Chapter

Chapter 3: Activities of the Fund

Author(s):
International Monetary Fund
Published Date:
September 1981
Share
  • ShareShare
Show Summary Details

An Overview

Recent and prospective changes in the world economy have had a pronounced impact on the scale of activities as well as on the policies and procedures of the Fund. In addition, the Fund has taken a number of major decisions to further the objective of making the SDR the principal reserve asset in the international monetary system.

The financial activity of the Fund reached a new peak in terms of the number of arrangements with members involving high conditionality in the use of the Fund’s resources, the total amount of resources committed under existing arrangements, and the magnitude of actual purchases. Total volume of resources made available to member countries as conditional liquidity (i.e., in response to balance of payments need through the General Resources and Administered Accounts) and as unconditional liquidity (i.e., through SDR allocations) during the financial year ended April 30, 1981 amounted to SDR 9.5 billion, of which non-oil developing countries accounted for about SDR 6.6 billion. This figure is made up of gross purchases from the General Resources Account, Trust Fund loans, oil facility subsidy account payments, and SDR allocations. (See Table 22.) In 1980/81 members made net purchases from the Fund of about SDR 1.9 billion, marking a reversal of the trend of net repurchases during the preceding three years. In addition, about SDR 400 million of profits from gold sales was distributed to developing member countries during 1980/81, representing a once-for-all transfer of resources to members that was unrelated to balance of payments needs. The increase in financial activity, amounting to about 30 per cent over the previous year, reflected the large and widespread payments imbalances of members and the Fund’s policy of enlarged access under its stand-by and extended arrangements.

Table 22.Selected Financial Activities by Type and Country, 1975-81

(In millions of SDRs)

Financial Years Ended April 30
19751976197719781979198019811975-81
By Type
General Resources Account
Gross purchases14,121.35,267.44,749.72,367.31,239.22,210.84,385.924,341.6
Net purchases2(3,741.8)(4,866.6)(3,899.6)(-1,861.8)(-3,267.2)(-1,041.8)(1,924.2)(8,261.4)
Administered Accounts
Trust Fund loans31.7268.2670.0961.71,059.92,991.5
Oil facility subsidy account
payments (grants)13.827.525.019.127.850.1163.3
SDR allocations4,032.64,033.24,052.512,118.3
Total4,121.35,281.24,808.92,660.55,960.97,233.59,548.439,614.7
By Country
Industrial countries2,103.62,391.32,198.11,438.82,593.72,617.62,543.915,887.0
United States874.1874.1857.32,605.5
United Kingdom1,000.01,700.01,250.0304.2304.2298.34,856.8
Italy1,675.1780.290.0129.0128.9126.52,929.7
Others428.5611.1498.198.81,286.41,310.41,261.85,495.0
Developing countries2,017.72,889.92,610.81,221.73,367.24,615.97,004.223,727.3
Oil exporting369.3369.3380.31,118.9
Non-oil developing2,017.72,889.92,610.81,221.72,997.94,246.66,624.022,608.3
Africa243.6580.5635.3336.6861.71,262.61,472.95,393.2
Asia926.5882.0603.8435.41,011.51,197.43,448.38,505.1
Europe380.0611.5340.1271.6249.0765.8981.23,599.2
Middle East158.8133.6199.5143.1289.7152.475.71,152.2
Western Hemisphere308.8682.3832.135.0586.0868.4646.03,958.6
All countries4,121.35,281.24,808.92,660.55,960.97,233.59,548.439,614.7
Memorandum
Stand-by and extended
arrangements as of
April 30
Commitments389.81,472.25,197.61,285.11,600.43,049.79,475.122,469.9
Undrawn balances156.01,085.83,581.13,638.81,377.52,718.08,076.4
Gold distribution3209.7212.6220.4230.8873.5
Profits from gold sales distributed
to developing countries4222.670.6302.4400.2995.8

Excluding drawings in the reserve tranche.

Excluding purchases and repurchases in the reserve tranche; net repurchases (—).

Valued at SDR 35 per fine ounce.

Distribution in U.S. dollars. SDR amounts based on SDR/U.S. dollar rate in effect at time of distribution.

Excluding drawings in the reserve tranche.

Excluding purchases and repurchases in the reserve tranche; net repurchases (—).

Valued at SDR 35 per fine ounce.

Distribution in U.S. dollars. SDR amounts based on SDR/U.S. dollar rate in effect at time of distribution.

New commitments under 32 stand-by and extended arrangements approved during 1980/81 totaled SDR 9.5 billion, compared with commitments under 28 such arrangements for a total of SDR 3 billion in the previous year. At the end of the financial year, the Fund had stand-by and extended arrangements with 37 members.

Both the nature and the magnitude of the Fund’s balance of payments assistance to member countries reflected the character of members’ payments imbalances and the need for adjustment. In recent years members have been more willing to seek the Fund’s assistance in financing and implementing adjustment programs and have been willing to do so at an early stage of their balance of payments problems. About two thirds of the assistance provided by the Fund in the period 1974-78 was low-conditionality finance drawn under the oil facility and compensatory financing facility. In contrast, in the past two years about three fourths of the finance from regular Fund resources has been made available under programs of upper credit tranche conditionality. This change reflects, among other factors, the emergence of persistent and large-scale imbalances and the recognition by members that such imbalances require stronger adjustment programs.

The twin elements in enabling the Fund to play its role in the adjustment and financing process have been both the increase in its resources, regular and borrowed, and the enlargement of members’ access to them. The primary source of the Fund’s financing is the quota subscribed by each of its members. The increase proposed in the Seventh General Review of Quotas came into effect in November 1980 and raised the Fund’s regular resources from SDR 39 billion to SDR 60 billion. Work on the Eighth General Review of Quotas has been initiated. It has been agreed that the Eighth General Review should not only cover the question of the overall size of the Fund but also include selective adjustments in members’ quotas. The aim of such adjustments would be to better reflect in the Fund’s quota structure the developments in individual member’s positions in the world economy, while taking into account the world economic conditions and the Fund’s liquidity position.

Over time, the total of Fund quotas has fallen as a proportion of world imports, from 12 per cent in 1965 to only about 4 per cent in 1980 and even more so in relation to the balance of payments deficits experienced by a large number of Fund members. The Fund’s quota base has thus been sharply eroded in real terms over the last 15 years, and it has had to enlarge progressively, in terms of quotas, the access that members have to its resources so as to be able to make an adequate contribution to the adjustment process. In the 1970s a member could normally purchase up to the equivalent of 100 per cent of its quota (or 165 per cent of quota in the case of an extended arrangement) to support high-conditionality adjustment programs. Following the most recent actions of the Fund in January 1981, members making strong balance of payments adjustment efforts may now purchase up to 150 per cent a year for three years of their recently increased quotas, within an overall limit of the Fund’s holdings of a member’s currency of 600 per cent of quota, excluding any outstanding purchases under the low-conditionality facilities for oil, compensatory, and buffer stock financing and net of scheduled repurchases.

The effective financing capacity of the Fund depends not only upon total quotas but also on its liquidity position in terms of the relationship between its stock of immediately usable currencies and SDRs in the General Resources Account and its commitments to provide resources and to meet other calls that may be made on it. The Fund’s liquidity position has been adequate so far, but it has been agreed that the Fund should strengthen its liquidity position in keeping with the more active role that is being played by the Fund under the enlarged access policy. Substantial borrowings are required to supplement the regular resources of the Fund. These borrowings, which are forecast at SDR 6-7 billion a year during the next three years, should also enable the Fund to play a suitable role in the recycling of the increases in reserves, which are concentrated among a small number of members.

A major element in the Fund’s borrowing program was put in place with the conclusion of an agreement with the Saudi Arabian Monetary Agency under which the Fund will be able to borrow up to SDR 4 billion a year in each of the next two years, with a possible additional amount in the third year. This borrowing, together with a doubling of the Saudi Arabian quota in the Fund to SDR 2.1 billion, will significantly enlarge the liquid resources of the Fund to meet its substantial prospective commitments. In addition, the Fund has arranged for short-term financing of at least SDR 1.3 billion from central banks of industrial countries. The Fund is also continuing to explore the possibility of future borrowing from the private market.

Effective May 1, 1981, the Executive Board took important decisions under which a member using the credit tranches or the extended Fund facility would have the option to either use or retain a reserve tranche position.1 These decisions will give members greater flexibility in timing the use of their reserve tranche position. In conjunction with the raising of the rate of remuneration on Fund creditor positions from 72 per cent to 85 per cent of the combined market interest rate, the decisions also improve the attractiveness of the reserve tranche position for members.

On May 13, 1981, the Executive Board adopted a decision on compensatory financing of fluctuations in the cost of cereal imports for assisting members that encounter a balance of payments difficulty produced by an excess in the cost of their cereal imports largely attributed to factors beyond a member’s control.2 This assistance will be integrated with that available under the compensatory financing facility for shortfalls in export earnings, with an overall purchase limit of 125 per cent of quota. While the integrated facility will be available to all members of the Fund, it is expected to be of particular benefit to low-income countries, which are usually most susceptible to balance of payments disruption caused by export shortfalls or sharp increases in import prices of cereals. Cereals account for more than three fourths of the calorie content of all foods imported by low-income countries and for about 25 per cent of the world trade in agricultural products.

The Trust Fund, established in May 1976 to provide additional balance of payments assistance on concessionary terms to eligible member countries, made its final loan disbursement on March 31, 1981. (See Table 32.) This marked the completion of its operational objectives, and the process of winding it up began on April 30, 1981. Total loans outstanding to 55 members as at the end of the year 1980/81 amounted to SDR 2.9 billion. Part of the loan repayments to the Trust Fund (about SDR 1,500 million) will be used for further concessional assistance to low-income developing countries and up to SDR 750 million to finance in part the newly created administered account of the Fund, the supplementary financing facility subsidy account. This account is intended to reduce the cost of using the Fund’s resources under the supplementary financing facility as well as under the policy on exceptional use of the Fund’s resources. The account will be supplemented by donations and borrowing to be agreed between the Fund and the lenders.

During the year, the Executive Board decided, after a comprehensive review, to simplify the structure of the Fund’s charges by introducing a single rate of charge of 6.25 per cent on members’ use of the Fund’s ordinary resources, together with provision for periodic reviews of the Fund’s income position.3 While the level of charges has been raised somewhat, charges for the use of ordinary resources still contain an important element of concessionality. Charges on Fund assistance financed with borrowed resources will, however, reflect the cost of borrowed funds.

The Executive Board also took the following major decisions to further enhance the role of the special drawing right as an international reserve asset. The valuation basket of the SDR was reduced from 16 currencies to 5 currencies and unified with the SDR interest rate basket, with effect from January 1, 1981. The SDR rate of interest was raised from 80 per cent to 100 per cent of the combined market interest rate, with effect from May 1, 1981. The reconstitution requirement whereby each member was obliged to maintain over time a minimum average level of SDR holdings of 15 per cent of its net cumulative allocation of SDRs was abrogated with effect from April 30, 1981. SDRs are now freely transferable, by agreement between participants, in transactions and operations that include purchases and sales of SDRs, both spot and forward, loans, donations (grants), swaps, and pledges of SDRs. The first use of SDRs in loans and in settlement of financial obligations took place during the year. The SDR is also finding increasing acceptance as a unit of account for private contracts as well as for use by other international and interregional organizations. The third and final allocation of SDRs (SDR 4,053 million) in the third basic period, January 1, 1978-December 31, 1981, was made as of January 1, 1981 to all 141 Fund members, bringing the total of SDRs to SDR 21.4 billion. Four more official institutions were prescribed as “other holders” of SDRs, and the first transactions and operations in SDRs involving “other holders” took place during the year.

During 1980/81, regular consultations were completed for 91 countries under Article IV. The consultations, which are the principal means of carrying out the Fund’s surveillance over the exchange rate policies of individual member countries, were supplemented by ad hoc consultations and by special consultations with member countries in connection with periodic reviews of the World Economic Outlook by the Executive Board.

The Fund’s training and technical assistance programs continued to be made available to members in the monetary, banking, fiscal, and balance of payments fields, as well as in other areas of special interest to the Fund, in response to requests from members.

Transactions and Operations in the General Resources Account

In 1980/81, total new commitments under stand-by and extended arrangements reached a peak of SDR 9.5 billion. Total purchases in 1980/81, all made by developing countries, amounted to the equivalent of SDR 4.9 billion. (See Table 23.)

Table 23.Flow of Transactions in the General Resources Account and Resulting Stocks, Financial Years Ended April 30,1975-81

(In millions of SDRs)

Financial Year Ended April 30
Type of Transaction1975197619771978197919801981
Total purchases5,1026,5914,9102,5033,7202,4334,860
Reserve tranche9811,3241611362,480222474
Credit tranche1,6044612,3701,9374851,1062,682
Buffer stock54826
Compensatory financing188281,7531322465863784
Extended facility8190109242216920
Oil facility2,4993,966437
Total repurchases5189608684,4854,8593,7762,853
Gold sales411452453419
Replenishment up to May 31, 1978201239
Competitive bids181187
Noncompetitive bids511
In distributions210213220231
Outstanding borrowings
In connection with oil facility2,4996,4656,7026,3294,2572,4741,528
Under the General Arrangements to Borrow9111,576777777777
From Swiss National Bank89154
Supplementary financing facility5022,018
Holdings of the General Resources Account
at end of year
Usable currencies210,1007,8005,30011,2008,80010,60023,440
SDRs5104617711,3711,2901,4075,445
Gold35,3705,3704,9594,5074,0553,6363,620

In addition, credit tranche purchases equivalent to SDR 39.56 million in the financial year ended April 30, 1976 were reclassified as having been made under the compensatory financing decision.

“Usable currencies” are those that are available to the Fund for net sales through the operational budget, except for those currencies held by the Fund in excess of quota. Since the Second Amendment became effective on April 1, 1978, the criterion for including currencies for net sales is that the members concerned have a balance of payments and reserve position that is considered “sufficiently strong” for that purpose.

Valued at SDR 35 per fine ounce.

In addition, credit tranche purchases equivalent to SDR 39.56 million in the financial year ended April 30, 1976 were reclassified as having been made under the compensatory financing decision.

“Usable currencies” are those that are available to the Fund for net sales through the operational budget, except for those currencies held by the Fund in excess of quota. Since the Second Amendment became effective on April 1, 1978, the criterion for including currencies for net sales is that the members concerned have a balance of payments and reserve position that is considered “sufficiently strong” for that purpose.

Valued at SDR 35 per fine ounce.

During the year, 21 stand-by and 11 extended arrangements were approved for a total of about SDR 9.2 billion; in addition, the arrangements for Panama and Sudan were augmented by SDR 251 million. Of the total, SDR 2.8 billion was committed from the Fund’s ordinary resources and SDR 6.6 billion from the supplementary financing facility. The undrawn balances under stand-by and extended arrangements at the end of April 1981 amounted to about SDR 8.1 billion. (See Appendix I, Tables I.2 and I.7.)

Total repurchases during the year, at SDR 2.9 billion, were considerably lower than in the preceding three years, although much higher than in 1975-77. Almost one third of total repurchases were in respect of purchases made under the oil facility, while a somewhat larger amount related to purchases that had been made under the compensatory financing facility.

Outstanding purchases at the end of April 1981 amounted to SDR 9.9 billion, an increase of SDR 1 billion in the preceding 12 months. (See Chart 19.)

Chart 19.Use of Fund’s Resources as at April 30, 1971-81

(In billions of SDRs)

Purchases

Reserve Tranche Purchases

Compared with the previous year, purchases in the reserve tranche more than doubled in 1980/81, to SDR 474 million. The increase was due largely to a purchase of SDR 368 million by the People’s Republic of China; the remaining purchases, totaling SDR 106 million, were made by 15 other developing countries.

