791978
Contributions:
Participants3,950,8213,547,402
International Monetary Fund13,406,29510,784,528
Participants restored to service105,69848,543
Transfers (net) from retirement plans of other international organizations(113,125)(79,855)
Total Contributions17,349,68914,300,618
Investment Income:
Interest and dividends7,197,2725,224,376
Amortization of accumulated discounts38,73835,968
Amortization of net realized losses on bonds(239,721)(240,016)
Recognized market appreciation on equity investments229,700(435,000)
Net Investment Income7,225,9894,585,328
Payments:
Pensions and other benefits3,801,2333,346,111
Contributions, benefits, and interest paid to participants upon withdrawal606,617358,072
Commuted benefits274,635
Death benefits223,81370,293
Total Payments4,631,6634,049,111
Increase in Reserves during year19,944,01514,836,835
Reserves at beginning of year115,625,591100,788,756
Reserves at end of year135,569,606115,625,591
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.

Notes to the Financial Statements

1. Purpose

In accordance with the provisions of the Staff Retirement Plan, all assets and income of the Staff Retirement Fund are the property of the International Monetary Fund and are held and administered by it separately from all its other property and assets and are to be used solely for the benefit of participants and retired participants or their beneficiaries. The International Monetary Fund, as employer, meets the administrative costs of the Plan and is to contribute the part of the cost and expenses of the Plan not provided by the contributions of participants, plus any additional amounts required to pay costs and expenses of the Plan not otherwise covered. The combined rate of normal contribution is 21 per cent of participants’ notional gross salaries (14 per cent from the employer and 7 per cent from participants).

2. Investments

Valuation

All investments are recorded in the accounts at cost or amortized cost. The basis of valuation of the investment portfolio is intended to focus on the prospective long-run average yield of the existing portfolio. Therefore, not only interest and dividends, but also realized gains and losses on bonds and the effect of unrealized changes in the value of equity investments, are taken into account. The realized net loss (or gain) on bonds is amortized through the Accumulation Account over a ten-year period; unrealized market appreciation or depreciation on bonds is ignored. The amount of appreciation (or depreciation) on stocks to be recognized through the Accumulation Account each year is based on a ten-year moving average of the annual rate of changes in the market value of the equity portfolio. “Funds originally invested,” as referred to below, is the cumulative amount of contributions from the employer and from the participants made available for investment plus investment income. The investment base for determining the yield on investments is the “adjusted book value” in the balance sheet.

Investment Portfolio

The investments at April 30, 1979 and 1978 were as follows (in U.S. dollars):

19791978
Bonds
Amortized cost:
Notes insured by
U.S. Government2,495,45710,107,181
International development
banks5,063,1855,816,334
Corporate13,943,73110,967,099
Commercial paper5,745,0003,430,000
Certificates of deposit28,700,00019,684,900
Repurchase agreement1,368,0001,050,000
Total amortized cost57,315,37351,055,514
Add: Net realized losses2,397,3302,400,126
Funds originally invested59,712,70353,455,640
Deduct: Amortized net
realized losses1,592,3961,352,675
Adjusted book value
of bonds58,120,30752,102,965
Stocks
Cost:
Preferred Convertible232,682
Common77,477,92264,001,601
Total cost77,477,92264,234,283
Deduct: Net realized gains614,746910,781
Funds originally invested76,863,17663,323,502
Recognized appreciation.(234,300)(464,000)
Adjusted book value
of stocks76,628,87662,859,502
Total investments at
adjusted book value134,749,183114,962,467
The accompanying notes are an integral part of the financial statements.
The accompanying notes are an integral part of the financial statements.

3. Actuarial Valuation

The most recent valuation of the Plan by the actuary engaged by the Pension Committee was made as at April 30, 1978. The actuary’s valuation showed an experience loss for the year then ended of $4.1 million. Experience losses are amortized by contributions from the employer over a period of fifteen years. At April 30, 1979 the unamortized experience losses amounted to $34.0 million (SDR 26.7 million).

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