Selected Decisions Annex (14th Ed)
Chapter

Enhanced Structural Adjustment Facility—Borrowing Agreement

Author(s):
International Monetary Fund
Published Date:
April 1989
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Swiss Confederation

a. Borrowing Agreement

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 Swiss Confederation in terms of the draft set out in Attachment I to EBS/88/70, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement.

Decision No. 8834-(88/56) ESAF April 4. 1988

b. Letter to Swiss Authorities

The Managing Director is authorized to send, on behalf of the Fund, the letter to the Swiss authorities set out in Attachment III to EBS/88/70.

Decision No. 8835-(88/56) April 4, 1988

Attachment I to EBS/88/70

Enhanced Structural Adjustment Facility: Proposed Borrowing Agreement with the Swiss Confederation

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 Swiss Confederation agrees to lend to the Fund as Trustee for the purpose of providing resources to the Loan Account of that Trust, in accordance with the terms of 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, as attached. The amount of the loan is to be the equivalent of SDR 200 million and the terms and conditions of this loan shall be as follows:

1. The Trustee may make drawings under this agreement on a date or dates to be agreed by the Swiss Confederation and the Trustee, provided that drawings shall be completed not later than June 30, 1992.

2. a. The amount of each drawing shall be denominated in SDRs. Unless otherwise agreed between the Trustee and the Swiss Confederation, the amount shall be paid by the Swiss Confederation, 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.

b. Upon request, the Trustee shall issue to the Swiss Confederation a non-negotiable certificate evidencing its claim on the Trust resulting from a-drawing outstanding under this agreement.

3. a. The proceeds of drawings shall be used to finance disbursements of Trust loans. Amounts equivalent to each such disbursement shall be repaid to the Swiss Confederation in ten equal semiannual installments beginning five and one-half years and ending ten years after the date of the disbursement, provided that, if the proceeds of a drawing have not been disbursed in full within six months following the date of the drawing, the undisbursed balance of that drawing shall be deemed, for the purposes of this provision, to have been disbursed six months following 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 Swiss Confederation and the Trustee, any drawing or part thereof 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. The amount outstanding in respect of each drawing shall bear no interest.

5. Payments of principal shall be made in U.S. dollars at a depository to be specified by the Swiss Confederation.

6. a. The Swiss Confederation 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 Swiss Confederation under this agreement with respect to repayment of the transferred claim.

7. Unless otherwise agreed between the Trustee and the Swiss Confederation, all transfers, exchanges, and payments of principal 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.

8. If the Fund changes the method of valuing the SDR, all transfers, exchanges, and payments of principal 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.

9. Any question arising hereunder shall be settled by mutual agreement between the Swiss Confederation and the Trustee.

If the foregoing proposal is acceptable to the Swiss Confederation, this communication and your duly authenticated reply accepting this proposal shall constitute an agreement between the Swiss Confederation and the Trustee, which shall enter into effect on the date the Trustee acknowledges receipt of the note by which the Swiss Confederation notifies the Trustee of the completion of its constitutional procedures.*

Attachment III to EBS/88/70

April 15, 1988

Dear Sir:

I am delighted to acknowledge and welcome the agreement of the Swiss Confederation, subject to ratification, to lend to the Enhanced Structural Adjustment Facility Trust, and to confirm that I share the sentiments and accept the proposals put forth in your letter of April 15, 1988. The generous support of the Swiss Confederation for the Enhanced Structural Adjustment Facility is a clear reflection of Switzerland’s longstanding commitment to international monetary cooperation and to the economic well-being of the poorest members of the international community.

I understand fully your desire that the Swiss Confederation, as a lender to the ESAF Trust, be kept fully informed and consulted in the circumstances described in your letter. I can thus readily accept, on behalf of the Fund, the proposed consultation and information procedures as stated in the aforementioned letter.

Please allow me to express my deep appreciation and that of the Fund’s membership for the contribution of the Swiss Confederation to this important initiative.

With highest regards,

Michel Camdessus

Mr. Otto Stich

President of the Swiss Confederation

Chief

Federal Department of Finance

Bernerhof

Bundesgasse 3,

3003 Berne, Switzerland

Letter from Mr. Stich, President of the Swiss Confederation and Chief, Federal Department of Finance, Berne, Switzerland

THE PRESIDENT OF THE SWISS CONFEDERATION

Berne, April 15, 1988

Dear Sir:

As we sign, subject to ratification, the agreement whereby the Swiss Confederation undertakes to contribute to the Enhanced Structural Adjustment Facility of the International Monetary Fund, I believe it would be beneficial to specify the spirit and context in which Switzerland, as a nonmember, intends to make this contribution.