Purchases in the reserve tranche 4 have so far tended to reflect the general trend in the higher demand for the Fund’s resources. This was so because the use of resources under stand-by and extended arrangements was predicated on the full prior use of any reserve tranche position that a member may have had at the time of requesting a purchase under the arrangement. Effective May 1, 1981, however, a member using the credit tranches or the extended Fund facility has the option of either using or retaining a reserve tranche position.5 In addition, members indebted to the Fund, whose currency is sold by the Fund under operational budgets, have the option of attributing the reduction in the Fund’s holdings either to any of their obligations to repurchase or to their reserve tranche position, except where the member has an outstanding purchase financed under the General Arrangements to Borrow.6 Purchases in the reserve tranche are, however, still subject to balance of payments need, although not, under the Articles, subject either to prior challenge or to economic policy conditions. They are also not subject to repurchase. This new decision on the reserve tranche will be reviewed by the Executive Board before April 30, 1984.

Credit Tranche Purchases and Stand-By Arrangements

Purchases in the credit tranches in 1980/81 increased sharply, to SDR 2.7 billion from SDR 1.1 billion in 1979/80, most of them made under stand-by arrangements. All the credit tranche purchases were made by developing countries, the largest amounts purchased being by the People’s Republic of China (SDR 450 million), Korea (SDR 384 million), Turkey (SDR 360 million), and Yugoslavia (SDR 376 million). Nearly half of the purchases under stand-by arrangements were financed from borrowed resources under the supplementary financing facility, compared with only SDR 383 million in 1979/80, when these supplementary financing facility resources were first used.

Twenty-one stand-by arrangements were approved for 19 members during the year in amounts totaling the equivalent of SDR 5 billion (compared with SDR 2.5 billion in the previous year), of which the largest amounts were for Yugoslavia (SDR 1,662 million) for a period of two years and 11 months, and for Turkey (SDR 1,250 million) for a period of three years. All the arrangements were in the upper credit tranches, except for those for the People’s Republic of China, Cyprus, El Salvador, and Zimbabwe, which were first credit tranche arrangements. Among stand-by arrangements approved in 1980/81, those for 11 members included supplementary financing, of which 6 (Kenya, Korea, Malawi, Tanzania, Turkey, and Yugoslavia) were approved under the section of the decision that permits, in special circumstances, stand-by arrangements for amounts in excess of the normal maximum entitlement. In all, 26 members purchased SDR 2.4 billion under stand-by arrangements in 1980/81; of the total, SDR 1.1 billion was drawn under the supplementary financing facility and the balance was purchased from ordinary resources.

Extended Fund Facility

Eleven arrangements were approved during 1980/81 under the extended Fund facility, which was established in September 1974 to provide medium-term assistance to members for longer periods and in amounts larger in relation to quotas than under the tranche policies, to overcome structural balance of payments maladjustments. The extended arrangement for jamaica was canceled and a new one approved during the year. The arrangement with Morocco was also canceled and of the total amount of its arrangement (SDR 810 million) the equivalent of SDR 147 million was purchased prior to cancellation. A new arrangement was approved for Morocco amounting to SDR 817.05 million. The 11 arrangements, all with developing countries, totaled SDR 4.5 billion, of which SDR 3.0 billion was provided from the supplementary financing facility. Ten of the arrangements are in excess of the quota limit of 140 per cent and were approved in the light of the members’ exceptional circumstances, particularly the balance of payments need relative to their quotas. A total of SDR 920 million was purchased under the 15 arrangements in force during the year, which included 4 approved in earlier financial years. Undrawn balances under the extended arrangements amounted to SDR 4,476 million on April 30, 1981.

The Executive Board reviewed the extended Fund facility and generally noted that the adjustment process in many countries was under growing external pressure and thus the longer periods of assistance under this facility would continue to be increasingly important. It was also agreed that the limit for maximum access to the Fund’s ordinary resources should be maintained at 140 per cent of quota and the maximum repurchase period at 10 years.

Compensatory Financing Facility

Members’ purchases under the compensatory financing facility are governed by Executive Board Decision No. 6224-(79/135),7 adopted August 2, 1979, which provides for a quota limit of 100 per cent on outstanding purchases under the facility. The operation of the facility is kept under constant review by the Executive Board in the course of its consideration of requests for use of the facility by individual members.

Use of the facility has grown significantly since its major liberalizations in December 1975 and August 1979, both in absolute terms and also in relation to total use of Fund credit. The nearly SDR 1 billion purchased since the 1979 decision accounted for about one third of total purchases from the Fund during the period August 1979 to April 1981. As of the end of April 1981, outstanding compensatory financing purchases amounted to SDR 2.6 billion, which is also about one third of total purchases from the Fund.

Compensatory Financing of Fluctuations in the Cost of Cereal Imports

On May 13, 1981 the Executive Board adopted a decision on compensatory financing of fluctuations in the cost of cereal imports, which establishes, in conjunction with the existing compensatory financing facility, a means of providing assistance to members in the financing of temporary increases in the costs of cereal imports that are caused by factors largely beyond a member’s control.8 The decision integrates the assistance in respect of temporary increases in the cost of members’ cereal imports with the assistance available under the compensatory financing facility in respect of temporary shortfalls in export receipts. Assistance available under the scheme will be additional to that available to members under the Fund’s credit tranche and extended Fund facility policies. As with the compensatory financing facility, the drawings will “float” in the reserve tranche. The principal features of the new scheme are as follows:

1. It will be operative for an initial period of four years, and the Executive Board will review this decision not later than June 30, 1983, and when quota increases under the Eighth General Review of Quotas become effective. The cereals under the scheme are those covered by categories 041-046 of the Standard International Trade Classification and include wheat, rice, and coarse grains, such as maize, barley, sorghum, and millet.

2. A member can either request a purchase under the compensatory financing facility as it has been in operation since August 1979 9 or it can base its request on the new decision, which integrates the compensation available for cereal import excesses with that available for export shortfalls. Once a member makes a request under the new decision, it is bound to continue to base its future requests under that decision for the next three years.

3. Under the new decision, a member’s purchase is subject to quota limits and is based on the net shortfall defined as the sum of two components:

(i) the export shortfall, which will continue to be calculated as the amount by which exports in a given year are below the geometric average of exports for a five-year period centered on the given year; and

(ii) the cereal import excess, calculated as the amount by which the cost of cereal imports in a given year exceeds the arithmetic average of the cost of cereal imports for the five-year period centered on the given year.

4. The quota limits applicable to outstanding purchases are as follows:

(a) Export shortfalls100 per cent of quota
(b) Cereal import excesses100 per cent of quota
(c) Total purchases
((a) plus (b))125 per cent of quota

The Fund will indicate in an appropriate manner which purchases by a member are made pursuant to this decision, and the export shortfall component and the cereal import component of each purchase.

5. In dealing with a member’s request, care will be taken to avoid overcompensation arising from such causes as: (i) previous compensatory purchases relating to overlapping shortfall years; and (ii) the grant element of food aid, to the extent that it is included in cereal import data.

6. A member making a purchase, besides demonstrating a balance of payments need to purchase, must represent that it will cooperate with the Fund in finding appropriate solutions for its balance of payments difficulties. When the requested purchase, by itself or taking into account previous compensatory financing purchases under the facility and the cereal decision, raises the member’s outstanding purchases under the facility and compensation of cereal import costs above 50 per cent of its quota, the member must satisfy the Fund that it has been so cooperating.

7. Repurchases with respect to purchases under the new decision shall be made in equal quarterly installments, beginning three years and ending five years after the date of purchase.

Buffer Stock Facility

Since its establishment in 1969, the Fund’s buffer stock facility has been used only in the case of contributions of Fund members to two commodity agreements. A total of SDR 30 million was purchased by five members for the Fourth International Tin Agreement. For the 1977 International Sugar Agreement, SDR 74 million was purchased by six members to enable them to meet their national stocking obligation. No purchases are currently outstanding under the facility. Under present policy, Fund assistance is available to members in balance of payments need for the purpose of financing the cost of their contributions to buffer stocks established under international agreements judged to be suitable for Fund financing. In accordance with criteria laid down in the 1969 decision, the Fund has so far authorized the use of Fund resources in connection with the tin, cocoa, and sugar buffer stocks, but drawings have been made only with respect to tin and sugar.

Supplementary Financing Facility

The supplementary financing facility was established on August 29, 1977 10 and became operational on February 23, 1979. Its purpose is to enable the Fund to provide supplementary financing under stand-by or extended arrangements, in conjunction with the use of the Fund’s ordinary resources, to members facing serious payments imbalances that are large in relation to their economies and their Fund quotas. (See Table 24.)

Table 24.Supplementary Financing Facility Commitments Outstanding and Purchases Under Stand-By and Extended Arrangements as at April 30,1981

(In millions of SDRs)

Supplementary Financing
CountryQuotaArrangementAmountCommitmentPurchases1Undrawn

balance
Bangladesh2228.0EFF800.00480.8083.50397.30
Costa Rica361.5SBA60.5029.705.1224.58
Dominica42.9EFF8.554.490.364.13
Guyana537.5EFF100.0066.0014.1951.81
Ivory Coast6114.0EFF484.50324.9022.09302.81
Jamaica7111.0EFF236.35149.256.70142.55
Kenya8103.5SBA241.50184.4250.10134.32
Korea9255.9SBA576.00454.3157.84396.47
Liberia1055.5SBA65.0036.9018.9018.00
Madagascar1151.0SBA76.7029.717.5422.17
Malawi1228.5SBA49.8835.6312.0023.63
Mauritania1325.5SBA29.7017.406.0811.32
Mauritius1440.5SBA35.0031.9326.935.00
Morocco15225.0EFF817.05567.752.10565.65
Pakistan16427.5EFF1,268.00869.00112.00757.00
Panama1767.5SBA90.0045.514.4841.03
Philippines18315.0SBA410.00333.00183.00150.00
Senegal1963.0EFF184.80126.0020.55105.45
Sierra Leone2046.5EFF163.7099.5199.51
Sudan21132.0EFF427.00303.8075.50228.30
Tanzania2282.5SBA179.60137.4716.28121.19
Togo2328.5SBA47.5029.877.2522.62
Turkey24300.0SBA1,250.001,211.40321.40890.00
Yugoslavia25415.5SBA1,662.001,357.8496.001,261.84
Total9,263.336,926.591,149.915,776.68

The amounts represent purchases made under those arrangements that were in effect as of April 30, 1981.

Three-year extended Fund facility (EFF) arrangement approved December 8, 1980.

Two-year stand-by arrangement (SBA) approved March 12, 1980.

Three-year EFF arrangement approved February 6, 1981.

Three-year EFF arrangement approved June 25, 1980.

Three-year EFF arrangement approved February 27, 1981.

Three-year EFF arrangement approved April 13, 1981.

Two-year SBA approved October 15, 1980.

One-year SBA approved February 13, 1981.

Two-year SBA approved September 15, 1980.

SBA approved for the period April 13, 1981 to June 26, 1982.

SBA approved for the period May 9, 1980 to March 31, 1982.

SBA approved for the period July 23, 1980 to March 31, 1982.

One-year SBA approved September 5, 1980.

EFF arrangement approved for the period March 9, 1981 to October 7, 1983.

Three-year EFF arrangement approved November 24, 1980.

SBA approved for the period April 18, 1980 to December 31, 1981.

SBA approved for the period February 27, 1980 to December 31, 1981.

Three-year EFF arrangement approved August 8, 1980.

EFF arrangement approved for the period March 30, 1981 to February 22, 1984.

Three-year EFF arrangement approved May 4, 1979 and augmented by SDR 227.00 million in November 1980.

SBA approved for the period September 15, 1980 to June 30, 1982.

Two-year SBA approved February 13, 1981.

Three-year SBA approved June 18, 1980.

SBA approved for the period January 30, 1981 to December 31, 1983.

The amounts represent purchases made under those arrangements that were in effect as of April 30, 1981.

Three-year extended Fund facility (EFF) arrangement approved December 8, 1980.

Two-year stand-by arrangement (SBA) approved March 12, 1980.

Three-year EFF arrangement approved February 6, 1981.

Three-year EFF arrangement approved June 25, 1980.

Three-year EFF arrangement approved February 27, 1981.

Three-year EFF arrangement approved April 13, 1981.

Two-year SBA approved October 15, 1980.

One-year SBA approved February 13, 1981.

Two-year SBA approved September 15, 1980.

SBA approved for the period April 13, 1981 to June 26, 1982.

SBA approved for the period May 9, 1980 to March 31, 1982.

SBA approved for the period July 23, 1980 to March 31, 1982.

One-year SBA approved September 5, 1980.

EFF arrangement approved for the period March 9, 1981 to October 7, 1983.

Three-year EFF arrangement approved November 24, 1980.

SBA approved for the period April 18, 1980 to December 31, 1981.

SBA approved for the period February 27, 1980 to December 31, 1981.

Three-year EFF arrangement approved August 8, 1980.

EFF arrangement approved for the period March 30, 1981 to February 22, 1984.

Three-year EFF arrangement approved May 4, 1979 and augmented by SDR 227.00 million in November 1980.

SBA approved for the period September 15, 1980 to June 30, 1982.

Two-year SBA approved February 13, 1981.

Three-year SBA approved June 18, 1980.

SBA approved for the period January 30, 1981 to December 31, 1983.

To provide financing for the facility, the Fund entered into borrowing agreements with 14 lenders (4 members and 10 monetary authorities) for a total amount of SDR 7.8 billion. The borrowed resources available under the facility became fully committed on March 30, 1981.

The Fund established a subsidy account on December 17, 1980 to reduce the cost of using the supplementary facility for its low-income developing members. (For details, see the section on Administered Accounts.)

Policy of Enlarged Access to Fund Resources

In anticipation of the full commitment of resources from the supplementary financing facility, the Executive Board took a decision on March 11, 1981 adopting a policy of enlarged access to the Fund’s resources until the Eighth General Review of Quotas becomes effective. The Fund will, thereby, continue to provide assistance to members facing payments imbalances that are large in relation to their quotas and who need resources in larger amounts and for longer periods than are available under the regular credit tranches.11

The decision on enlarged access, which was to take effect with the full commitment of the supplementary financing facility and the conclusion of new borrowing agreements, became operative with the completion of a new borrowing agreement with the Saudi Arabian Monetary Agency on May 7, 1981. This was followed by other borrowing agreements with the Bank for International Settlements and four central banks.12

Under this policy the Fund will, as under the supplementary financing facility, authorize purchases under stand-by and extended arrangements to be financed in the same specified proportions from ordinary resources and borrowed resources in accordance with existing policies on phasing and performance criteria. Access to the Fund’s resources under other Fund policies will remain available in accordance with the terms of those policies. The Fund will approve arrangements under the new decision only to the extent of available financing. The Fund will review this decision not later than June 30, 1983 and annually thereafter as long as the decision remains in effect. The main features of the decision on enlarged access, which are broadly similar to those of the supplementary financing facility, are as follows:

A member requesting use of enlarged access to resources must satisfy the Fund that (i) it needs financing in excess of the amount available to it in the four credit tranches or under the extended Fund facility and its problem requires a relatively long period of adjustment and a maximum period for repurchase longer than the three to five years specified under a normal stand-by arrangement, and (ii) its program will be adequate to deal with its problems and is compatible with the Fund’s policies on the use of its resources beyond the first credit tranche or under the extended Fund facility.

