Chapter

Article V, Sections 8 and 9: Charges and Remuneration

Author(s):
International Monetary Fund
Published Date:
April 1987
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Charges: Rate of Charge as of May 1, 1987*

Effective May 1, 1987, the rate of charge referred to in Rule 1-6(4), determined in accordance with the provisions of Section III. 1(a) of Decision No. 8348-(86/122), adopted July 25, 1986, as amended, shall be 5.8 percent.

Decision No. 8621-(87/90)

June 17, 1987

Charges: Special Charges on Overdue Financial Obligations to the Fund

Decision No. 8165-(85/189) G/TR, adopted December 30, 1985, effective February 1, 1986, Section V, paragraph 2, shall be amended by the addition of the following sentence:

“Such payments may be made also in SDRs to a prescribed holder on behalf of the Special Disbursement Account, provided that use of SDRs is in accordance with Decision No. 8642-(87/101) S/TR, adopted July 9, 1987.”

Decision No. 8641-(87/101) G/S/TR

July 9, 1987

Income Position—Principles of “Burden Sharing,” Income Target for FY 1987 and FY 1988, Rate of Charge, and Rate of Remuneration: Retroactive Reduction of Rate of Charge for FY 1987

An amount of SDR 20,690,531 shall be used to reduce retroactively for financial year 1987 the rate of charge referred to in Rule I-6(4), determined in accordance with the provisions of Section III. 1(a) of Decision No. 8348-(86/122), adopted July 25, 1986, as amended.

Decision No. 8618-(87/90)

June 17, 1987

Retroactive Reduction of Rate of Charge for FY 1988

If the net income for financial year 1988 exceeds 10 percent of the Fund’s reserves at the beginning of financial year 1988, the excess amount shall be used to reduce the rate of charge retroactively for financial year 1988.

Decision No. 8781-(88/12)

January 29, 1988

Special Contingent Account

In view of the existing overdue obligations, a special contingent account shall be established. It shall be recorded separately in the Fund’s financial statements. There shall be placed to that account, for financial year 1987, an amount of SDR 26,547,074. This amount shall be distributed, to creditors and debtors for that year, in accordance with the principles of burden sharing, when the need for this account disappears.

Decision No. 8619-(87/90)

June 17, 1987

Special Contingent Account: Additions in FY 1988, and Disposition of Amounts Placed in FY 1987 and FY 1988

1. An amount equivalent to 2½ percent of the Fund’s reserves at the beginning of financial year 1988 already provided for in accordance with Section II. 1 of Decision No. 8348-(86/122), adopted July 25, 1986, as amended, shall be placed to the Special Contingent Account at the end of financial year 1988.

2. An additional amount equivalent to 2½ percent of the Fund’s reserves at the beginning of financial year 1988 shall be raised in accordance with Section II.2 and Section V. 1 and 2(a) of Decision No. 8348-(86/122), as amended, as follows:

(a) effective February 1, 1988 the rate of charge referred to in Rule 1-6(4) shall be 6.15 percent;

(b) the rate of remuneration shall be adjusted for the period from February 1 through April 30, 1988 in order to generate an amount of net income equal to the amount generated under (a), subject to the limitation in Section V.2(c) of Decision No. 8348-(86/122), as amended.

That additional amount shall also be placed to the Special Contingent Account at the end of financial year 1988.

3. The amounts placed to the Special Contingent Account, including the amount placed to it in financial year 1987, shall be distributed when there are no outstanding overdue charges and repurchases, or at such earlier time as the Fund may decide, in accordance with subparagraphs (a), (b), and (c) below:

  • distributions of the amounts placed to the Special Contingent Account at the end of financial year 1988 shall be made in proportion to the amounts that have been paid, or have not been received, by each member in financial year 1988 as a result of adjustments made under paragraphs 1 and 2 above;

  • the amount placed to the Special Contingent Account in financial year 1987 shall be distributed to members that have paid charges referred to in Rule 1-6(4) in financial year 1987, in proportion to the amounts that have been paid;

  • any distribution shall be made in proportion to the total amount to be distributed to each member under (a) and (b) cumulatively.

4. If any loss is charged against the Account, it shall be recorded in accordance with the principle of proportionality set forth in paragraph 3(c).

Decision No. 8780-(88/12)

January 29, 1988

Principles of “Burden Sharing,” Rate of Charge, Amount for Special Contingent Account and Net Income Target, and Implementation of “Burden Sharing” for FY 1989

Section I. Principles of “Burden Sharing”

1. The financial consequences for the Fund which stem from the existence of overdue financial obligations shall be shared between debtor and creditor member countries.