The Enhanced Structural Adjustment Facility, as we see it, is essentially monetary in nature, in that its objective is to maintain the solvency of those poorest countries that undertake sound growth policies, and to retain these countries in the international division of labour system. Although essentially monetary in nature, the Enhanced Structural Adjustment Facility in this way helps create conditions that facilitate and support multilateral and bilateral efforts to assist the development of these countries.

As we did when Switzerland acceded to the General Arrangements to Borrow, we wish to state that any steps taken by the Swiss Confederation vis-à-vis the developing countries must be consistent with the principles on which Swiss legislation on international development cooperation is based. According to these principles, the objective of development cooperation is to support the efforts of developing countries to improve the living conditions of their people, in particular the poorest segments of the population; to help these countries achieve the capacity to develop on their own; and to promote a better balance in the long term within the international community. The Swiss Confederation is participating in the Enhanced Structural Adjustment Facility in the expectation that the adjustment programs required of the beneficiaries of the Facility will foster the attainment of the above-mentioned goals. This means in particular that the programs must support the maintenance and development of the apparatus of production in the long term and that the poorest segments of the population must not have to bear an excessive share of the adjustment burden.

The Swiss Confederation is not represented on the Executive Board of the International Monetary Fund, which is the trustee of the Enhanced Structural Adjustment Facility, and should therefore be informed and consulted before any decision to amend the instrument or lending policy of the Facility. Moreover, it should be in a position to monitor the progress of the Facility’s operations and express its views thereon. Accordingly, I propose that high-level representatives of the Confederation and the International Monetary Fund, as trustee of the Facility, meet at least twice a year, at their mutual convenience, to exchange views and information during the period in which loans are granted and disbursed. Subsequently, until such time as the Facility is liquidated, similar meetings should be organized as needed. The International Monetary Fund, as trustee of the Facility, should ensure that the Swiss authorities receive the documentation necessary to keep abreast of developments relating to the Facility.

The Swiss Embassy in the United States will act as intermediary for all communications relating to the Facility.

Please confirm your acceptance of the views and proposals set forth in this letter.

With highest regards,

Otto Stich

Mr. Michel Camdessus

Managing Director

International Monetary Fund

Washington, D.C./USA

Enhanced Structural Adjustment Facility—Borrowing-Agreements, Investment with Subsidy Account, and Arrangement for a Subsidy Contribution

A. Bank Negara Malaysia

Pursuant to Section IV, paragraph 3 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 and promissory note for an investment by Bank Negara Malaysia with the Subsidy Account of the Trust in terms of the draft agreement and promissory note set out in Attachments I and II to EBS/88/93, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement and issue the promissory note.

Decision No. 8892-(88/90) ESAF

June 8, 1988

Attachment I to EBS/88/93

Draft Agreement with the Bank Negara Malaysia on an Investment with the Subsidy Account of the ESAF Trust

I have been authorized to propose on behalf of the International Monetary Fund (the “Fund”) as Trustee (the “Trustee”) of the Enhanced Structural Adjustment Facility Trust (the “Trust”) that the Bank Negara Malaysia (the “Bank”) agree to invest with the Subsidy Account of the Trust, in accordance with Section IV, paragraph 3(b) of the Instrument establishing the Trust (the “Instrument”) adopted by the Executive Board of the Fund by Decision No. 8759-(87/176) ESAF December 18, 1987, an amount in the equivalent of SDR 40 million on the following terms and conditions:

1. a. The investment may be made in two parts. The first investment in an amount of SDR 30 million shall be made in 1988 and, provided that Malaysia’s balance of payments and reserve position remains favorable, the second investment in an amount of SDR 10 million shall be made in 1989. The date of each investment shall be agreed between the Trustee and the Bank, but in any case the first investment shall not be made later than June 30, 1988 and the second investment shall not be made earlier than June 30, 1989. The proceeds of the investments by the Bank shall be reinvested by the Trustee. The Fund, as Trustee of the Enhanced Structural Adjustment Facility Trust, shall issue to the Bank a non-negotiable promissory note in the amount of each investment. The Bank agrees, subject to the conditions set out in this agreement, to purchase the promissory note on the issue date from the Trustee in the amount of each investment.

b. The Trustee shall make a formal request for each investment by giving notice by tested telex at least seven business days (Washington, D.C.) in advance of the investment date agreed between the Trustee and the Bank.

c. 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 obtain further investments under this agreement pending consultations with the Bank on the matter. However, the Trustee may obtain investments under this agreement once the arrears to the Bank have been discharged.