An arrangement providing for enlarged access may be approved at any time until the Eighth General Review of Quotas becomes effective, provided that the Fund may extend this period. A stand-by arrangement approved under this decision will normally exceed one year and may extend up to three years in exceptional cases. An extended arrangement will normally be for three years.

The amounts of the arrangements will be determined according to guidelines adopted by the Fund from time to time, and the apportionment of the amounts between ordinary and borrowed resources will be as follows:

(a) Under a stand-by arrangement in the ratio of 2 to 1 in the first credit tranche and of 1 to 1.2 in the next three credit tranches. Thereafter, purchases will be made with borrowed resources only.

(b) Under an extended arrangement purchases will be made with ordinary and borrowed resources in the ratio of 1 to 1 until the outstanding use of the upper credit tranches and the extended Fund facility equals 140 per cent of quota. Thereafter, purchases will be made out of borrowed resources.

The Fund will review from time to time the proportions of ordinary and borrowed resources and may modify them. Any modification in the proportions will apply uniformly both to arrangements approved after the modification and to amounts purchased after the modification under existing arrangements.

An arrangement under the decision on enlarged access may provide, in part, for supplementary financing if (i) it replaces an arrangement under the supplementary financing decision or (ii) supplementary financing becomes available because an arrangement is canceled or is not expected to be fully utilized. In this case, the supplementary financing will be used before other borrowed resources.

As under the supplementary financing facility, repurchases in respect of outstanding purchases financed by borrowed resources are to be made in equal semiannual installments beginning three and one-half years and ending seven years after the purchase. A repurchase in advance of the scheduled installments attributed to a purchase of borrowed resources must be accompanied by a repurchase in respect of the purchase made from ordinary resources if any part of that purchase is still outstanding. The amounts to be repurchased will be in the same proportions in which ordinary and borrowed resources were used in the purchases.

Provision is made for a waiver of the limitation of 200 per cent, in Article V, Section 3(b)(iii), of the level of the Fund’s holdings of a member’s currency. The Fund’s credit tranche policies will be applied as if the Fund’s holdings of a member’s currency did not include holdings resulting from purchases of borrowed resources under this decision. Further, holdings resulting from such purchases will be excluded under Article XXX(c) for the purpose of defining reserve tranche purchases.

The Fund’s Executive Board also adopted, in January 1981, new guidelines that enlarge the scale of Fund assistance to member countries following the completion of quota increases under the Seventh General Review. The new guidelines generally provide for members making strong adjustment efforts to have an annual access to Fund resources of up to 150 per cent of their new quotas or up to 450 per cent over a three-year period. Members’ cumulative access, net of scheduled repurchases, would be up to 600 per cent of quota excluding outstanding drawings under the compensatory and buffer stock financing facilities or outstanding drawings under the oil facility. The new guidelines provide for absolute amounts of assistance 12½ per cent larger than those available earlier.13

The guidelines governing access under the new quotas allow for flexibility in application. Thus, in some cases, members will be able to borrow larger amounts than the limits would normally allow, as, for instance, when a member’s quota is unusually low in relation to its economic size, or when a member has an exceptionally strong adjustment program. The Fund will also consider members’ requests, on a case-by-case basis, for augmentation of the amounts of existing stand-by and extended arrangements in light of the new guidelines, taking into account the progress of the adjustment program in individual countries, normally at the end of the first year of an arrangement but some flexibility on the timing of such reviews will be allowed for.

The new guidelines will be reviewed by the Executive Board in the light of experience with members’ adjustment programs, taking into account present and prospective arrangements under the enlarged access decision, the pace and modalities of the Fund’s borrowing program, and the liquidity position of the Fund.

Repurchases

Total repurchases made in 1980/81 amounted to the equivalent of SDR 2,853 million, compared with SDR 3,776 million in 1979/80 and the peak of SDR 4,859 million in 1978/79.

There was a very marked decline during 1980/81 in the number and amounts of members’ requests for rescheduling of their repurchases beyond their initial due dates. The Executive Board agreed to the requests of 22 members to reschedule their repurchases, totaling SDR 613 million, over periods up to five years from the date of purchase under facilities for which the repurchase period is three to five years. In the previous year, the Executive Board had agreed to the request of 37 members to reschedule their repurchases (totaling SDR 1,654 million).

None of the outstanding purchases fell during the year under the guidelines for early repurchases adopted by the Executive Board by decisions taken in March 1978 and June 1979.14 Two members, Mauritius (SDR 9.2 million) and Sudan (SDR 4.5 million), made voluntary repurchases totaling SDR 13.7 million in advance of their scheduled repurchase commitments.

Fund Liquidity

The Fund’s overall liquidity position—that is, the relationship between its immediately usable resources, or uncommitted ordinary resources, comprising SDRs in the General Resources Account and usable currencies and its liquid liabilities 15—was considerably improved following the quota increases under the Seventh General Review in 1980. Usable currencies are currencies of those members that are considered by the Executive Board to be sufficiently strong, in the light of their balance of payments and gross reserve positions, to be subject to designation and for inclusion in the quarterly operational budget. Under existing decisions and policies of the Fund, currencies of members that have outstanding purchases are not proposed for sales, unless so requested by the member concerned. The Fund’s holdings of gold, amounting to 103.440 million fine ounces, are not included in the total of immediately usable resources.

At the end of 1980/81, the Fund’s usable uncommitted ordinary resources amounted to about SDR 28.6 billion (SDR 23.4 billion of usable currencies and SDR 5.2 billion in the General Resources Account), compared with outstanding borrowings (under the oil facility, the supplementary financing facility, and GAB) of SDR 4.3 billion and reserve tranche positions of Fund members totaling SDR 13.1 billion. These liquid claims on the Fund may be drawn upon or encashed by the creditor members in case of balance of payments need. The use of these claims has been modest to date, but the Fund must be able to meet demands for use or encashment of these claims not only for prudential reasons but also to maintain confidence in the Fund’s ability to serve as an international monetary institution in which members also hold some of their liquid foreign reserves. The Fund’s liquidity will be considerably enhanced, by some SDR 1 billion, once the payment for the special increase in Saudi Arabia’s quota is completed. Moreover, the Fund has taken a decision under which it may agree with a “debtor” member concerning sales of its currency provided that the member is in a sufficiently strong external position.16 Under this decision, the Fund began using pounds sterling in the quarterly period starting March-May 1981, to finance purchases by other members, although the United Kingdom has outstanding purchases under the oil facility. In practice, the bulk of the Fund’s usable currency holdings usually tends to be represented by a small number of currencies. Thus at the end of the financial year 1980/81, the Fund’s holdings of just five currencies accounted for a little over 70 per cent of total usable currency holdings.

The present relatively comfortable liquidity position has to be viewed in the light of the potential demands on the Fund’s resources from (a) commitments under stand-by and extended arrangements, credit tranche purchases outside those arrangements under the compensatory and buffer stock financing facilities, and (b) possible use of creditor positions in the Fund, including reserve tranche positions and claims by special holders that may be encashed in case of balance of payments need, as well as future claims with encashment provisions that may alternatively be sold to the Fund. In view of these prospective demands, the Fund judges it prudent to strengthen its liquidity. The Fund will need adequate resources to finance purchases and to hold as liquid assets against borrowing until the next quota increases under the Eighth General Review are completed. The Fund’s new borrowing program is thus essentially designed to obtain bridging finance for the next few years.

Membership and Quotas

Membership and Participation in the Special Drawing Rights Department

Between May 1, 1980 and July 31, 1981, one new member joined the Fund and four countries applied for membership. Zimbabwe became a member of the Fund on September 29, 1980, raising the total membership to 141. Its initial quota of SDR 100 million was increased to SDR 150 million in connection with the Seventh General Review of Quotas. Zimbabwe also elected to participate in the Special Drawing Rights Department and, as a result, all Fund members were participants in that Department at the end of the financial year.

Vanuatu applied for membership during the year. On April 3, 1981 a Committee on Membership agreed to propose to the Executive Board a quota of SDR 6.9 million for Vanuatu. Effective June 15, 1981 the Board of Governors adopted the resolution on membership for Vanuatu. Antigua and Barbuda, Belize, and the Kingdom of Bhutan have also applied for membership in the Fund.

Seventh General Review of Quotas

The Seventh General Review of Quotas, which was initiated in 1976, became effective on November 29, 1980, following notification to the Fund by 127 members, representing 75.15 per cent of total Fund quotas on November 1, 1978, of their consent to the increase in quota. The Board of Governors Resolution on the Seventh General Review of Quotas, which was adopted on December 11, 1978, provided for a general quota increase of 50 per cent for all members except the People’s Republic of China and Democratic Kampuchea, for which no increases were provided. In addition, selective quota increases were provided for 11 developing member countries: Iraq, Iran, Korea, Kuwait, Lebanon, Libyan Arab Jamahiriya, Oman, Qatar, Saudi Arabia, Singapore, and the United Arab Emirates. Members were required to pay 25 per cent of the increase in their quotas in SDRs, and the remainder in their own currencies. A member’s increase in quota became effective upon payment of the required amount.

In all, the Seventh Review of Quotas provided for an increase in the total of Fund quotas from SDR 39,766.5 million to SDR 60,025.6 million, including provisions covering a special quota adjustment for the People’s Republic of China (discussed below) and for members joining the Fund after November 1, 1978. After several extensions by the Fund, the time limit for consent to the proposed quota increases under the Seventh General Review was set at March 16, 1981. By that date the consents received from all countries except Iran had raised aggregate quotas to SDR 59,605.5 million. However, the Executive Board decided that it would give sympathetic consideration to any request for a special quota increase by Iran, up to the amount available under the Seventh General Review, provided that such a request was received by December 31, 1981. All other members except Oman had consented to the full increase provided for them. Oman consented to an increase to SDR 30 million, against a proposed maximum quota of SDR 35.1 million.

Special Quota Adjustments

Two members, the People’s Republic of China and Saudi Arabia, requested and received special adjustments in their quotas during the year. China’s quota had remained unchanged at SDR 550 million since the inception of the Fund. But following the Executive Board’s decision on April 17, 1980 that the People’s Republic of China represented China in the Fund, China requested a special increase in its quota commensurate with its economic size. On September 8, 1980, the Board of Governors authorized an ad hoc increase in the quota of China from SDR 550 million to SDR 1,200 million, as well as an increase of 50 per cent in its quota on the same terms and conditions as other members under the Seventh General Review of Quotas. These increases together raised China’s quota from SDR 550 million to SDR 1,800 million (3.02 per cent of total quotas).

On December 1, 1980, Saudi Arabia requested a substantial increase in its quota. The Executive Board considered the request on March 27, 1981, and recommended to the Board of Governors that Saudi Arabia’s quota be increased from SDR 1,040.1 million, following the Seventh General Review, to SDR 2,100 million, thereby increasing Saudi Arabia’s share of total quotas from 1.74 per cent to approximately 3.5 per cent. In its recommendation to the Board of Governors, the Executive Board noted that Saudi Arabia’s quota was out of line, taking account of its relative importance in the world economy and its uniquely large-scale lending to the Fund, in the past as well as prospectively, not only in absolute amounts but also in relation to its quota. In addition, in the light of Saudi Arabia’s present and prospective balance of payments and reserve position, the Executive Board noted that the increase in its quota would also enlarge the usable resources available to the Fund. The Board of Governors authorized the recommended increase in Saudi Arabia’s quota, effective April 27, 1981. Saudi Arabia consented to the increase by means of a letter dated May 31, 1981. The new quota will become effective when the full payment has been received by the Fund, at which time Fund quotas will total SDR 60,665.4 million. (Appendix I, Table I.13.)

Eighth General Review of Quotas

The Interim Committee of the Board of Governors of the Fund in a communiqué issued after its September 28, 1980 meeting indicated, inter alia, that while it would be necessary during the next few years for the Fund to resort to further borrowing, the Committee wished to stress its view that the Fund should continue to place primary reliance on subscriptions under members’ quotas as a source of financing of the Fund’s operations. In this connection, the Committee endorsed the intention of the Executive Board to begin preparatory work on the Eighth General Review of Quotas. The Committee noted that this review “will be the occasion to reflect in the quotas the developments in members’ positions in the world economy, including a review of the criteria by which quotas are calculated.”

The Interim Committee in a communiqué issued after its sixteenth meeting in Libreville, Gabon, on May 21, 1981, urged the Executive Board to intensify its work on the Eighth General Review of Quotas, taking into account world economic conditions and the Fund’s liquidity position so that it would be in a position to make appropriate recommendations in due course. The process leading to the Eighth General Review of Quotas has been set in motion with the preliminary consideration by the Executive Board of the economic criteria entering into quota calculations.

Borrowing

To date, the Fund has supplemented its ordinary resources (i.e., from subscriptions to quotas) by borrowing from some of its members and Switzerland under the General Arrangements to Borrow, the oil facility, and the supplementary financing facility. To finance its growing commitments under the policy of enlarged access, the Fund has entered into new bilateral arrangements with the Saudi Arabian Monetary Agency (SAMA) and with the central banks or official agencies of 16 industrial countries under which they will make available to the Fund the equivalent of SDR 1.3 billion over a commitment period of two years. Discussions are under way with a number of other countries with strong balance of payments and reserve positions on possible medium-term borrowing arrangements similar to those arranged with SAMA and also with the monetary authorities of certain industrial countries and developing countries for placements of short-term paper issued by the Fund.

General Arrangements to Borrow

The General Arrangements to Borrow (GAB), originally concluded between the Fund and ten industrial member countries in 1962 for four years, have been extended a number of times, and most recently for another period of five years from October 24, 1980.17 Switzerland’s association with the GAB, under a separate agreement of June 11, 1964 with the Fund, has been extended until July 15, 1985, with an automatic extension until October 23, 1985 provided that the Swiss Parliament decides to extend the relevant Federal Decree until the latter date. The maximum credit available to the Fund through the GAB in lenders’ currencies is equivalent to about SDR 6.5 billion, of which the balance on April 30, 1981, after adjusting for GAB resources already drawn upon, was about SDR 5.8 billion. The use of the GAB is limited to drawings by a participant and it is activated only to forestall or cope with an impairment of the international monetary system. The last use of the GAB was in connection with a reserve tranche purchase, equivalent to SDR 777 million, made in November 1978 by the United States; this amount is scheduled to be repaid by the Fund in November 1983.

Oil Facility

The borrowing agreements under this facility were originally entered into by the Fund with 17 lender countries, including Switzerland, in 1974 and 1975 for a total amount of SDR 6.9 billion. During 1980/81, the Fund repaid the equivalent of about SDR 1.0 billion to these lenders, and by April 30, 1981, the Fund had repaid the equivalent of SDR 5.4 billion of indebtedness incurred under the oil facility. The balance of indebtedness on that date amounted to SDR 1.5 billion and is expected to be fully repaid by mid-1983.

In November 1980, the Deutsche Bundesbank transferred to SAMA its claims under the oil facility totaling SDR 225 million. This was the first such transfer made in accordance with the Executive Board decision on transferability of oil facility claims.18 Previous transfers of loan claims on the Fund had been made only among GAB participants. The transferred claims carry a five-year maturity in accordance with the relevant provision of the original oil facility borrowing agreement between the Deutsche Bundesbank and the Fund. Of the transferred claims, SDR 75 million was due for repayment in January 1981, although corresponding repurchases from the borrowers were not due at that time. However, following a proposal by SAMA, subsequently approved by the Executive Board, the maturity of these claims was extended from five years to seven years. This extension brought into line the maturity of the claims with most other existing oil facility claims. The remaining transferred claims, equivalent to SDR 150 million, were fully repaid to SAMA by May 10, 1981.

