Selected Decisions (14th Ed)
Chapter

Article V, Sections 8 and 9: Charges and Remuneration

Author(s):
International Monetary Fund
Published Date:
April 1989
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Charges: Future Changes in Charges on Fund’s Holdings of Members’ Currencies in Excess of Quota

Changes in any schedule of charges levied under Article V, Section 8(c), (d) and (e)* shall apply to all holdings subject to the schedule that are obtained by the Fund after the date of this decision.

Decision No. 4239-(74/67)

June 13, 1974

Charges: Media of Payment in General Resources Account

1. A member whose holdings of SDRs are insufficient for the payment of the total of estimated charges due and payable by it within the next thirty days may:

  • (a) obtain SDRs from the General Resources Account up to a reasonable estimate of the balance of SDRs needed for the payment; or

  • (b) pay the balance of the charges in the currencies of other members.

2. A member that is unable to pay charges in SDRs because it is not a participant in the Special Drawing Rights Department and has not been prescribed as an other holder may pay all charges payable under Article V, Section 8 in the currencies of other members.

3. The currencies for which the SDRs would be sold under paragraph 1(a) or that would be paid under paragraph 1(b) and paragraph 2 shall be selected by the Fund from those currencies that the Fund would receive in accordance with the operational budget in effect at the time.

Decision No. 5702-(78/39) G/S

March 22, 1978, effective April 1, 1978,

as amended by

Decision No. 7096-(82/57) G/S

April 23, 1982

Charges: Rate of Charge as of May 1, 1986

Effective May 1, 1986, 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, shall be 6.0 percent.

Decision No. 8349-(86/122)

July 25, 1986

Charges: Rate of Charge as of May 1, 1987

Effective May 1, 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, shall be 5.8 percent.

Decision No. 8621-(87/90)

June 17, 1987

Charges: Rate of Charge as of May 1, 1988

Effective May 1, 1988, the rate of charge referred to in Rule I-6(4), determined in accordance with the provisions of Section II. 1(a) and (b) of Decision No. 8861-(88/67), adopted April 27, 1988, as amended, shall be 5.5 percent.

Decision No. 8898-(88/90)

June 8, 1988

Charges: Accounting for Charges from Members with Overdue Obligations

The Executive Board decides that, effective November 1, 1986, accrued charges on the use of the Fund’s general resources from a member that is overdue in meeting any financial obligation to the Fund for six months or more will not be included in accrued income unless the member is current in the payment of charges. Charges that are not included in accrued income will instead be reported as deferred income, and will be recorded as income only when paid. Once charges from a member have been reported as deferred income, charges subsequently accrued will not be included in accrued income until the member becomes current in the payment of charges.

Decision No. 8433-(86/175)*

October 31, 1986

Charges: Special Charges on Overdue Financial Obligations to the Fund

I. Overdue Repurchases

1. Pursuant to Rule I-6(8) the Fund has reviewed the rates of charge to be levied under Article V, Section 8(c) on its holdings of a member’s currency that have not been repurchased in accordance with the requirements of the Articles or decisions of the Fund.

2. Within three business days after (i) the due date for the repurchase by a member of the Fund’s holdings of its currency resulting from purchases of the Fund’s ordinary resources or (ii) the effective date of this decision, whichever is the later, the Fund shall consult with the member on the reduction of the Fund’s holdings of the member’s currency that should have been repurchased. The consultation shall take place by rapid means of communication.

3. Unless the Fund’s holdings of the member’s currency are reduced within the period referred to in Section IV below by the amount that should have been repurchased, the rate of charge on the holdings that should have been repurchased shall be increased by a percentage equal to the excess, if any, of the rate of interest on the SDR over the rate of charge levied on the holdings under Rule I-6(4) or (11). For the purposes of this calculation, any adjustments in the rate of charge referred to in Rule I-6(4) that may be made to cover deferred income or for placement to the Special Contingent Account shall not be taken into consideration.

II. Overdue Charges in the General Resources Account

A special charge equal to the rate of interest on the SDR shall be paid by a member on the unpaid amount of charges owed by it under Article V, Section 8(a) and (b).

III. Overdue Interest and Repayments on Trust Fund Loans*

IV Waiver of Special Charges

Special charges under Sections I, II, and III above shall be levied in respect of an overdue financial obligation as of the due date or the effective date of this decision, whichever is the later, unless the obligation is discharged within ten business days after the applicable date.