2. The amount of each investment 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 (Federal funds) to the account of the Trustee at the Federal Reserve Bank of New York, New York.

3. a. Subject to the other provisions of this agreement, the Trustee shall repay to the Bank an amount equivalent to the SDR value of each investment from the proceeds of the investment ten years after the date of the investment.

b. If the maturity period does not end on a business day in the place where payment is to be made, the maturity date shall be fixed to fall on the next succeeding business day in that place.

c. The Bank intends to maintain its investments with the Trust for their full maturity. If the Bank represents that because of Malaysia’s balance of payments and reserve position there is a need for the Bank to encash all or part of the investment and the Trustee, having given the representation the overwhelming benefit of any doubt, agrees, the investment may be encashed in whole or in part in advance of the final maturity date. The Bank agrees to restore the investment as soon as practicable in light of favorable developments in Malaysia’s balance of payments and reserve position.

d. The Trustee may repay all or part of each investment at any time in advance of the maturity date.

4. The Trustee shall pay interest on the Bank’s investments under this agreement at an annual rate of one half of one percent per annum calculated on an actual day basis using a 365-day year. Interest shall be paid in respect of the period from and including the date of an investment to but excluding the maturity date. Interest shall be paid on each anniversary of an investment or upon repayment of the investment amount represented by the promissory note, from the proceeds of the Trust’s investments.

5. Payments by the Trustee of the investment amounts in respect of each promissory note and all accrued interest thereon shall be made in U.S. dollars or in other media as agreed between the Trustee and the Bank.

6. 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 other currencies shall be made to accounts specified by the Bank.

7. Unless otherwise agreed between the Bank and the Trustee, the transfer under paragraph 2, and all payments of the investment amounts in respect of each promissory note and all accrued interest thereon, 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 or payment.

8. If the Fund changes the method of valuing the SDR, all transfers, exchanges, and payment of the investment amounts in respect of each promissory note and all accrued interest thereon 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.

9. Upon repayment of all or part of each investment and all accrued interest thereon, the promissory note shall be returned to the Trustee for cancellation, and if any balance of an investment remains outstanding, the Trustee shall issue a new promissory note for the remainder of the investment with the same maturity date.

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

11. If the foregoing proposal is acceptable to the Bank, this communication and your duly authenticated reply accepting the 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.*

Attachment II to EBS/88/93

Draft Form of Promissory Note

International Monetary Fund

700 19th Street, N.W.

Washington, D.C. 20431

The International Monetary Fund (hereinafter called the Fund), as Trustee (the Trustee) of the Enhanced Structural Adjustment Facility Trust (the Trust), for value received, hereby promises to pay to the Bank Negara Malaysia (hereinafter called the Bank) on surrender of this Note on [date], a principal sum equivalent to SDR () million and to pay interest on the said principal sum in accordance with paragraphs (5) and (6). This note represents an investment by the Bank in accordance with Section IV, paragraph 3(b) of the Instrument establishing the Trust adopted by the Executive Board of the Fund by Decision No. 8759-(87/176) ESAF, adopted December 18, 1987.

1. This promissory note is non-negotiable.

2. If the maturity period does not end on a business day in the place where payment is to be made, the maturity date shall be fixed to fall on the next succeeding business day in that place.

3. The Bank intends to maintain its investment with the Trust for its full maturity. If the Bank represents that because of Malaysia’s balance of payments and reserve position, there is a need for the Bank to encash all or part of the investment represented by this promissory note and the Trustee, having given the representation the overwhelming benefit of any doubt, agrees, the investment may be encashed in whole or in part in advance of the final maturity date. The Bank agrees to restore the investment as soon as practicable in light of favorable developments in Malaysia’s balance of payments and reserve position.

4. The Trustee may repay all or part of the investment represented by this promissory note at any time in advance of the maturity date.

5. The Trustee shall pay interest on the Bank’s investment at an annual rate of one half of one percent calculated on an actual day basis and using a 365-day year. Interest shall be paid in respect of the period from and including the investment date to but excluding the maturity date. Interest shall be paid on each anniversary of the investment or upon repayment of the principal amount.