Supplementary Financing Facility

In 1979 the Fund entered into borrowing agreements with 13 members and the Swiss National Bank to provide, in different currencies, the equivalent of SDR 7.8 billion as supplementary financing. (See Appendix I, Table I.10.)

During the financial year, the Fund borrowed a total of SDR 1.5 billion under the facility, compared with SDR 502.4 million in the previous year. On April 30, 1981, SDR 5.8 billion was still undrawn but had been fully committed under existing stand-by and extended arrangements.

A creditor’s loan claims on the Fund in connection with the supplementary financing facility are encashable virtually on demand by the Fund if the creditor represents that it has a balance of payments need, and lenders can, without prior consent of the Fund, transfer their claims to any other lender, any Fund member, or certain other official entities at prices agreed between the transferor and transferee. The first such transfer of claims took place in November 1980, when loan claims totaling SDR 172 million were transferred by the Deutsche Bundesbank to SAMA. The transferred claims carry a five-year maturity in accordance with the relevant provision of the borrowing agreement between the Deutsche Bundesbank and the Fund, whereas most other claims under the supplementary financing facility carry a seven-year maturity.

The interest payable by the Fund on its borrowings for the supplementary financing facility is at a rate equal to the average yield for each six-month period starting July 1, 1978 of U.S. Government securities with a maturity of five years, rounded upward to the nearest ⅛ of 1 per cent. Since June 1979, this rate has varied from 9.25 per cent to 11.625 per cent a year. For the six-month period ended June 30, 1981, the rate was 13.75 per cent a year (Table 25).

Table 25.Interest Paid by the Fund Under the Supplementary Financing Facility

(In per cent per annum)

Six MonthsRate of
EndedInterest
June 30, 19799.25
December 31, 19799.875
June 30,198011.375
December 31, 198011.625
June 30,198113.75

Borrowing to Finance Enlarged Access

Saudi Arabian Monetary Agency

A large-scale borrowing agreement was concluded between the Fund and SAMA on May 7, 1981, whereby the Fund’s policy of enlarged access also became operative.

SAMA has agreed to lend to the Fund up to SDR 4 billion in the first year of the commitment period and up to SDR 8 billion in the second year. The Saudi Arabian authorities have also indicated their intention to consider a further commitment for the third year if their balance of payments and reserve position so permits. The loans will be denominated in SDRs. Drawings under this borrowing agreement may be made by the Fund during a commitment period of six years, each call being subject to a 90-day notice period. After the first 90 days, the Fund will undertake to draw down at least SDR 1 billion in the first year and not more than SDR 4 billion in any one year without the further agreement of SAMA.

Interest will be paid by the Fund semiannually, on the basis of the weighted average rate of five-year government securities in each of the component currencies of the SDR. Each loan will be repayable in four equal annual installments, beginning at the end of the fourth year and ending after seven years. The Fund may repay any loan or installment in advance of maturity, subject to 60 days’ notice to SAMA. SAMA will be entitled to obtain a suspension of calls by the Fund or repayment of outstanding loans in the event of a balance of payments need. The claims of SAMA will be transferable to any member of the Fund or a prescribed holder of SDRs, and SAMA will be able to obtain, at its request, promissory notes in bearer form, which would be transferable to other parties, official or private. The agreement provides that, if within the next two years the Fund agrees to more favorable financial terms with any other member or central bank of a member that is lending to the Fund, SAMA will also receive the benefit of these terms.

The agreement will be reviewed before the end of 18 months with a view to a possible further commitment. Any disputes under the agreement will be settled by mutual agreement and, failing such agreement, by international arbitration. Disputes on bearer notes, if the bearer-note option is taken by SAMA, will be subject to adjudication in an appropriate national judicial system, and, for this purpose only, the Fund will waive its immunity with respect to jurisdiction and execution.

Bank for International Settlements, Central Banks, and Other Monetary Authorities

By August 4, 1981, the Fund had agreed with the central banks or official agencies of 16 industrial countries that they will make available to the Fund the equivalent of SDR 1.3 billion over a commitment period of two years.19 Of this amount, SDR 675 million is being made available to the Fund under a borrowing agreement with the Bank for International Settlements (BIS), and the balance is being borrowed by the Fund under direct bilateral arrangements with four lenders, namely, the National Bank of Belgium, Japan, the Swiss National Bank, and the Bank of England. The Fund has also entered into separate agreements with the Bank of Finland and the Reserve Bank of Australia. The Fund also expects to enter into arrangements with other central banks or official agencies of members other than those above on substantially the same terms as the agreement with the BIS, the main features of which are as follows:

BIS arrangement, (i) The BIS has opened a stand-by facility for the Fund for a commitment period of two years (from June 1, 1981 to May 31, 1983) of about SDR 675 million. The BIS arrangement covers the amounts that certain central banks are making available through the BIS.

(ii) The Fund is able to draw on the facility at seven business days’ notice. There are no restrictions on the maximum amount of an individual drawing. Each drawing constitutes a loan with a nominal maturity of six months, which the Fund may opt to repay or to renew at maturity. The agreement gives the Fund the right to four renewals of the first drawing, which, if exercised, would extend the period to two and one-half years. In respect of subsequent drawings, the Fund will have the right of renewal for successive six-month periods, but not beyond two and a half years from the date of the first drawing. If the first drawing was made, for example, on June 30, 1981, the terminal date would be the end of December 1983. A drawing made on, say, June 30, 1982, would then run for eighteen months to the same terminal date. The Fund can delay its first drawing and thus extend into the future the period over which it can retain resources borrowed from the BIS, but under the agreement the terminal date would not go beyond January 31, 1985.

(iii) Drawings are denominated in SDRs, and the exchange rates for currencies against the SDR are those established under the Fund’s Rules and Regulations. The vehicle currency is normally the U.S. dollar, subject to the concurrence of the U.S. authorities. If the Fund requests the BIS to make any payment in a currency other than the U.S. dollar, the BIS will do its best to meet the Fund’s wishes.

(iv) The interest rate for each drawing, and for each renewal of a drawing, will be established three business days of the Fund prior to the value date. The BIS will calculate the rate of interest using the same method of calculation as used by the Fund for the recently concluded SAMA agreement, with the result of the calculation being rounded upward, if rounding is necessary, to the nearest 1/16 of 1 per cent. Interest will be paid at the end of each six-month period.

Direct arrangements with central banks. The Fund stands ready to enter into an agreement with any member, the central bank or other agency of any member, or any official entity that has been prescribed as an “other holder” of special drawing rights pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement, under which such member, central bank, or other entity will commit itself to loan or invest in the Fund on terms and conditions that are substantially the same as those of the Agreement with the BIS, except for certain variations.20

Borrowed Resources Suspense Account

The Executive Board adopted decisions, effective May 5, 1981, on the establishment of a borrowed resources suspense account within the General Department for holding balances of currencies borrowed pending their use in transactions, or received in repurchases made before repayment can be made, and to invest these balances until they can be transferred to the General Resources Account for immediate use in a transaction or an operation.21

The Managing Director may now invest currencies held in the borrowed resources suspense account in deposits, denominated in SDRs, with the national official financial institution of a member issuing the currency borrowed or to which the borrowed funds may be transferred for investment or with the Bank for International Settlements. The investment policy will take into account the operational needs of the General Resources Account.

Charges and Remuneration

During the year the Fund took major decisions effective May 1, 1981, to simplify the Fund’s structure of charges and to provide for periodic reviews of the Fund’s income position, including a mechanism to assure over time a positive net income for the Fund.

The Fund’s schedules of charges applicable to the average daily balances of members’ currencies held by the Fund in excess of quota or acquired by the Fund under policies that have been the subject of an exclusion (e.g., for purchases under the compensatory financing facility and buffer stock facility) were unchanged during the year ended April 30, 1981. The basic schedule that applied to currency balances resulting from purchases financed with the Fund’s ordinary resources provided for rates that progressed from 4.375 per cent to 6.375 per cent per annum (to 6.875 per cent for purchases under the extended Fund facility) depending on the time that the balances were outstanding. For 1980/81 the average rate of charge on the use of ordinary resources was 5.30 per cent, virtually unchanged from the previous year. Including charges on the use of the oil and supplementary financing facilities, the average rate of charge for the year was 6.92 per cent.

During the year, the Fund undertook a comprehensive review of the level and the structure of the Fund’s charges. This review took into account the relationship of the level of the Fund’s charges to market rates of interest and the rate of remuneration paid by the Fund on creditor positions, the desirability that the rates of charges levied by the Fund should, to the extent possible, contain a degree of concessionality, and whether the rates of charges could and should be related to the degree of conditionality associated with the use of Fund resources under the various Fund facilities. In the light of the review, it was decided to simplify the structure of the Fund’s charges by introducing a single rate of charge on members’ use of the Fund’s ordinary resources.22 The single rate of charge is to be fixed by the Executive Board at the beginning of each financial year on the basis of the estimated income and expense of the Fund for the year and the target amount of net income for the year set by the Executive Board. Beginning May 1, 1981, the single rate of charge to be applied to currency holdings arising from purchases financed from the Fund’s ordinary resources was set at 6.25 per cent per annum on the daily average outstanding balances of members’ purchases. There were no changes in the schedules of charges applicable to currency balances acquired by the Fund from purchases under the oil and supplementary financing facilities. The service charge of 0.5 per cent, payable once per transaction except for purchases in the reserve tranche, which are free of charges, was also left unchanged, as was the charge of 0.25 per cent for stand-by and extended arrangements. Also, for the year beginning on May 1, 1981, the target is to attain balance between income and expense, and for succeeding years to obtain an amount of net income broadly equal to 3 per cent of the Fund’s reserves at the beginning of each year.

During the past financial year, the Fund also established the rate of charge on the use by members of borrowed resources under the policy of enlarged access. The rate to be applied is equal to the net cost of such resources to the Fund plus a margin of 0.2 per cent per annum.

The rate of remuneration that the Fund pays to members on their creditor positions, which is linked directly to the SDR rate of interest, remained at 90 per cent of that rate throughout the year. But in April 1981, the Executive Board took important decisions on the SDR interest rate and the rate of remuneration.23 Rule T-1 was amended to increase the rate of interest on the SDR from 80 per cent to 100 per cent of the combined market rate, rounded to two decimal places. At the same time, Rule I-10 was amended to set the rate of remuneration at 85 per cent of the rate of interest on the SDR, rounded to two decimal places. Although the rate of remuneration was reduced from 90 per cent to 85 per cent of the SDR interest rate, its relationship to the combined market rate of interest was raised from 72 per cent (90 per cent of 80 per cent) to 85 per cent. These amended rules came into effect on May 1, 1981. Consequently, for May and June 1981, the SDR rate of interest rose from 10.125 per cent per annum in April 1981 to 12.58 per cent and the rate of remuneration increased from 9.1125 per cent per annum to 10.69 per cent.

These changes accorded with the objective of keeping the rate of remuneration as high as possible relative to the SDR rate of interest while at the same time maintaining a sound income position for the Fund and concessional rates of charges.

The SDR rates of interest and the rates of remuneration (Chart 20) applicable over the six quarters beginning April 1, 1980 were as follows:

Chart 20.SDR Interest Rate, Rate of Remuneration, and Short-Term Interest Rates, July 1974-June 19811

1 Up to December 1980, short-term domestic interest rates are the yield on three-month treasury bills for the United Kingdom and the United States, the rate on three-month interbank deposits for France and the Federal Republic of Germany, and the call money market rate (unconditional) for Japan. From January 1981, the yield on U.S. Treasury bills was converted to a coupon equivalent basis, and the discount rate on two-month (private) bills was used for Japan. From March 1981, the basis for the interbank rates for France and the Federal Republic of Germany was converted from a 360-day year to a 365-day year.

SDR
Calendar quarterinterestRate of
beginningrateremuneration
April 1, 198010.259.225
July 1, 19808.257.425
October 1, 19808.507.65
January 1, 198110.8759.7875
April 1, 1981-April 30, 198110.1259.1125
May 1, 1981-June 30, 198112.5810.69

Shortly before the end of the financial year, the Fund is required to consider whether the net income for the year is sufficient to allow the rate of remuneration to be raised to more than 90 per cent but not above 100 per cent of the SDR average rate of interest for the year. In considering whether a higher rate of remuneration would be paid for a particular year, the Fund is also required to consider the possibility of reducing its rates of charges for the use of its ordinary resources from the beginning of the subsequent financial year. The net income for the year ended April 30, 1981 was sufficient to permit adjusting the average annual rate of remuneration to 100 per cent of the average SDR rate of interest. However, the Executive Board decided to place the full amount of net income to the Special Reserve in the light of the proposals then under consideration: (i) to raise the SDR interest rate to 100 per cent of the combined market rate; (ii) to raise the rate of remuneration as a percentage of that rate; (iii) the restructuring of the Fund’s charges; (iv) and the Fund’s expanded borrowing program.

Special Drawing Rights

During 1980/81, several decisions were taken by the Executive Board that further improve the characteristics of the SDR as an international reserve asset and continue the process of establishing the SDR as “the principal reserve asset in the international monetary system.” 24

The major developments relating to SDRs were as follows:

  • The third and final allocation of SDRs (SDR 4,053 million) in the third basic period (January 1, 1978-December 31, 1981) was made as of January 1, 1981 to all 141 Fund members, bringing the total cumulative allocation of SDRs to SDR 21.4 billion.

  • The valuation basket of the SDR was reduced from 16 currencies to 5 currencies and was unified with the SDR interest rate basket with effect from January 1, 1981.

  • The rate of interest on the SDR was raised to 100 per cent of the combined market interest rate with effect from May 1, 1981.

  • The reconstitution requirement whereby members were obliged to maintain, over time, a minimum average level of SDR holdings of 15 per cent of their net cumulative allocation, was eliminated, with effect from April 30, 1981.

  • Four more official financial institutions were prescribed as “other holders” of SDRs, and the first transactions and operations in SDRs involving “other holders” took place during the year.

Valuation and Interest Rate Basket

In its communiqué issued after the meeting in Hamburg, Germany, on April 25, 1980, the Interim Committee endorsed the objectives of simplifying and further enhancing the attractiveness of the SDR as an international reserve asset and generally expressed the view that it would be desirable for the interest and valuation baskets for the SDR to be identical. Since 1974, the SDR valuation basket had comprised 16 currencies and the interest rate basket 5 currencies. After extensive discussions, the Executive Board decided in September 1980 to adopt the 5-currency basket for determining both the value of and interest rate on the SDR. The new basket came into effect on January 1, 1981.25

The agreed initial weights of the currencies in the basket—42 per cent for the U.S. dollar, 19 per cent for the deutsche mark, and 13 per cent each for the French franc, Japanese yen, and pound sterling—broadly reflect the relative importance of these currencies in international trade and payments, based on the value of the exports of goods and services of the member countries issuing these currencies and the balances of these currencies held as reserves by members of the Fund over the five-year period 1975-79. These agreed initial weights were converted into units of each of the 5 currencies in the new basket by using London noon exchange rates averaged over the three months ended December 31, 1980. As on previous occasions when the method of valuation of the SDR was changed, the continuity of value was preserved by ensuring that the value of the SDR on the last working day when the old basket was in use (i.e., December 31, 1980) was the same using both the old and new baskets. An illustrative calculation of the value of the SDR is given in Table 26.