2. This sharing shall be applied in a simultaneous and symmetrical fashion.

Section II. Determination of the Rate of Charge

1. (a) The rate of charge for financial year 1989 referred to in Rule I-6(4Xa) shall be determined at the beginning of the financial year, on the basis of the estimated income and expense of the Fund during the year, to generate the target amount of net income for that year.

(b) When estimating income, no deduction shall be made for projected deferred income.

2. The rate of charge shall be adjusted in accordance with the provisions of Section IV.

3. The rate of charge in force as of the end of financial year 1989, as adjusted under Section IV, shall continue to apply subsequently unless it is otherwise decided.

4. Net income for financial year 1989 exceeding the amount specified in Section III shall be used to reduce the rate of charge retroactively for financial year 1989.

Section III. Amount for Special Contingent Account and Net Income Target for FY 1989

1. An amount equivalent to 5 percent of the Fund’s reserves at the beginning of financial year 1989 shall be generated during financial year 1989, in accordance with the provisions of Section IV, and shall be placed to the Special Contingent Account.

2. In addition, during financial year 1989, in accordance with Rule I-6(4)(a), the target amount of net income referred to in Rule I-6(4)(a) shall be 5 percent of the Fund’s reserves at the beginning of the year.

Section IV. Implementation of “Burden Sharing”

1. During financial year 1989, notwithstanding Rule I-6(4)(a) and (b) and Rule I-10, the rate of charge referred to in Rule 1-6(4), and the rate of remuneration prescribed in Rule I-10 shall be adjusted in accordance with the provisions of this Section.

2. (a) In order to generate the amount to be placed in financial year 1989 to the Special Contingent Account, the rate of charge, and, subject to the limitation in (c), the rate of remuneration shall be adjusted, in accordance with the provisions of this paragraph, so as to produce equal amounts of income.

(b) If income from charges becomes deferred during an adjustment period as defined in (d), the rate of charge and, subject to the limitation in (c), the rate of remuneration shall be further adjusted, in accordance with the provisions of this paragraph, so as to generate, in equal amounts, an additional amount of income equal to the amount of deferred charges. For the purposes of this provision, special charges on overdue financial obligations under Decision No. 8165-(85/189) G/TR, adopted December 30, 1985, as amended, shall not be taken into account.

(c) No adjustment in the rate of remuneration under this paragraph shall be carried to the point where the average remuneration coefficient would be reduced below 85 percent for an adjustment period.

(d) The adjustments under this paragraph shall be made as of May 1, 1988, as of August 1, 1988, as of November 1, 1988, and as of February 1, 1989:

  • shortly after July 31 for the period from May 1 to July 31;

  • shortly after October 31 for the period from August 1 to October 31;

  • shortly after January 31 for the period from November 1 to January 31;

  • shortly after April 30 for the period from February 1 to April 30.

(e) The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit in (c) above.

3. A midyear review of the Fund’s income position shall be held shortly after October 31, 1988. If, after any adjustment under paragraph 2, the actual net income for the first six months of the financial year, on an annual basis, is below the target amount for the year, by an amount equal to, or greater than, 2 percent of the Fund’s reserves at the beginning of the financial year, the Executive Board will consider how to deal with the situation. If on December 15 no agreement has been reached as a result of this consideration, the rate of charge shall be increased as of November 1 to the level necessary to reach the target amount of net income for the year.

4. (a) Subject to paragraph 3 of Decision No. 8780-(88/12), adopted January 29, 1988, the balances held in the Special Contingent Account shall be distributed in accordance with the provisions of this paragraph to members that have paid additional charges or have received reduced remuneration as a result of the adjustment, when there are no outstanding overdue charges and repurchases, or at such earlier time as the Fund may decide.

(b) An amount equal to the proceeds of any adjustment for deferred charges shall be distributed, in accordance with the provisions of this paragraph, to members that have paid additional charges or have received reduced remuneration as a result of the adjustment, when, and to the extent that, charges, the deferral of which had given rise to the same adjustment, are paid to the Fund. Distributions under this provision shall be made quarterly.

(c) Distributions under (a) or (b) shall be made in proportion to the amounts that have been paid or have not been received by each member as a result of the respective adjustments.

(d) If a member that is entitled to a payment under this paragraph has any overdue obligation to the Fund in the General Department at the time of payment, the member’s claim under this paragraph shall be set off against the Fund’s claim in accordance with Decision No. 8271-(86/74), adopted April 30, 1986, or any subsequent decision of the Fund.

(e) Subject to paragraph 4 of Decision No. 8780-(88/12), adopted January 29, 1988, if any loss is charged against the Special Contingent Account, it shall be recorded in accordance with the principles of proportionality set forth in (c).

Decision No. 8861-(88/67)

April 27, 1988

For the rate of charge, effective February 1, 1988, see Decision No. 8780-(88/12), January 29, 1988 on page 51.

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