- International Monetary Fund. External Relations Dept.
- Published Date:
- September 1952
One of the purposes of the International Monetary Fund, set forth in Article I of the Articles of Agreement, is: “To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.” The Fund Agreement recognizes that restrictions may have to be maintained, and provides in Article VIII for their existence with the approval of the Fund and in Article XIV for their retention during the postwar transitional period. It is nevertheless the philosophy of the Fund Agreement that restrictions are to be regarded as temporary devices to be removed as soon as conditions permit.
In its Second Annual Report on Exchange Restrictions, the Fund recognized the difficulties and problems being faced by member countries under present circumstances and the uncertainties resulting from the strained international situation and rearmament. That Report, however, stated that even in these new circumstances it was the view of the Fund that, if countries had favorable balance of payments conditions and were experiencing increases in their reserves providing a reasonable basis of exchange stability, it was in their interest, and in that of the international community, to relax or remove restrictions unless such action would produce conditions justifying the intensification or reintroduction of restrictions.
During 1951 and the early months of 1952, the Fund, among its other activities, continued its work in the field of restrictions and sent technical missions to a number of its member countries, namely, Austria, Colombia, Costa Rica, Ecuador, Greece, Iceland, Iran, Paraguay, and Yugoslavia. In addition, there have been fact-finding visits to a number of countries. Through the missions, advice and guidance for members on their exchange policy have been provided, assisting in progress toward the practical realization of the objectives of the Fund Agreement. Several of these missions resulted from requests received from member countries asking for Fund approval of changes in their exchange systems which they were proposing to bring into effect. Associated with its work in exchange restrictions was the Fund participation in the Sixth Session of the Contracting Parties to the General Agreement on Tariffs and Trade, which was held in Geneva in the autumn of 1951, and in Geneva meetings of the Contracting Parties’ Ad Hoc Committee on Agenda and Intersessional Business in January and in February 1952.1
In 1952, the Fund entered a new period of activity in the field of restrictions as a result of the requirement for consultations between member countries and the Fund on the further retention of exchange restrictions. The nature of these consultations, and of the parallel consultations under the General Agreement on Tariffs and Trade, is considered in the following sections of this Part of the Report.