Table 26.SDR Valuation, April 30, 1981
Currency

(1)
Currency Amount

Under Rule O-1

(2)
Exchange

Rate1

(3)
U.S. Dollar

Equivalent2

(4)
U.S. dollar0.541.00000.540000
Deutsche mark0.462.21450.207722
French franc0.745.25400.140845
Japanese yen34215.130.158044
Pound sterling0.0712.14040.151968
1.198579
SDR value of US$1 =0.834321
U.S. dollar value of SDR =1.19858

Middle rate between buying and selling rates at noon in the London exchange market as determined by the Bank of England, expressed in currency units per U.S. dollar except for the pound sterling, which is expressed in U.S. dollars per pound sterling.

The U.S. dollar equivalents of the currency amounts in column (2) at the exchange rates in column (3)—that is, column (2) divided by column (3) except for the pound sterling, for which the amounts in the two columns are multiplied.

Middle rate between buying and selling rates at noon in the London exchange market as determined by the Bank of England, expressed in currency units per U.S. dollar except for the pound sterling, which is expressed in U.S. dollars per pound sterling.

The U.S. dollar equivalents of the currency amounts in column (2) at the exchange rates in column (3)—that is, column (2) divided by column (3) except for the pound sterling, for which the amounts in the two columns are multiplied.

From January 1, 1981, the U.S. dollar rate for the Japanese yen used in the daily calculation of the value of the SDR is obtained from the London exchange market rather than the Tokyo market.26 As all the exchange rates used for calculating the value of the SDR are now obtained from the London market, it is easier for dealers in obligations denominated in SDRs to replicate the SDR in the private market.

The object of the change in the valuation basket is to simplify the SDR, making it more useful as a unit of account, and thereby to facilitate the wider use of SDR-denominated assets and liabilities in financial markets and in international transactions, resulting in a wider role for the SDR in the international monetary system. The 5-currency basket retains the properties of stability and representativeness that characterized the 16-currency basket, while providing a greater likelihood of constancy in the currency composition of the basket.

The list of currencies used in determining the value of the SDR, and the amount of each of these currencies, will be revised every five years beginning January 1, 1986, unless the Fund’s Executive Board decides otherwise, so as to include the currencies of the five member countries of the Fund with the largest exports of goods and services during the five-year period ending 12 months before the effective date of the revision (for example, 1980-84 for the revision effective January 1, 1986). However, a currency will not replace another currency on the list unless the value of the exports of the country issuing the former currency over the relevant five-year period exceeds that of the country issuing the latter currency by at least 1 per cent. The amounts of the currencies in the revised valuation basket for the SDR will reflect both the values of the exports of goods and services and the balances of these currencies held by other members. These two factors will be assigned a similar relative importance to that given them in arriving at the agreed percentage weights of the current SDR basket.

Interest Rate

In a further step to enhance the attractiveness of the SDR, the Executive Board raised the interest rate on the SDR to the full combined interest market rate, effective May 1, 1981.27 This completes the process whereby the rate of interest on the SDR has been raised, in steps, from its original 1½ per cent per annum to a full market-related interest rate. When the 5-currency valuation basket came into effect on January 1, 1981, several changes were made with respect to the determination of the rate of interest on the SDR.28 First, the reference period for establishing the combined market interest rate was altered from the six-week period ending on the fifteenth day of the month before the calendar quarter for which the rate of interest is determined to the period of 15 business days preceding the last 2 business days of the month before the calendar quarter for which the rate of interest is determined. Second, the method of deriving the combined market rate from the interest rates on the 5 currencies in the SDR basket was also changed. Whereas, previously, fixed percentage weights were applied to each interest rate, for calendar quarters beginning January 1, 1981, each interest rate is multiplied by the number of units of the corresponding currency in the valuation basket and by the value in terms of SDRs of a unit of that currency. As a result, the percentage share of a currency in establishing the combined market rate will follow its percentage share in the valuation basket, and that share will vary as the exchange value of the currency varies in relation to that of the other currencies in the basket. Third, the rate of interest on the SDR became subject to review at the conclusion of each financial year rather than before the beginning of each calendar quarter.

All matters concerning the level and method of determination of the interest rate on the SDR, except the list and amounts of currencies included in the basket, are now subject to annual review about the end of the Fund’s financial year. The quarterly review by the Executive Board of the level of the SDR interest rate (in relation to the combined market rate) is no longer required. Finally, the rounding of the interest rate on the SDR was changed to the nearest ⅛ of 1 per cent, rather than ¼ of 1 per cent. Subsequently, from May 1, 1981, when the interest rate on the SDR was raised to 100 per cent of the combined market rate, it was decided that the combined market interest rate would be rounded to the two nearest decimal places rather than the nearest ⅛ of 1 per cent.

A further technical change that came into effect on January 1, 1981 was that the interest rate used to represent the Japanese yen in determining the combined market interest rate was changed from the rate on call money (unconditional) to the discount rate on two-month (private) bills, which is considered more in line with the other instruments in the basket.29

Abrogation of Reconstitution

Effective April 30, 1981, the Executive Board abrogated the reconstitution requirement, whereby participants had been obliged to maintain, over time, a minimum average level of SDR holdings in relation to their net cumulative allocations.30 This requirement, a feature of the SDR scheme from its inception, was designed to protect the SDR from undue use by ensuring that countries retained or restored a minimum level of SDR holdings. With the changes that have been made in recent years to widen the uses of SDRs and to increase the interest rate on the SDR, thereby making SDRs more attractive to hold, a compulsory holding requirement was considered to be no longer necessary or desirable. The required average holding was reduced on January 1, 1979 from 30 per cent to 15 per cent of net cumulative allocation on the same date as the rate of interest was raised from 60 per cent to 80 per cent of the combined market interest rate. With the raising of the interest rate to the full combined market rate, it was decided to eliminate the remaining reconstitution requirement. Participants, however, are still expected to pay due regard to the desirability of pursuing over time a balanced relationship between their holdings of SDRs and their other reserves.

Throughout the period January 1, 1970 to April 30, 1981, the reconstitution obligation was fulfilled by all participants other than Democratic Kampuchea.31

Other Holders

The Fund has the authority to extend the range of official holders of SDRs beyond its member countries and the Fund’s General Resources Account. In August 1980, the Fund prescribed the Arab Monetary Fund, Abu Dhabi, as an “other holder” of SDRs, and in December 1980 it so prescribed the International Bank for Reconstruction and Development and its affiliate, the International Development Association. In June 1981 the Central Bank for West African States was also prescribed as an “other holder” of SDRs, bringing the total number of prescribed “other holders” to ten. The “other holders” prescribed earlier are the Andean Reserve Fund, Bogotè; the Bank for International Settlements (BIS), Basle; the East Caribbean Currency Authority, St. Kitts; the International Fund for Agricultural Development, Rome; the Nordic Investment Bank, Helsinki; and the Swiss National Bank, Zurich. Each of these institutions can acquire and use SDRs voluntarily in transactions and operations by agreement with any other holder and with any of the Fund’s member countries. “Other holders” have the same degree of freedom as Fund members to buy and sell SDRs both spot and forward, to borrow, lend, or pledge SDRs, to use SDRs in swaps, or to use or receive SDRs in donations (grants). They cannot, however, receive allocations of SDRs nor use SDRs in transactions with designation. During 1980/81, three “other holders” received SDRs in transactions and operations, and in July 1981 a fourth received SDRs in payment of a capital subscription.

SDR as a Unit of Account

The SDR, which is the unit of account for Fund transactions, is finding increasing acceptance as a unit of account (or as the basis for a unit of account) for private contracts and international treaties as well as for use by other international and regional organizations, e.g., the Arab Monetary Fund, the Asian Clearing Union, the Economic Community of West Africa, the Islamic Development Bank, and the Nordic Investment Bank.

The reduction in the number of currencies in the SDR valuation basket from 16 to 5 on January 1, 1981 has further enhanced its usefulness as a unit of account and has given fresh impetus to the issue of private financial obligations denominated in SDRs. Time deposits denominated in SDRs are accepted by more than 30 commercial banks in major financial centers and the Bank for International Settlements. In addition, a branch of one international bank has begun to offer demand-deposit accounts denominated in SDRs. It also offers clearance finance facilities for SDR-denominated bonds. One of the two major clearing systems for Eurobonds now accepts SDR deposits in payment for the purchase of SDR-denominated issues. Participants in the market are able to maintain cash accounts denominated in SDRs with the settlement system.

In January 1981 a group of London banks announced that they would issue and trade certificates of deposit (CDs) denominated in SDRs using uniform documentation and agreeing to repurchase CDs they had issued, thereby helping to establish a secondary market in which these CDs can be traded. It is estimated that these banks made “tap” issues (i.e., issued in response to investor demand) of such CDs of about SDR 150 million in the first two months of 1981, while about SDR 80 million in CDs were issued in offerings of fixed amounts, including two medium-term floating rate CDs totaling SDR 40 million. The interest rate on one of the floating rate CDs is based on an average of rates quoted by five reference banks on interbank SDR deposits; the other is based on the London interbank offered rate (LIBOR) of the component currencies. Prior to 1981, only two CD issues were denominated in SDRs, each of SDR 25 million.

In addition, the electricity authority of Italy (Ente Nazionale per L’Energia Elettrica) issued floating rate notes denominated in SDRs, totaling SDR 100 million. These notes mature in five years, and their interest rate is based on six-month Eurodeposit rates for the five currencies in the SDR basket. In February 1981, Sweden obtained a five-year syndicated loan consisting of one tranche of US$800 million, and a second tranche of the equivalent of about US$500 million denominated in SDRs. The Ivory Coast arranged an eight-year SDR-denominated loan of about SDR 83 million with a rate of interest based on an average of interbank rates on SDR-denominated six-month deposits. Also in February 1981, a bond issue of SDR 20 million was launched by the Nordic Investment Bank, bringing to nine the total number of bond issues denominated in SDRs since 1974. The total of these nine issues is about SDR 233 million, and the first of them matured in June 1980.

SDR as a Currency Peg

In addition to its role as a unit of account, the SDR also functions as a currency peg. When a member pegs its currency to the SDR, the value of its currency is fixed in terms of the SDR and then is set in terms of other currencies by reference to the SDR value of the other currencies as calculated and published by the Fund. At June 30, 1981, 14 member countries were pegging their currencies to the SDR.32

Allocations

The allocation of SDR 4,053 million made as of January 1, 1981 was the final allocation in the third basic period, which ends on December 31, 1981, and brought the total of SDRs to SDR 21,433 million. (See Appendix I, Table I.14.) Kuwait and Zimbabwe became participants in the Special Drawing Rights Department in 1980 and received allocations for the first time as of January 1, 1981. The amount allocated to each participant was equal to 6.8 per cent of the participant’s quota in the Fund on December 31, 1980. For all but two participants, these quotas reflected increases under the Seventh General Review of Quotas. These two participants were Oman, which consented to the increase in its quota in February 1981, after the allocation had been made, and Iran, which did not consent to the increase in its quota.

The question of allocations of SDRs in the Fourth Basic Period, scheduled to begin on January 1, 1982, was discussed by the Executive Board in January and April 1981. But these discussions did not lead to a conclusion on the matter of allocation. The Interim Committee at its meeting on May 21, 1981 considered this question, taking account of the various relevant factors, including the importance of strengthening the role of the SDR as an international reserve asset and the need to avoid an undue increase in international liquidity. The Committee urged the Executive Board to continue its deliberations on the subject to enable the Managing Director to submit to the Board of Governors at the earliest possible date a proposal that would command the necessary support among members. The Managing Director’s subsequent report to the Board of Governors and to the Executive Board, pursuant to Article XVIII, Section 4(c), concluded that he was not in a position to make, by June 30, 1981, a proposal that would command a broad support among the members of the Fund, and that as soon as there was such support he would submit a proposal that was consistent with the Articles.

Transactions and Operations in SDRs Among Participants and Other Holders

Transactions and Operations by Agreement

The amount of SDRs transferred by participants and other holders in transactions by agreement amounted to SDR 419 million in the year ended April 30, 1981, somewhat higher than in the previous year. (See Table 27.)

Table 27.Use and Receipt of SDRs in Transactions by Agreement, Financial Year Ended April 30,1981

(In millions of SDRs)

HolderUseReceipt
Bangladesh3.7
Bolivia4.5
Burma23.5
Cameroon0.4
Canada106.3
Central African Republic1.2
Chad0.7
Congo0.3
Costa Rica2.6
Djibouti0.2
Dominica0.1
East Caribbean Currency Authority0.5
El Salvador2.4
Germany, Federal Republic of310.9
Greece6.6
Grenada0.3
Guinea-Bissau0.1
Guyana0.6
Iceland13.6
Israel80.0
Jamaica12.1
Lao People’s Democratic Republic0.1
Liberia1.6
Madagascar0.2
New Zealand10.0
Nicaragua1.9
Nordic Investment Bank1.0
Panama5.8
Peru111.5
Romania12.0
Rwanda2.7
Solomon Islands1.0
Sri Lanka10.2
Tanzania3.6
Turkey47.6
Uganda2.9
United Arab Emirates1.3
Western Samoa0.2
Zaïre7.3
Zambia13.2
Zimbabwe32.5
Total418.5418.5

As in 1979/80, most of the transactions involved transfers by the Federal Republic of Germany and Canada under arrangements with the Fund for sales of SDRs in bilateral transactions to other participants that wish to acquire them, generally for use in Fund-related transactions, such as charges in the General Resources Account, net charges on the use of SDRs, or to comply with the reconstitution requirement. The abrogation of the reconstitution requirement may reduce the frequency of this type of transaction in future. A notable feature of the financial year was the first two acquisitions of SDRs totaling SDR 1.5 million by “other holders” in transactions by agreement. Information concerning the currencies transferred in exchange for SDRs in transactions by agreement is presented in Appendix I, Table I.17.

The Fund permits additional uses of SDRs by agreement by participants and other holders, namely, to buy and sell SDRs forward; to borrow, lend, or pledge SDRs; to use SDRs in swaps; or to make donations (grants) with SDRs. The first use of SDRs in loans and in settlement of financial obligations took place in July 1981. All decisions permitting additional uses of SDRs are to be reviewed by the Fund once each year.

Transactions with Designation

In 1980/81, in transactions with designation, in which the user is subject to a requirement of balance of payments need, 42 participants—all developing countries—used SDR 1,883 million in 72 transactions to obtain currency from other participants designated by the Fund. In these transactions, a total of 36 participants were designated to provide currency, the largest amounts being provided by the United States, the United Kingdom, and France. (See Table 28.) Of these transactions, 49 (amounting to SDR 1,490 million) represented the immediate use of SDRs acquired from the Fund’s General Resources Account in purchase transactions, while the remainder represented the drawdown of participants’ own SDR holdings in transactions with designation that were unrelated to purchases from the Fund. Details of the currencies transferred against SDRs in transactions with designation are given in Appendix I, Table I.17.

