Selected Decisions Annex (14th Ed)

Enhanced Structural Adjustment Facility—Borrowing Agreement

International Monetary Fund
Published Date:
April 1989
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Bank of Norway

Pursuant to Section III, paragraph 2 of the Instrument to Establish the Enhanced Structural Adjustment Facility Trust, the International Monetary Fund, in its capacity as Trustee of that Trust, approves the agreement for borrowing from the Bank of Norway in terms of the draft set out in the attachment to EBS/88/72, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement.

Decision No. 8833-(88/56) ESAF

April 4, 1988

Attachment to EBS/88/72

Enhanced Structural Adjustment Facility: Proposed Borrowing Agreement with the Bank of Norway

I have been authorized to propose on behalf of the International Monetary Fund (the “Fund”) as Trustee of the Enhanced Structural Adjustment Facility Trust (the “Trust”) that the Bank of Norway (the “Bank”) agree to lend to the Fund as Trustee for the purposes of providing resources to the Loan Account of that Trust, in accordance with the Instrument establishing the Trust (the “Instrument”) adopted by the Executive Board of the Fund by Decision No. 8759-(87/176) ESAF, adopted December 18, 1987. The amount of the loan is to be the equivalent of SDR 90 million and the terms and conditions of this loan shall be as follows:

1. a. The Trustee may make drawings under this agreement at any time during the period from the effective date of this agreement through June 30, 1993, upon giving the Bank at least five business days (Washington, D.C.) notice by tested telex, provided that total drawings may not exceed SDR 30 million until January 1, 1989 and SDR 60 million until January 1, 1990.

b. If any installment of interest is not paid to the bank within a period of ten days after its due date, the Trustee shall not make, further drawings under this agreement pending consultations with the Bank on the matter. However, the Trustee may resume drawings under this agreement once the arrears to the Bank have been discharged.

2. The amount of each drawing shall be denominated in SDRs. Unless otherwise agreed between the Trustee and the Bank, the amount shall be paid by the Bank, on the value date specified in the Trustee’s notice, by transfer of the equivalent amount of U.S. dollars to the account of the Trust at the Federal Reserve Bank of New York, New York.

3. a. Each drawing shall be repaid in ten equal semiannual installments beginning five and one-half years and ending ten years after the date of the drawing. Repayments by the Trust shall be made on or promptly after the relevant maturity date.

b. By agreement between the Bank and the Trustee, any drawing or part there of may be repaid by the Trustee at any time in advance of maturity.

c. If a drawing matures on a date that is not a business day of the Fund, the maturity date shall be on the preceding business day.

4. a. The rate of interest applicable to each drawing shall be calculated at the time of the drawing and at intervals of six calendar months thereafter. The amount outstanding in respect of each drawing shall bear interest at an annual rate determined by the Trustee at the time of the calculation from the product of:

(i) the interest rates on domestic instruments in each currency included in the SDR basket, as reported to the Trustee by each reporting agency, on the business day of the Fund three business days prior to the interest calculation dates referred to in subparagraph (a) above, as follows:

  • —the bond equivalent yield for six-month U.S. Treasury bills,

  • —the six-month interbank rate in Germany,

  • —the six-month rate for interbank loans against private paper in France,

  • —the average rate for newly issued bank CDs in Japan with a maturity of between 150 and 180 days,

  • —the six-month interbank rate in the United Kingdom, and

(ii) the percentage weight of that currency in the valuation of the SDR on that business day, calculated by using the same amounts and exchange rates for currencies as are employed by the Fund for calculating the value of the SDR in terms of the U.S. dollar on that day.

The applicable interest rate shall be the sum of the products so calculated, rounded to two decimal places.

b. The amount of interest payable in respect of each drawing shall be calculated on an actual day basis and shall be paid on all outstanding drawings under this agreement promptly after June 30 and December 31 of each year.

5. a. Payments of principal and interest shall be made in U.S. dollars or in other media as may be agreed between the Trustee and the Bank.

b. Payments in U.S. dollars shall be made by crediting the amount due to the account of the Bank at the Federal Reserve Bank of New York, New York. Payments in SDRs shall be made by crediting Norway’s holdings account in the Special Drawing Rights Department. Payments in other currencies shall be made to an account specified by the Bank.

6. a. The Bank shall have the right to transfer at any time all or part of any claim to any member of the Fund, to the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1, or to any official entity that has been prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Fund’s Articles of Agreement.

b. The transferee shall acquire all the rights of the Bank under this agreement with respect to repayment of and interest on the transferred claim.

7. At the request of the Bank, calls on its commitment to meet drawings may be suspended temporarily at any time prior to December 31, 1992, subject to the provisions of Section III, paragraph 4(b) and (c) of the Instrument.

8. Unless otherwise agreed between the Trustee and the Bank, all transfers, exchanges, and payments of principal and interest shall be made at the exchange rates for the relevant currencies in terms of the SDR established by the Fund for the third business day of the Fund before the value date of the transfer, exchange, or payment.

9. If the Fund changes the method of valuing the SDR, all transfers, exchanges, and payments of principal and interest made three or more business days of the Fund after the effective date of the change shall be made on the basis of the new method of valuation.

10. Any question arising hereunder shall be settled by mutual agreement between the Bank and the Trustee.

If the foregoing proposal is acceptable to the Bank, this communication and your duly authenticated reply accepting this proposal shall constitute an agreement between the Bank and the Trustee, which shall enter into effect on the date the Trustee acknowledges receipt of your reply.*

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