V. Notification and Payment of Special Charges

1. Special charges levied under this decision shall be payable following the end of each of the Fund’s financial quarters and the member shall be notified promptly of any special charges due. The charges shall be payable on the third business day following the dispatch of the notification.

2. Special charges in respect of overdue repurchases and charges in the General Resources Account shall be paid in SDRs to that Account. Special charges in respect of overdue repayments and interests on Trust Fund loans shall be paid in U.S. dollars to the Special Disbursement Account. 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.

VI. Entry into Effect and Review

This Decision will enter into effect on February 1, 1986. It will be reviewed shortly after October 31, 1986 at the time of the midyear review of the Fund’s income position for the financial year ending April 30, 1987, and thereafter annually in connection with the annual reviews of the Fund’s income position.

Decision No. 8165-(85/189) G/TR

December 30, 1985, effective

February 1, 1986, as amended by

Decision No. 8496-(87/3) G/TR, January 7, 1987,

Decision No. 8641-(87/101) G/S/TR, July 9, 1987, and

Decision No. 8923-(88/110) G/TR, July 21, 1988

Charges: Setoff in Connection with a Retroactive Reduction of Charges due by Members in Arrears

1. When the Fund decides upon a retroactive reduction in the rate of charge specified in Rule I-6(4), the amount to be paid to a member that has charges or repurchases overdue, in the General Resources Account, on the effective date of the payment by the Fund, shall be set off pro tanto, as of that date, against such overdue obligations in the following manner: the member shall be requested to specify which overdue obligations, among the categories listed in paragraph 2, it wishes to discharge by the setoff; in the absence of a response by the member within seven business days after the request, the setoff shall apply to the member’s overdue obligations, within the categories listed in paragraph 2, in the descending order of maturities.

2. The setoff under paragraph 1 shall apply to:

  • (a) special charges due on the amount of overdue charges under Executive Board Decision No. 8165-(85/189)G/TR, December 30, 1985;

  • (b) special charges due on the amount of overdue repurchases under Article V, Section 8(c);

  • (c) charges due under Article V, Section 8(a) or (b);

  • (d) overdue repurchase obligations.

Decision No. 8271-(86/74)

April 30, 1986

Charges: Special Charges on Overdue Repurchases—Setoff

The amount to be repaid by the Fund to a member with respect to special charges on overdue obligations in the General Resources Account under Decision No. 8165-(85/189) G/TR paid by the member for the first quarter of financial year 1987 shall be set off pro tanto against charges due for the second quarter of financial year 1987.

Decision No. 8442-(86/178)

November 6, 1986

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

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. Income Target for FY 1987 and FY 1988

1. During financial year 1987 and financial year 1988, the Fund’s net income target shall be raised from 5 percent to 7.5 percent of the Fund’s reserves at the beginning of each year. The additional net income shall be generated in accordance with the provisions of Section V. It shall be recorded separately in the financial statements of the Fund.

2. For financial year 1988, the Fund may decide to add supplemental income to be generated in accordance with the provisions of Section V. It shall be recorded separately in the financial statements of the Fund.

Section III. Rate of Charge

1. (a) The rate of charge referred to in Rule I-6(4) shall be determined at the beginning of financial year 1987 and financial year 1988. This determination shall be made on the basis of the estimated income and expense of the Fund during the year and the target amount of net and supplemental income for the year, and shall include the adjustment necessary to generate one half of the additional net income and of the supplemental income for the year.

(b) During financial year 1987 and financial year 1988, when estimating income, no deduction shall be made for projected deferred income.

2. During financial year 1987 and financial year 1988, the rate of charge shall be further adjusted in accordance with the provisions of Section V.

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

Section IV. Rate of Remuneration

1. Effective August 1, 1986, Rule I-10(d) shall cease to apply.

2. Effective February 1, 1987, Rule I-10 shall read as follows:

I-10. (a) The rate of remuneration shall be equal to 100 percent of the rate of interest on holdings of SDRs under Rule T-1 (hereafter referred to as “SDR interest rate”).

(b) The relationship of the rate of remuneration to the SDR interest rate will be referred to as the “remuneration coefficient.”

3. During financial year 1987 and financial year 1988, the rate of remuneration shall be adjusted in accordance with the provisions of Section V.