Table 28.Use and Receipt of SDRs in Transactions with Designation, Financial Year Ended April 30,1981

(In millions of SDRs)

ParticipantUseReceipt
Algeria11.5
Argentina24.3
Austria5.0
Bangladesh69.7
Bolivia14.4
Botswana1.7
Brazil2.3
Burma5.5
Central African Republic0.2
Chile54.8
China, People’s Republic of579.8
Colombia10.9
Comoros0.7
Costa Rica3.3
Dominica0.2
Ecuador2.5
El Salvador11.0
Equatorial Guinea6.4
France209.2
Germany, Federal Republic of57.0
Guatemala1.8
Guinea-Bissau0.4
Guyana11.9
Haiti10.0
Honduras6.0
India211.08.0
Indonesia41.1
Italy57.0
Ivory Coast50.1
Jamaica28.4
Kenya57.6
Korea217.6
Kuwait2.0
Lao People’s Democratic Republic0.8
Liberia7.6
Libyan Arab Jamahiriya37.4
Madagascar15.7
Malaysia8.7
Malta0.5
Mauritius9.4
Mexico59.6
Morocco172.4
Nepal10.5
Netherlands39.8
Nigeria24.4
Norway17.2
Oman1.0
Pakistan42.9
Paraguay1.9
Philippines18.1
Romania101.2
Rwanda1.2
Saudi Arabia43.7
Senegal14.1
Sierra Leone3.6
Singapore6.9
Sri Lanka21.9
South Africa62.4
Spain12.2
Sudan13.2
Suriname0.8
Tanzania13.9
Togo10.6
Trinidad and Tobago5.6
Turkey14.6
Uganda4.1
United Arab Emirates5.8
United Kingdom506.3
United States551.7
Uruguay2.8
Venezuela3.9
Viet Nam28.4
Western Samoa0.1
Yugoslavia22.7
Zaïre47.4
Zambia8.0
Zimbabwe17.5
Total1,882.91,882.9

The method of calculating the amounts of designation in the quarterly designation plans was reviewed in March 1981 jointly with a review of the policy on sales of SDRs through the Fund’s operational budgets, and it was decided to continue to use the existing method.

Transactions and Operations Between Participants and the General Resources Account

Payments of SDRs in respect of quota increases pursuant to the Seventh General Review of Quotas amounted to SDR 5,091 million, of which SDR 4,977 million was paid in December 1980. Reflecting understandings reached at the September 1978 meeting of the Interim Committee and in accordance with Article III, Section 3(a), these payments represented 25 per cent of the quota increases. Consequently, at the end of December 1980 the SDR holdings of the General Resources Account totaled SDR 5,572 million, 32 per cent of total allocations—a record amount. As a result of net transfers of SDRs from the Fund since that date, holdings were SDR 5,445 million, 25 per cent of total allocations, on April 30, 1981.

Following the review of the appropriate policy on sales of SDRs through the Fund’s operational budgets, the Executive Board decided to sell the amount of SDRs expected to be received in each quarterly period and to distribute the balance of purchases between SDRs and currency in such a manner as to reduce the level of SDR holdings by the General Resources Account to SDR 4.5 billion in early 1982, when this policy will be reviewed again.33

Inflows

Inflows of SDRs to the General Resources Account other than on account of quota payments were SDR 1,771 million in 1980/81, against SDR 1,629 million in 1979/80. Repurchases, discharged at the member’s option with SDRs rather than currencies specified by the Fund, amounted to SDR 994 million, somewhat less than in 1979/80. Members using SDRs for repurchases included the United Kingdom (SDR 425 million), Peru (SDR 72 million), Israel (SDR 64 million), and Mexico (SDR 59 million).

Charges levied by the Fund on the use of its resources must be paid in SDRs, unless the member’s holdings of SDRs are insufficient. During 1980/81, all charges were paid in SDRs, although a number of members with low holdings found it necessary to acquire SDRs for this purpose, either in transactions by agreement or from the Fund. The largest amounts of charges were paid by Turkey (SDR 60 million), the United Kingdom (SDR 51 million), and the Philippines (SDR 37 million).

Interest received on the Fund’s holdings of SDRs amounted to SDR 266 million, substantially more than in previous years owing to both a higher average interest rate on the SDR and larger SDR holdings by the General Resources Account. The assessment, by which participants reimburse the Fund’s General Resources Account for the expenses of conducting the business of the Special Drawing Rights Department, was SDR 2 million.

Outflows

There was a continued increase in the amount of SDRs transferred from the General Resources Account to members in purchases. These transfers amounted to SDR 2,033 million, against SDR 1,283 million in 1979/80, and accounted for 61 per cent of the total purchases during the year that were financed through the Fund’s ordinary resources through the operational budget.

In May 1980, the Fund paid remuneration on members’ net credit positions for 1979/80, including amounts in SDRs totaling SDR 220 million, to 44 members.

Some members lacked sufficient SDRs to make the required payment of 25 per cent of the amount of their quota increases in SDRs. Therefore, the Executive Board decided that the Fund would provide a member in this position, at its request, with SDRs from the General Resources Account against the currencies of other members, up to the amount that the member needed to be able to pay SDRs to increase its quota.34 Subsequently, under this decision the Fund transferred a total of SDR 341 million to 44 members in exchange for currency, to enable them to have sufficient SDRs to pay for their quota increases. The Fund also transferred SDR 20 million to 6 participants to enable them to meet the reconstitution obligation. The decision under which participants obtained SDRs from the Fund in order to promote reconstitution was terminated on April 30, 1981 when the reconstitution requirement was abrogated.35

The Fund used a total of SDR 211 million to pay interest and to make repayments of principal to lenders to the Fund under the General Arrangements to Borrow, the oil facility, and the supplementary financing facility. The major part of these transfers (SDR 176 million) reflected interest payments and repayment of indebtedness under the oil facility to ten countries, including one “other holder” of SDRs.

Administered Accounts

The Fund administers as a Trustee, in addition to its Staff Retirement Plan, three accounts for member countries, namely, the oil facility subsidy account, the Trust Fund, and the newly created supplementary financing facility subsidy account. These administered accounts are independent of the Fund’s General Department and the Special Drawing Rights Department.36

Oil Facility Subsidy Account

The oil facility subsidy account was established by the Executive Board on August 1, 1975 to assist Fund members most seriously affected by oil price increases to meet the cost of using the 1975 oil facility. Subsidy payments are calculated as a percentage per annum of the average daily balances, subject to charges, of the Fund’s holdings of eligible members’ currency outstanding under the 1975 oil facility. As on the occasion of each of the five previous annual reviews, the Executive Board, following the annual review for 1980/81, approved subsidy payments at the rate of 5 per cent per annum to the eligible beneficiaries. Consequently, subsidy payments totaling SDR 50 million were made to 23 eligible beneficiaries in June 1981. (See Table 29.)

Table 29.Oil Facility Subsidy Account: Total Use of 1975 Oil Facility by Beneficiaries, and Subsidy Payments for Financial Year Ended April 30,19811

(In millions of SDRs)

Total UseSubsidy at 5 Per Cent
of 1975Cumulative
Oil FacilityAmountto date
Original beneficiaries:
Subsidy for financial year
ended April 30, 1981
Bangladesh40.471.179.52
Cameroon11.790.352.75
Central African Republic2.660.070.63
Egypt31.681.007.30
Haiti4.140.120.98
India201.3426.95
Ivory Coast10.351.42
Kenya27.930.756.68
Mali3.990.130.92
Mauritania5.320.161.24
Pakistan111.012.9826.47
Senegal9.910.252.40
Sierra Leone4.970.161.15
Sri Lanka34.131.008.01
Sudan18.300.514.36
Tanzania20.610.505.00
Western Samoa0.420.010.10
Yemen, People’s
Democratic Republic of12.020.352.82
Subtotal551.039.51108.68
Additional beneficiaries:
Subsidy for financial years
ended April 30, 1978-81
Grenada0.490.080.12
Malawi3.730.640.87
Morocco18.003.214.10
Papua New Guinea14.801.932.73
Philippines152.0325.4935.93
Zaïre32.535.817.40
Zambia229.723.373.37
Subtotal251.3040.5454.52
Total802.3350.05163.20

Purchases began in July 1975 and continued until May 1976. The subsidy amounts shown are calculated as a percentage per annum of the average daily balances, subject to charges, of the Fund’s holdings of each eligible member’s currency outstanding under the 1975 oil facility during the year.

Zambia received a subsidy only for the period July 1, 1978 to April 30, 1981.

Purchases began in July 1975 and continued until May 1976. The subsidy amounts shown are calculated as a percentage per annum of the average daily balances, subject to charges, of the Fund’s holdings of each eligible member’s currency outstanding under the 1975 oil facility during the year.

Zambia received a subsidy only for the period July 1, 1978 to April 30, 1981.

Originally, the list of eligible beneficiaries was limited to those Fund members that were included in the United Nations list of countries most seriously affected by the increased price of oil. The UN list included 39 Fund members, but only 18 of those members made purchases under the 1975 oil facility, and these are the original beneficiaries of the subsidy account.37 However, the decision establishing the subsidy account was amended in November 1978 to permit any surplus, after provision had been made to pay the original beneficiaries at the rate of 5 per cent per annum, to be used to make payments at a rate not exceeding 5 per cent per annum to 7 additional beneficiaries, namely, Grenada, Malawi, Morocco, Papua New Guinea, the Philippines, Zaïre, and Zambia. With the addition of these members, the list of beneficiaries included all members eligible to receive assistance from the Trust Fund that had also used the 1975 oil facility. The Executive Board decided that subsidy payments to Zambia should be made in respect of the average daily balances of its currency subject to charges from July 1, 1978 because Zambia became eligible for assistance from the Trust Fund only in the Trust’s second period, which began on that date.

The subsidy payments in June 1981 totaled SDR 9.5 million to 16 of the original beneficiaries for 1980/81 and SDR 40.5 million to the 7 additional beneficiaries for the financial years 1977/78-1980/81.38 Of the 18 original beneficiaries, India and Ivory Coast did not receive a subsidy in 1981, as they no longer had purchases outstanding under the 1975 oil facility. The balance remaining in the subsidy account after these payments, together with expected contributions and investment income, will be available for subsidy payments to the eligible beneficiaries in future years. Since the average cost of using the 1975 oil facility was 7.875 per cent per annum for the original beneficiaries for 1980/81 and 7.74 per cent per annum for the additional beneficiaries for the financial years 1977/78-1980/81, the subsidy at the rate of 5 per cent effectively reduced the cost of using the facility to about 2.875 per cent for the original beneficiaries and to 2.74 per cent for the additional beneficiaries for the periods in question.

The 18 original beneficiaries, which had purchased a total of SDR 551 million under the 1975 oil facility, have received payments to date from the subsidy account totaling SDR 109 million. Members that were added to the list of beneficiaries in November 1978 and received subsidy payments for the first time in June 1980 have received a total of SDR 55 million. These 7 members had purchased a total of SDR 251 million under the 1975 oil facility (Table 29.)

The subsidy account is financed by contributions from 24 members of the Fund and Switzerland (Table 30). The funds received are invested in U.S. Government obligations until the subsidy payments are made to the beneficiaries. Promised contributions over the life of the subsidy account total SDR 160 million. Actual contributions to April 30, 1981 amounted to SDR 156 million.

Table 30.Oil Facility Subsidy Account: Contributions

(In millions of SDRs)

AnticipatedContributions
TotalReceived as of
ContributorsContributions1April 30, 1981
Australia5.7005.700
Austria2.3002.300
Belgium5.6005.040
Brazil1.8501.850
Canada9.5009.500
Denmark2.2001.577
Finland1.6001.600
France12.90012.373
Germany, Fed. Rep. of13.70013.720
Greece0.6000.597
Iran6.0006.000
Italy8.6008.600
Japan10.3009.537
Luxembourg0.1100.108
Netherlands6.0006.000
New Zealand1.7001.407
Norway2.1002.100
Saudi Arabia40.00040.000
South Africa1.3501.350
Spain3.4002.450
Sweden2.8002.800
Switzerland3.2853.285
United Kingdom12.05011.641
Venezuela6.0006.000
Yugoslavia0.9000.900
Total160.545156.436

In some cases where contributions are being made in installments, budgetary approval will be required in each year that a contribution is to be made. SDR amounts may be subject to small adjustments owing to exchange rate changes.

In some cases where contributions are being made in installments, budgetary approval will be required in each year that a contribution is to be made. SDR amounts may be subject to small adjustments owing to exchange rate changes.

Trust Fund

The Trust Fund was established by the Executive Board in May 1976 to provide additional balance of payments assistance on concessionary terms to eligible developing member countries that qualified for assistance by carrying out programs of balance of payments adjustment.39 The resources of the Trust Fund are derived mainly from the profits realized on the sale of 25 million ounces of the Fund’s gold over four years for the benefit of developing member countries. Profits from the gold sales program, which was completed with the auction in May 1980, totaled US$4.6 billion, of which US$1.3 billion was paid directly to 104 developing countries on the basis of their share of quotas at August 31, 1975,40 while the remainder—together with income from investments, income from outstanding loans to members, and other transfers to the Trust, less expenses—was available for concessionary lending. Loans totaling SDR 2.9 billion were made by the Trust Fund over a period of about four years ended on March 31, 1981, when the final loan disbursement was made. With this final loan disbursement, the operational objectives of the Trust were completed and, under the decision of the Executive Board, the process of winding up the Trust Fund began on April 30, 1981.41

While 104 developing members were eligible to participate in the direct distribution of profits from gold sales, 7 members of the Organization of Petroleum Exporting Countries (OPEC)—Iraq, Kuwait, Libyan Arab Jamahiriya, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela—made irrevocable transfers of the full amounts of their profit shares to the Trust Fund to add to the resources available for loan assistance; the last such transfer was made by Libyan Arab Jamahiriya in November 1980. In addition, Yugoslavia transferred one third of its share of profits, and Romania made a loan of 10 per cent of its share, to the Trust Fund. The total value of the amounts transferred to the Trust by these members was US$125 million.

The total of loans and profits actually disbursed by the Trust Fund amounted to SDR 4 billion, of which over two thirds was disbursed during 1979/80 and 1980/81 (Table 31). The bulk of loan and profit disbursements occurred during the latter part of the Trust Fund program because of a large increase in available resources following the rise in gold prices during the last 12 months of the gold sales program. Disbursements to developing members in Africa and Asia amounted to about three fourths of the total disbursed by the Trust Fund. For members that qualified for loans in both periods of the Trust Fund, total disbursements of loans and profits represented about 57 per cent of their present quotas.

Table 31.Trust Fund: Loan Disbursements and Distribution of Profits from Gold Sales, by Region, 1977-81

(In millions of SDRs)1

Financial Years Ended April 30
19771978197919801981Total
Africa20.030.0286.5515.1149.31,100.9
Asia9.1199.0322.0460.91,051.12,042.1
Of which,
China309.5309.5
India529.0529.0
Europe16.78.626.434.986.6
Middle East1.661.587.4124.661.3336.4
Western
Hemisphere1.083.636.1136.9163.6421.2
Total31.7490.8740.61,263.91,460.23,987.2

Amounts distributed as profits converted to SDRs at exchange rates prevailing on dates of payment.

Amounts distributed as profits converted to SDRs at exchange rates prevailing on dates of payment.

The operations of the Trust Fund were divided into two periods, and profits from the sale of 12.5 million ounces of gold were available for loan disbursements in each of these two periods. The first period was two years in duration and ended on June 30, 1978, while the second period covered the subsequent years through February 28, 1981. Members were considered eligible for Trust Fund loans on the basis of a per capita income criterion 42 and qualified for Trust Fund loans on the basis of 12-month balance of payments programs of at least first credit tranche conditionality. Programs in support of loans in the second period had to be separate from those in the first period.

The Trust Fund provided balance of payments assistance for a total of SDR 841 million during the first period to 43 members that qualified for loans (or about one third of their present quotas) and a total of SDR 2,150 million was provided during the second period to 53 qualified members (or about one half of their present quotas).

The Executive Board decided in November 1980 to extend the second period by two months (to February 28, 1981) and the final date by which a program had to begin for a member to qualify for a loan (to January 1, 1981) so as to permit a greater number of eligible members to qualify for Trust Fund loan disbursements. At the same time it was decided on the basis of newly available information on per capita income in 1975 to add two members—the People’s Republic of China and Guyana—to the list of members eligible for loan assistance in the Trust’s second period.43 Both countries qualified for loans in the second period.

The total amount of loans to each qualified member in the second period represented the same percentage of members’ quotas on December 31, 1975, subject to any limitation of need as decided by the Fund as Trustee after a re-examination if necessary. In the event, the Executive Board decided that no re-examination of need was required for any member that qualified for Trust assistance in either the first or the second period. The amount of loans to each qualified member in the Trust’s second period was 56.3 per cent of its quota on December 31, 1975. The largest absolute amounts were disbursed to the People’s Republic of China and India, which received loans totaling SDR 310 million and SDR 529 million, respectively.

Trust Fund loans are denominated in SDRs although disbursements were made in U.S. dollars. Interest at the rate of ½ of 1 per cent per annum on outstanding loans is payable half-yearly in a currency specified by the Fund (U.S. dollars, thus far). Loans are to be repaid in ten semiannual installments between six and ten years from the dates of the loan disbursement, except that loan disbursements made on March 31, 1981 that amounted to about 0.4 per cent of quota are to be repaid in one installment not later than the end of the tenth year from the date of disbursement. In December 1980 the Executive Board carried out a review of the repayment terms of Trust Fund loans as called for in Section II of the Trust Fund Instrument. It was decided to confirm the original repayment terms and to allow the date of individual repayments to be deferred for a period of up to two years for countries experiencing hardship, to be determined on a case-by-case basis.

The assets of the Trust, pending disbursements as loans, were held in SDR-denominated deposits at the Bank for International Settlements in the period July 1978-March 1981; the average return on these deposits over the entire investment program was 11.1 per cent. The remainder of the Trust’s assets was invested in U.S. Government obligations until used for the direct distribution of profits.

Following completion of the distribution of profits and in anticipation of the final loan disbursements, the Executive Board decided in December 1980 to terminate the Trust Fund as of April 30, 1981, or the date on which Trust Fund loan disbursements were completed.44 As the final loan disbursements were made on March 31, 1981 (Table 32), the winding up process began on April 30, 1981. The responsibilities of the Fund as Trustee during this period will consist of the receipt and disposition of interest and loan repayments as well as completion of any unfinished business of the Trust Fund.45

Table 32.Trust Fund: Loan Disbursements, July 1,1976-March 31,1981

(In millions of SDRs)

MemberFirst

Period1
Second

Period2
Total
Bangladesh51.80970.347122.156
Benin5.3887.31612.704
Bolivia15.33620.82336.158
Burma24.86833.76758.635
Burundi7.87510.69318.568
Cameroon14.50719.69734.204
Central African Republic5.3887.31612.704
Chad5.3885.388
China, People’s Republic of309.527309.527
Congo5.3887.31612.704
Egypt77.921105.802183.723
El Salvador19.69719.697
Equatorial Guinea4.5024.502
Ethiopia11.19115.19526.386
Gambia, The2.9013.9396.841
Ghana48.96148.961
Grenada0.8291.1261.955
Guinea9.94713.50723.454
Guyana11.25611.256
Haiti7.87510.69318.568
Honduras14.06914.069
India529.009529.009
Ivory Coast21.55329.26450.817
Kenya19.89527.01346.908
Lao People’s Democratic Republic5.3887.31612.704
Lesotho2.0722.8144.886
Liberia12.02016.32028.340
Madagascar10.77614.63225.409
Malawi6.2178.44214.659
Mali9.11812.38121.500
Mauritania5.3887.31612.704
Mauritius9.1189.118
Morocco46.83663.594110.429
Nepal5.8037.87913.682
Niger5.3887.31612.704
Pakistan97.401132.252229.654
Papua New Guinea8.28911.25619.545
Philippines64.24487.230151.474
Rwanda10.69310.693
Senegal14.09219.13433.227
Sierra Leone10.36214.06924.431
Somalia10.69310.693
Sri Lanka40.61855.15295.771
Sudan29.84240.52070.362
Swaziland4.5024.502
Tanzania17.40823.63741.045
Thailand55.54075.412130.952
Togo6.2178.44214.659
Uganda22.51122.511
Upper Volta5.3887.31612.704
Viet Nam25.69734.89260.590
Western Samoa0.8291.1261.955
Yemen, People’s Democratic
Republic of12.02016.32028.340
Zaïre46.83663.594110.429
Zambia42.77142.771
Total840.9682,150.3662,991.335

Ended June 30, 1978.

Ended February 28, 1981.

Ended June 30, 1978.

Ended February 28, 1981.

As provided in the Trust Instrument, surplus assets accruing to the Trust Fund from interest and loan repayments will be transferred to the Special Disbursement Account, and the Executive Board decided to commit the first SDR 750 million of these assets to the supplementary financing facility subsidy account (discussed below). The Board also decided that SDR 1,500 million of these repayments would be used to provide balance of payments assistance on concessional terms, on a uniform basis, to low-income developing members in need of such assistance under arrangements similar to those set forth in the Trust Fund Instrument. The remaining assets shall be used to provide assistance in accordance with Article V, Section 12(f)(ii) of the Articles of Agreement under a decision of the Fund to be taken not later than June 30, 1986. If no such decision is reached, these assets will be added to the SDR 1,500 million available for balance of payments assistance as described above.

Supplementary Financing Facility Subsidy Account

The question of a subsidy for low-income developing member countries designed to reduce the cost of using the Fund’s resources under the supplementary financing facility and the policy on exceptional use of the Fund’s resources has been under study for some time. The cost of using these resources is related to market interest rates and therefore could be substantially higher than charges on the use of the Fund’s ordinary resources. Various ways of financing such subsidies were considered but the Executive Board agreed in principle in mid-1980 to establish a subsidy account, to be financed from the resources of the Trust Fund, voluntary contributions in the form of donations or concessional loans, and other sources. The Interim Committee welcomed this agreement in its communiqué of September 28, 1980.46

The supplementary financing facility subsidy account came into being on December 17, 1980 when the Executive Board formally adopted the Instrument establishing the account, which will be administered by the Fund as Trustee.47 The aim is a subsidy account that will total SDR 1 billion, of which SDR 750 million will be from repayments of, and interest on, Trust Fund loans, and the balance from voluntary contributions and other sources, such as investment income. The amounts of subsidy payments to each eligible member will be calculated as a percentage per annum of the average daily balances of the Fund’s holdings of the member’s currency acquired as a result of all purchases under the supplementary financing facility and under the Fund’s policy on exceptional use.48

Subsidy payments to eligible members will be made on a two-tier basis. Members with per capita incomes equal to or below the level of per capita income used to determine eligibility for assistance from the International Development Association (IDA) are eligible for the full rate of subsidy, which shall not exceed 3 per cent per annum. Other members, which are eligible for a subsidy of one half of the full rate, are those with per capita incomes in excess of the IDA level but not more than the per capita income of the member that had the highest per capita income in 1979 and was eligible to receive assistance from the Trust Fund. In no case will the payment of subsidies reduce the cost of using the supplementary financing facility or the policy on exceptional use below the level of prevailing charges on the Fund’s ordinary resources under stand-by and extended facility arrangements. The amounts of the subsidy to eligible members will be paid annually as soon as practicable after the end of the Fund’s financial year, on April 30.

On the basis of the latest available data provided by the World Bank prior to April 30, 1981, a total of 83 developing members had per capita incomes that would have made them eligible to receive a subsidy. (See Table 33.) Additions to the list of eligible members may be made next year if new members join the Fund and meet the per capita income criterion, or if existing members, whose per capita incomes in 1979 are at present estimated to be above the maximum limit, prove by April 1982 to have per capita incomes in 1979 below the limit. As of April 30, 1981, 20 of the present group of eligible members had purchases outstanding under the supplementary financing facility for a total amount equivalent to SDR 995 million, and the undrawn supplementary financing facility commitments to 18 of these members under stand-by and extended arrangements amounted to nearly SDR 3 billion. In addition, one member—Zambia—had a balance equivalent to SDR 11.6 million outstanding under the Fund’s policy on exceptional use.

Table 33.Fund Members That Would Be Eligible to Receive a Subsidy on Basis of Per Capita Income Data Currently Available
Members Eligible for Full Rate of Subsidy
Afghanistan
Bangladesh
Benin
Bolivia
Burma
Burundi
Cameroon
Cape Verde
Central African Republic
Chad
China, People’s Republic of
Comoros
Congo
Djibouti
Dominica
Egypt
El Salvador
Equatorial Guinea
Ethiopia
Gambia, The
Ghana
Grenada
Guinea
Guinea-Bissau
Guyana
Haiti
Honduras
India
Indonesia
Kampuchea, Democratic
Kenya
Lao People’s Democratic Republic
Lesotho
Liberia
Madagascar
Malawi
Maldives
Mali
Mauritania
Nepal
Nicaragua
Niger
Nigeria
Pakistan
Papua New Guinea
Philippines
Rwanda
St. Lucia
St. Vincent
Säo Tomé and Principe
Senegal
Sierra Leone
Solomon islands
Somalia
Sri Lanka
Sudan
Swaziland
Tanzania
Thailand
Togo
Uganda
Upper Volta
Viet Nam
Western Samoa
Yemen Arab Republic
Yemen, People’s Democratic Republic of
Zaïre
Zambia
Zimbabwe
Botswana Colombia
Dominican Republic
Ecuador
Guatemala
Ivory Coast
Jordan
Lebanon
Mauritius
Morocco
Paraguay Peru
Syrian Arab Republic
Tunisia

As part of the decision terminating the Trust Fund as of April 30, 1981, the Executive Board decided that the equivalent of SDR 750 million from repayments of, and interest on, Trust Fund loans shall be transferred, as received, to the supplementary financing facility subsidy account, through the Special Disbursement Account.49 However, Trust Fund interest payments are small, and the repayments from Trust Fund loans are not scheduled to begin until July 1982 and will not benefit the supplementary financing facility subsidy account in a material way until 1983/84. Consequently, the Fund is authorized to arrange borrowings for the account which, in addition to donations, are expected to finance the early operations of the supplementary financing facility subsidy account. These borrowings, on concessional terms to be agreed between the Fund and lenders, will be repaid as amounts become available from the Special Disbursement Account.

The Managing Director has been in communication with 27 countries with a view to obtaining voluntary contributions in the form of grants or loans to the supplementary financing facility subsidy account; of these, 7 are oil exporting and 20 are industrial countries. To date, indications have been received from 13 countries that they would favorably consider making a contribution to the account: 5 of these countries have already confirmed the amounts they will pay to the account and another country has indicated the amount that might be expected from it. Another 8 countries have the matter under consideration, and 6 countries have indicated that they are unable to contribute, at least for the time being. The receipt of the first contribution, in the form of a donation, of approximately SDR 4.1 million from the Netherlands on May 26, 1981, initiated the operational phase of the supplementary financing facility subsidy account. Subsequently, a loan agreement with Belgium for an interest-free loan of up to SDR 4.4 million was entered into by the Fund and the first payment under this agreement of SDR 0.8 million was received on July 9, 1981.

As a consequence of the supplementary financing facility subsidy account becoming operational, the Fund established a policy for the temporary investment of its assets that are not immediately needed to pay subsidies or to meet liabilities. The account may invest in marketable SDR-denominated assets so as to avoid exchange risks for the account (under Section 14 of the Instrument establishing the Account), and the Bank for International Settlements (BIS) has agreed to accept such deposits.50 Accordingly, currencies received by the supplementary financing facility subsidy account will be placed in such deposits, unless the Managing Director considers that the terms offered by the BIS on an intended deposit are not sufficiently attractive, in which case he will so inform the Executive Board and make other proposals for investment in SDR-denominated obligations.

The Instrument provides that, on completion of all subsidy operations, the Fund will terminate the supplementary financing facility subsidy account. Any balances remaining after discharge of outstanding liabilities will be returned to the Special Disbursement Account up to the full amount transferred from Trust Fund loan repayments. Any additional balance will be used to reimburse the donors, pro rata, up to the amount of their donations.

Income, Expense, and Reserves

The net income of the Fund for the financial year ended April 30, 1981 amounted to SDR 80 million, compared with SDR 3 million in 1979/80. This outcome reflected a substantial increase in the operational income from periodic charges, service charges, and interest on the Fund’s SDR holdings in the General Resources Account, which rose by SDR 268 million, (44 per cent) over the year, to a record SDR 882 million. Operational expenses—the payment of remuneration on creditor positions and of interest on Fund borrowing—increased by SDR 177 million (34 per cent) to SDR 702 million. As a result, net operational income increased from SDR 89 million in 1979/80 to SDR 180 million. Administrative and fixed property expense was SDR 100 million, some SDR 14 million above that for the previous year. The comparative details of the Fund’s operational income and expense are presented in Appendix VII and details of administrative expenses in Appendix VI. The net income for the financial year ended April 30, 1981 was placed to the Special Reserve, bringing the total of the Special and General Reserves of the Fund at April 30, 1981 to SDR 843 million.

The increase in net income in 1980/81 was due largely to the payment of the quota increases under the Seventh General Review of Quotas. The total increase in quotas amounted to SDR 19.8 billion, of which 25 per cent was paid in SDRs and the balance in members’ own currencies. As a result, the Fund’s holdings of SDRs in the General Resources Account, on which it earned the SDR rate of interest, increased by nearly SDR 5 billion in the period during which the quota payments were made (December 1, 1980 to February 13, 1981). At the same time, creditor positions on which the Fund paid remuneration increased by SDR 3.2 billion, and balances subject to charges decreased by SDR 0.4 billion.

Surveillance Procedures

The 1980 Annual Report described the procedures for surveillance in some detail. There were no changes in such procedures during the financial year 1980/81. The Executive Board conducted the annual review of the general implementation of the Fund’s surveillance over members’ exchange rate policies in April 1981. In this review, Executive Directors supported the continuation of existing procedures regarding surveillance within the framework of regular Article IV consultations with members, the World Economic Outlook discussions, and the supplemental consultations. Executive Directors concluded that the strengthening of Fund surveillance could be accomplished, with a more active stance, within this framework and without the need for new procedures. Executive Directors supported a more active use of the supplemental consultation procedure.51 It was recognized that such supplemental consultations provide a mechanism for timely contact with members and enable the Fund to analyze important developments during the interval between regular Article IV consultations, without the presumption that the member concerned has not complied with its obligations under Article IV. Executive Directors emphasized the importance of discretion and caution in initiating such consultations, and agreed that an informal and low-key approach is useful in implementing the intent of the supplemental surveillance decision.

Consultations with Member Countries

Regular Article IV consultations are required for all members and constitute, inter alia, the centerpiece of the Fund’s surveillance over the exchange rate policies of individual member countries. These consultations are required, in principle, to take place annually. They are to be completed not later than three months after the termination of discussions between the member and the staff by conclusions reached by the Executive Board. Where appropriate, the Executive Board also renders a decision concerning matters of Fund jurisdiction. In practice, there has been some shortfall from the objective of annual consultations, owing to the constraints of staff resources or to the wish of some members to modify the scheduling of the consultation. In 1980/81, the Fund completed 91 regular Article IV consultations, of which 54 were with countries availing themselves of the transitional arrangements of Article XIV, and 37 with countries that had formally accepted the obligations of Article VIII. Of those consultations completed in the financial year, 25 had been initiated in the previous financial year, whereas 21 of those initiated in 1980/81 remained outstanding at the end of the year. During 1980/81 one country—Zimbabwe—joined the Fund bringing total membership to 141, and 3 member countries (Uruguay, St. Lucia, and Djibouti) formally accepted the obligations of Article VIII, Sections 2, 3, and 4. At the end of the financial year, 53 members had Article VIII status, 87 members were availing themselves of the transitional arrangements of Article XIV, and one member—St. Vincent and the Grenadines—had yet to complete formal procedures to establish Article VIII or Article XIV status in the Fund.