Section V. “Burden Sharing” in FY 1987 and FY 1988

1. In financial year 1987 and financial year 1988, and notwithstanding Rule I-6(4)(a) and (b) and Rule I-10, the rate of charge referred to in Rule I-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 additional net income referred to in Section II. 1, and the supplemental income referred to in Section II.2, the rate of charge shall be adjusted in accordance with the provisions of Section III. 1(a), and the rate of remuneration shall be adjusted, subject to the limitation in (c), 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 the rate of remuneration shall be further adjusted, subject to the limitation in (c), 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, shall not be taken into account.

(c) No reduction 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) Subject to the provisions of Section III. 1(a), the adjustments under this paragraph shall be made as of May 1, as of August 1, as of November 1, and as of February 1 of each year:

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) Notwithstanding the provisions of (d), any adjustment made in respect of the first half of financial year 1987 shall affect the rate of remuneration only as of August 1, 1986.

(f) The operation of this decision shall be reviewed when the remuneration coefficient is reduced to 85 percent under (c).

3. A midyear review of the Fund’s income position shall be held shortly after October 31 of each year. 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) An amount equal to the proceeds of any adjustment made under paragraph 2(a) in order to generate supplemental income in financial year 1988 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 made under paragraph 2(b) in financial year 1987 or financial year 1988 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.

Decision No. 8348-(86/122)

July 25, 1986, as amended by

Decisions Nos. 8481-(86/202), December 17, 1986, and

8482-(86/202), December 17, 1986

Managing Director’s Concluding Remarks at Informal Meeting on Principles of Burden Sharing and the Fund’s Income Position July 17, 1986

Although we need to look at the language, the principles I outlined at the outset of this afternoon’s meeting are accepted, but the mechanism for FY 1987 and FY 1988 is different.

The agreed principles are:

First, the consequences for the Fund which stem from the problem of overdue financial obligations should be shared between debtor and creditor member countries. Second, the burden sharing in principle should be applied in a simultaneous and symmetrical fashion inasmuch as the Articles of Agreement make possible the full application of this principle. Third, the remuneration coefficient would be raised to 100 percent of the interest rate on the SDR.

The principles governing burden sharing shall remain in effect as a temporary understanding, as long as the problem of overdue financial obligations which gave rise to the need for burden sharing at present continues.

The compromise on the financing mechanism for FY 1987 and FY 1988 is as follows:

  • (1) The remuneration coefficient will be increased to 100 percent, effective February 1, 1987; until that time the coefficient will move according to the existing formula.

  • (2) The income for FY 1986 in excess of target—SDR 26 million—remains part of reserves; it will not be deemed as income for FY 1987.

  • (3) As a reserve effort in FY 1987 and FY 1988 the target will be increased from 5 percent to 7.5 percent; there will be burden sharing, without refunding.

  • (4) The FY 1988 reserve target of 7.5 percent may be raised beyond that figure if needed; burden sharing will apply above 5 percent and amounts in excess of 7.5 percent will be refundable.

  • (5) Net income above 5 percent will be placed in a special line of “reserves”.

The mechanism will be in place for two years; afterwards, the Board will take a new decision.

As for the 85 percent floor to the rate of remuneration, if the remuneration coefficient is moving toward that limit the situation will be reviewed in advance to determine what action the Fund should take; the Board will reach a decision in light of the circumstances at that time. The existing safeguard clause continues, to avoid a vacuum.

Techniques will be studied, and implemented as practical, of adjusting, in the context of the operational budget, the share of the United States in total remunerated positions with a view to mitigating the share of the United States in the amount of burden sharing to be assumed by the creditor countries.

Managing Director’s Concluding Remarks at Executive Board Meeting 86/124 on July 30, 1986 on Principles of Burden Sharing and the Fund’s Income Position

With reference to the texts of Decision No. 8348-(86/122) and Decision No. 8349-(86/122) taken at EBM/86/122 on July 25, 1986, and noting today’s revision (7/30/86) of the concluding remarks on July 17, it was understood that:

The Executive Board will come back at an early date to the issue of provisioning.

For any financial year after 1988, in which the problem of overdue obligations to the Fund remains serious, the reserve target will remain at 7.5 percent unless a decision by the Executive Board on provisioning will have altered the treatment of the problem in the meantime.

The increase in the reserve target above 5 percent will remain subject to burden sharing as during FY 1987 and FY 1988 as long as the increase is required by the problem of overdue obligations.

Income Position—Burden Sharing—Rate of Charge and Rate of Remuneration—Adjustment for Quarter Ended January 31, 1987

1. The Executive Board has reviewed the operation of Decision No. 8348-(86/122), adopted July 25, 1986 (as amended), in accordance with Section V, paragraph 2(f) of that decision.

2. The adjustment in the rate of charge for the quarter ended January 31, 1987 will be limited so as to generate an amount equal to the amount generated through the reduction in remuneration for that quarter to cover deferred charges. The resulting shortfall will be deemed deferred income in the quarter ending April 30, 1987; the rate of charge and the rate of remuneration will be adjusted with respect to this amount, for the period from February 7, 1987 to the end of the quarter.

3. Whenever charges that became deferred are settled, distributions under Section V, paragraphs 4(b) and (c) of Decision No. 8348-(86/122) (as amended) shall be made in the proportion that the adjustment payments with respect to deferred income for that period had to the amount of deferred charges for the same period.

Decision No. 8515-(87/23)

February 6, 1987

Adjustment for Quarter Ended April 30, 1988

1. The Executive Board has reviewed the operation of Decision No. 8348-(86/122), adopted July 25, 1986, as amended, in accordance with Section V, paragraph 2(f) of that decision.

2. The adjustment in the rate of charge for the quarter ended April 30, 1988 shall be limited so as to generate an amount equal to the amount generated through the reduction in remuneration for that quarter to cover deferred charges. The resulting shortfall shall be deemed deferred income in the quarter ending July 31, 1988; the rate of charge and the rate of remuneration shall be adjusted with respect to this amount, for the period from May 24, 1988 to the end of the quarter.

Decision No. 8878-(88/84)

May 23, 1988

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

If the net income for FY 1988, after placement to the Special Contingent Account of an amount equal to 5 percent of the Fund’s reserves at the beginning of FY 1988, exceeds 5 percent of such reserves, minus the amount of deferred income in the quarter ended April 30, 1988 for which no adjustments are made in that quarter in accordance with Decision No. 8878-(88/84), adopted May 23, 1988, the excess amount shall be used to reduce the rate of charge retroactively for FY 1988.

Decision No. 8879-(88/84)

May 23, 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 I-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:

  • (a) 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;

  • (b) 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 I-6(4) in financial year 1987, in proportion to the amounts that have been paid;

  • (c) 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(4)(a) 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 FY 1989 exceeding the total of (i) the amount specified in Section III, and (ii) the amount of deferred income in the quarter ended April 30, 1988 for which no adjustments are made in that quarter in accordance with Decision No. 8878-(88/84), adopted May 23, 1988, shall be used to reduce the rate of charge retroactively for FY 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 I-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,

as amended by

Decision No. 8880-(88/84)

May 23, 1988

1. The Executive Board has reviewed the operation of Decision No. 8861-(88/67), as amended, in accordance with Section IV, paragraph 2(e) of that decision.

2. The adjustment in the rate of charge for the quarter ended July 31, 1988 shall be limited so as to generate an amount equal to the amount generated through the reduction in remuneration for that quarter. The resulting shortfall shall be deemed deferred income in the quarter ending October 31, 1988, and shall be financed through an adjustment of the rate of charge and the rate of remuneration for that quarter.

Decision No. 8936-(88/118)

July 29, 1988

Income Position—Burden Sharing—Implementation in FY 1990

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. The sharing shall be applied in a simultaneous and symmetrical fashion.

Section II. Determination of the Rate of Charge

1. The rate of charge for financial year 1990 referred to in Rule I-6(4)(a) shall be adjusted in accordance with the provisions of Section IV.

2. The rate of charge in force as of the end of financial year 1990, as adjusted under Section IV, shall continue to apply subsequently unless it is otherwise decided.

Section III. Amount for Special Contingent Account

1. An amount equivalent to SDR 65 million shall be generated during financial year 1990, in accordance with the provisions of Section IV, and shall be placed to the Special Contingent Account.

Section IV. Implementation of Burden Sharing

1. During financial year 1990, notwithstanding Rule I-6(4)(a) and (b) and Rule I-10, the rate of charge referred to in Rule I-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 1990 to the Special Contingent Account in accordance with Section III, 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, 1989, as of August 1, 1989, as of November 1, 1989, and as of February 1, 1990:

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, 1989. 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, 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. 9135-(89/46)

April 26, 1989

Corresponds to Article V, Section 8(b), (c), and (d) of the Articles of Agreement after the Second Amendment.

Replaced Decision No. 7930-(85/41), March 13, 1985.

See page 374.

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