In addition to regular Article IV consultations, as in previous years, special consultations were held with major industrial countries in connection with the World Economic Outlook reviews by the Executive Board.

Training and Technical Assistance

In June 1981, the Executive Board carried out a thorough review of the Fund’s technical assistance activities and approved the flexible approach that it had adopted in responding to requests for technical assistance from members. During 1980/81, such assistance continued to be made available to members in the form of training at headquarters, staff missions, and the stationing of staff members and outside experts in member countries, as well as the assistance that is customarily provided through the Fund’s consultation procedures under Article IV. Upon request, the Fund’s area and functional departments furnish technical assistance on many economic and financial problems of the member countries.

During the financial year, the IMF Institute conducted nine training courses, for the first time offered a seminar on balance of payments management, and organized—with the Fiscal Affairs Department—a seminar on budgeting and expenditure control. Officials from member countries who attended the training courses totaled 270, an increase of 15.8 per cent over the previous year. The Institute has trained 2,883 participants from 135 countries since it was established in 1964.

The Institute’s principal course, on Financial Analysis and Policy, describes the Fund’s procedures and policies, and examines the tools of economic analysis and forecasting. It pays particular attention to the instruments of monetary, fiscal, and balance of payments policies that are being employed under changing national and international conditions. This course was offered twice in English (once, for the first time, with simultaneous translation into Arabic) and once each in French and Spanish. The courses conducted in English were of 19 weeks duration, while those in French and Spanish lasted 21 weeks each.

During the financial year, the eight-week course on Balance of Payments Methodology was presented twice (in English and Spanish) in collaboration with the Bureau of Statistics. It focuses on the concepts and definitions that are used in the Fund’s Balance of Payments Manual and helps member countries to improve their balance of payments statistics. The ten-week course on Public Finance was offered twice (in English and Spanish) in cooperation with the Fiscal Affairs Department. It deals with the objectives, instruments, and procedures of public finance, emphasizing the fiscal problems of developing countries. For the first time, a six-week course on Government Finance Statistics was conducted in French, in cooperation with the Bureau of Statistics. This course applies the concepts, definitions, and procedures in the Draft Manual on Government Finance Statistics for compiling statistics from accounts in the public sector.

Technical assistance was provided by the Central Banking Department, in response to requests from appropriate authorities, both in the field through the assignment of resident experts and staff missions and from headquarters through advisory services. During the financial year, experts served in 111 assignments in executive or advisory positions with 51 central monetary institutions and provided about 70 man-years of assistance most of which was in the fields of research and statistics, bank supervision, banking and exchange operations, and controls. Departmental staff carried out nine advisory missions and participated in seven missions by other Fund departments. Advice was given on topics that include central banking and financial system legislation (in cooperation with the Legal Department), mobilization of savings, accounting systems, and bank supervision.

The Fiscal Affairs Department has continued to provide technical assistance in response to requests from member countries through staff missions, staff assignments in the field, and the services of the members of the panel of experts. Assistance was furnished mainly in the areas of fiscal policy, tax and customs administration, budget system and procedures, accounting, auditing, and financial reporting. During 1980/81, technical assistance was given to 38 countries, compared with 40 countries during 1979/80; one country received assistance for the first time. There were 36 long-term and 24 short-term assignments in the field, totaling 60 individual assignments and 294 man-months; 44 panel members and 30 staff members undertook technical assistance work. Staff members continuously visit countries to review progress and to advise on requests for further assistance. Yet another aspect of the technical assistance furnished by the Department is the work of staff members at headquarters to support and guide the field experts.

The Bureau of Statistics has continued to provide technical assistance in the statistical field through such activities as the improvement of existing central bank statistical bulletins (emphasizing financial and general statistics), the establishment of new bulletins, aid to members in compiling balance of payments and government finance statistics in keeping with the methodologies of Fund manuals, and advice on establishing computer systems to manage economic data bases. The assistance has taken the form of lectures, discussions, and working on data with national officials and technicians, using those concepts and classification standards for assembling data that are relevant for analyzing monetary and payments problems. The Bureau’s assistance has focused on applying to national source materials the framework and standards presented in the Fund’s Balance of Payments Manual and the Draft Manual on Government Finance Statistics.

During 1980/81, the Bureau of Statistics participated in 74 missions to 58 countries. Besides cooperating in the presentation of the IMF Institute courses on the balance of payments and government finance statistics, the Bureau responded to requests from 19 national and multinational institutions for ad hoc training of officials of central banks, ministries of finance, and other government agencies.

Relations with Other International Organizations

The increasing degree of interdependence in the world has enhanced the importance of the Fund’s relations with other international and regional organizations in the economic and financial area. A close working relationship is maintained with the World Bank, which includes, inter alia, participation by staff of each of the organizations in missions of the other, as well as joint Fund-Bank missions, when deemed advisable. Additionally, the Fund collaborates on matters of common concern with the United Nations (UN) and its relevant organs; the Organization for Economic Cooperation and Development (OECD); the General Agreement on Tariffs and Trade (GATT); the Commission of the European Communities (CEC); the Bank for International Settlements (BIS); the Organization of American States (OAS), particularly its Inter-American Economic and Social Council and its Permanent Executive Committee (CEPCIES); and regional development and financial institutions in Africa, Asia and the Pacific area, Latin America and the Caribbean, and the Middle East. Ongoing liaison is maintained by the Special Representative to the United Nations; the European Office in Paris with respect to the BIS, CEC, and OECD; and the Geneva Office with respect to the GATT, the United Nations Conference on Trade and Development (UNCTAD) and its various bodies, and other organizations in the vicinity. Their efforts are supplemented, as required, by the assignment of head-quarters staff and resident representatives in the field.

During the past year, the Managing Director delivered his traditional address to the UN Economic and Social Council (ECOSOC) in Geneva on July 4, 1980, and spoke at a meeting of the UN Administrative Committee on Coordination in New York on November 3. Also in November he participated in the monthly meeting of the BIS in Basle. As in prior years, the Managing Director attended meetings of the UNCTAD Intergovernmental Group of Twenty-Four on International Monetary Affairs and of the Group of Ten ministers and governors of central banks held concurrently with meetings of the Interim and Development Committees. Staff members attended relevant meetings of other international and regional organizations and participated in seminars, working groups, and training programs. Pertinent documents and information were also exchanged.

The Fund aims to assist regional organizations by sharing its technical expertise whenever possible. To this end, the staff prepared a study describing existing payments and trade arrangements in the 18-member Preferential Trading Area of Eastern and Southern African States and suggested possible improvements to these arrangements to promote intraregional trade for the Association of African Central Banks, at the request of the African Centre for Monetary Studies. Technical assistance was also provided to the Economic Community of West African States (ECOWAS) in connection with a study on currency convertibility among ECOWAS member countries. In response to a request from the Executive Secretariat of the Economic Commission for Latin America (ECLA), the Fund assisted with the preparation of a study of alternative strategies for opening the economies of developing countries. Staff also participated in the organization and conduct of a seminar on balance of payments methodology conducted by the Arab Monetary Fund.

Cooperation with member countries with respect to aid coordination involved participation in meetings of the World Bank Consultative Groups on Aid Coordination for Korea, Mauritius, the Philippines, Thailand, and Zaïre; the India and Pakistan consortia; and the Aid Groups for Bangladesh, Burma, and Sri Lanka. Staff also continued to participate in the work of the Caribbean Group for Cooperation in Economic Development, and to assist in the preparation of financial plans for the aid recipients of the Group. The Fund continued to provide assistance to members with respect to debt renegotiations. Fund representatives attended meetings in Paris on debt rescheduling for the Central African Republic, Liberia, Madagascar, Nicaragua, Pakistan, Sudan, Togo, Turkey, and Zaïre. Staff were also present at meetings of the Joint Commission for the Implementation of External Cooperation with Haiti, the Egypt Aid Donors’ Group, and the Intergovernmental Aid Group for Indonesia.

In keeping with long-established arrangements for collaboration with the GATT regarding its consultations with common member countries on trade restrictions imposed for balance of payments purposes, Fund representatives participated in those consultations and provided background documents. Staff also attended the 36th session of the Contracting Parties; meetings of the Council of Representatives, including a special session on notification and surveillance of trade policy measures and the international trading system; and meetings of various GATT committees and working parties. Staff continued the practice of attending relevant meetings of some of the other international organizations in Geneva and elsewhere, in particular those of UNCTAD, and to collaborate with those agencies in areas of mutual interest, such as aid and debt arrangements.

Executive Directors and Staff

A list of Executive Directors and their voting power on April 30, 1981 is given in Appendix IV. The changes in membership of the Executive Board during 1980/81 are shown in Appendix V.

In the year ended April 30, 1981, there were 144 appointments to the Fund’s regular staff and 99 separations. At the end of the financial year, the staff numbered 1,462 and was drawn from 94 countries.

Publications

The list of publications issued by the Fund during 1980/81 is shown in Appendix I, Table I.18.

Executive Board Decisions No. 6830-(81/65) and No. 6831-(81/65), adopted April 22, 1981 and reproduced in Appendix II.

Executive Board Decisions No. 6860-(81/81), No. 6861-(81/81), and No. 6862-(81/81), adopted May 13, 1981 and reproduced in Appendix II.

Executive Board Decisions No. 6834-(81/65), adopted April 22, 1981 and reproduced in Appendix II.

Which is measured by the extent to which the Fund’s holdings of a member’s currency in the General Resources Account, after deducting holdings excluded under Article XXX(c), are less than its quota.

Executive Board Decision No. 6830-(81/65), adopted April 22, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6831-(81/65), adopted April 22, 1981 and reproduced in Appendix II.

See Annual Report, 1980, pages 136-38.

Executive Board Decision No. 6860-(81/81), adopted May 13, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6224-(79/135), adopted August 2, 1979. See

Executive Board Decision No. 5508-(77/127), Section 5(f), “* adopted August 29, 1977. See Annual Report, 1978, page 113.

Executive Board Decision No. 6783-(81/40), adopted March 11, 1981 and reproduced in Appendix II.

Executive Board Decisions No. 6843-(81/75), adopted May 6, 1981, and No. 6863-(81/81) and No. 6864-(81/81), adopted May 13, 1981 and reproduced in Appendix II.

On the basis of quotas prevailing in mid-1980 under the Sixth General Review of Quotas an annual limit of 200 per cent of quota, or a limit of 600 per cent of quota over a three-year period, was broadly accepted. In terms of the new quotas, the 200/600 per cent limits in effect until the Seventh Quota Review were equivalent in nominal amounts to 133.3/400 per cent. The new 150/450 per cent guidelines therefore represent an increase of one eighth over the amounts previously available.

Executive Board Decisions No. 5704-(78/39), adopted March 22, 1978, and No. 6172-(79/101), adopted June 28, 1979. See Annual Report, 1978, pages 125-26, and Annual Report, 1979, pages 138-39. Also see Annual Report, 1979, page 75.

Liquid liabilities are measured by the outstanding reserve positions of members and undrawn balances under stand-by and extended arrangements.

Executive Board Decision No. 6774-(81/35), adopted March 5, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6241-(79/144), adopted August 24, 1979. See Annual Report, 1980, pages 139-40.

Executive Board Decision No. 5974-(78/190), adopted December 4, 1978. See Annual Report, 1979, page 135.

The 16 countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, the Federal Republic of Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom.

Executive Board Decision No. 6864-(81/81), adopted May 13, 1981 and reproduced in Appendix II.

Executive Board Decisions No. 6844-(81/75) and No. 6845-(81/75), adopted May 5, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6834-(81/65), adopted April 22, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6833-(81/65) S, adopted April 22, 1981 and reproduced in Appendix II.

Article VIII, Section 7.

Executive Board Decision No. 6631-(80/145) G/S, adopted September 17, 1980 and reproduced in Appendix II.

Executive Board Decision No. 6709-(80/189) S, adopted December 19, 1980 and reproduced in Appendix II. If the London market is closed, the middle rates at noon in the New York exchange market are used. If these rates are also unavailable, the middle rates in the Frankfurt exchange market are used.

Executive Board Decision No. 6833-(81/65) S, adopted April 22, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6632-(80/145) G/S, adopted September 17, 1980 and reproduced in Appendix II.

Executive Board Decision No. 6708-(80/189) S, adopted December 19, 1980 and reproduced in Appendix II.

Executive Board Decision No. 6832-(81/65) S, adopted April 22, 1981 and reproduced in Appendix II.

The right of Democratic Kampuchea to use SDRs has been suspended by decision of the Executive Board. Under Article XXIII, Section 2(e), the Executive Board may, but need not, lift this suspension 180 days after June 30, 1981.

See Appendix I, Table I.1.

Executive Board Decision No. 6772-(81/35) G/S, adopted March 5, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6663-(80/160) S, adopted October 31, 1981 and reproduced in Appendix II.

Executive Board Decision No. 5699-(78/38) G/S, adopted March 22, 1978. See Annual Report, 1978, page 123.

Reports of the Audit Committee for the financial year ended April 30, 1981 are reproduced in Appendix VIII.

The 18 original beneficiaries are Bangladesh, Cameroon, the Central African Republic, Egypt, Haiti, India, Ivory Coast, Kenya, Mali, Mauritania, Pakistan, Senegal, Sierra Leone, Sri Lanka, Sudan, Tanzania, Western Samoa, and the People’s Democratic Republic of Yemen.

Zambia, one of the additional beneficiaries, received a subsidy for the period July 1, 1978 to April 30, 1981.

The establishment and operation of the Trust Fund were discussed in Annual Report, 1980, pages 85-89, Annual Report, 1979, pages 86-87, Annual Report, 1978, pages 76-78, Annual Report, 1977, pages 66-67, and Annual Report, 1976, pages 60 and 111-17.

The members that were eligible for the distribution of profits and the amounts paid to each member are set out in Annual Report, 1980, Appendix I, Table I.12, pages 119-20.

Executive Board Decision No. 6704-(80/185) TR, adopted December 17, 1980 and reproduced in Appendix II.

During the first period, 61 members were eligible for Trust assistance; these members were countries that were Fund members on August 31, 1975 and had per capita incomes of less than SDR 300 in 1973. For the Trust’s second period, the cutoff point was a per capita income of less than US$520 in 1975; a total of 61 members were eligible on that basis for Trust Fund loans in the second period. Although the same number of members were eligible during both periods, the composition of the groups differed slightly in the two periods.

Executive Board Decision No. 6676-(80/168) TR, adopted November 19, 1980 and reproduced in Appendix II.

Executive Board Decision No. 6704-(80/185) TR, adopted December 17, 1980 and reproduced in Appendix II.

The Trust Fund holds US$3,990,776 that represents the share of Democratic Kampuchea in the direct distribution of profits from gold sales by the Fund. The Executive Board decided that the Trust shall continue to hold this amount until relations with Democratic Kampuchea have been restored.

The text of the communiqué is reproduced in Appendix III.

Executive Board Decision No. 6683-(80/185) G/TR, adopted December 17, 1980 and reproduced in Appendix II. Subject to the provisions of the Instrument, the Fund shall apply the same rules and procedures as apply to the operations and transactions of the General Resources Account.

The establishment of the supplementary financing facility and the policy on exceptional use were described in Annual Report, 1978, pages 112-20.

Executive Board Decision No. 6704-(80/185) TR, adopted December 17, 1980 and reproduced in Appendix II.

Executive Board Decision No. 6854-(81/78) SBS, adopted May 8, 1981 and reproduced in Appendix II.

Executive Board Decision No. 6026-(79/13), adopted January 22, 1979. See Annual Report, 1979, page 136.

    Other Resources Citing This Publication