6. Payments by the Trustee of the investment amount represented by this promissory note and all accrued interest thereon shall be made in U.S. dollars or in other media as agreed between the Trustee and the Bank. Payments in U.S. dollars shall be made by crediting the amount due to an account of the Bank at the Federal Reserve Bank of New York, New York. Payments in other currencies shall be made to accounts specified by the Bank.

7. Unless otherwise agreed between the Bank and the Trustee, all payments of the investment amount represented by this promissory note and all accrued interest thereon 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 or payment.

8. Upon repayment of all or part of the investment and all accrued interest thereon, this promissory note shall be returned to the Trustee for cancellation, and if any balance of the investment remains outstanding, the Trustee shall issue a new promissory note for the remainder of the investment with the same maturity date.

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

B. Bank of Spain

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 Spain in terms of the draft set out in the Attachment to EBS/88/101, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement.

Decision No. 8893-(88/90) ESAF

June 8, 1988

Attachment to EBS/88/101

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

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 Spain (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 220 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 73 million until January 1, 1989 and SDR 147 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) Drawings shall be for maturity periods of six months. The Trustee may request that all or part of each drawing be similarly renewed on giving notice as provided in paragraph 1, subject to the provisions of paragraph 3(b). The Bank shall consider sympathetically and is expected to agree to such requests.

(b) One tenth of the amount of each drawing shall become finally due and payable and no longer subject to renewal under paragraph 3(a) five and one-half years following the date of the drawing, and a further one tenth will similarly become due and payable at the end of each succeeding period of six months through the tenth year following the date of the drawing. Repayments by the Trust shall be made on or promptly after the relevant maturity date.

(c) If, notwithstanding the provisions of paragraph 3(a), the Bank is unable to agree to a requested renewal and the relevant part of the drawing is repaid, the Bank’s commitment to make loans shall be restored pro tanto and the Bank shall provide a new drawing of an equal amount not later than six months following the date of repayment. Any such drawing under this paragraph 3(c) shall be subject to the terms applicable to the original drawing as if its renewal had been agreed.

(d) 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.

(e) 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 amount outstanding in respect of each drawing shall bear interest at an annual rate determined by the Trustee at the commencement of each maturity period 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 referred to in paragraph 8 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 Spain’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, as a condition of the transfer, notify the Trustee prior to the transfer that it accepts the obligations of the Bank relating to the transferred claim with respect to renewal and new drawings under paragraphs 3(a) and 3(c), and 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.*

C. Government of Canada

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 Government of Canada in terms of the draft set out in the Attachment to EBS/88/105, and authorizes the Managing Director to take such action as is necessary to conclude and implement the agreement.

Decision No. 8894-(88/90) ESAF

June 8, 1988

Attachment to EBS/88/105

Enhanced Structural Adjustment Facility: Proposed Borrowing Agreement with the Government of Canada

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 Government of Canada agree to lend to the Fund as Trustee for the purpose of providing resources to the Loan Account of that Trust, in accordance with the terms of 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, as attached. The amount of the loan is to be the equivalent of SDR 300 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 Government of Canada at least five business days (Washington, D.C.) notice by tested telex, provided that total drawings may not exceed SDR 100 million until January 1, 1989 and SDR 200 million until January 1, 1990.

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

2. a. The amount of each drawing shall be denominated in SDRs. Unless otherwise agreed between the Trustee and the Government of Canada, the amount shall be paid, on the value date specified in the Trustee’s notice, by transfer of the equivalent amount of U.S. dollars or SDRs by the Bank of Canada to an account specified by the Trustee. Upon receipt of the Trustee’s notice by the Government of Canada, the Bank of Canada shall promptly advise the Trustee of the media to be used for the transfer.

b. Upon request, the Trustee shall issue to the Government of Canada a non-negotiable certificate evidencing its claim on the Trust resulting from a drawing outstanding under this agreement.

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 Government of Canada and the Trustee, any drawing or part thereof 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 amount outstanding in respect of each drawing shall bear interest at an annual rate determined by the Trustee at the time each drawing is made 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 referred to in paragraph 8, as follows:

(a) for the French franc, the yield to maturity on a representative sample of securities of major French public sector enterprises with an average remaining life in the range of four and one-half to five and one-half years, based on market prices for the securities, as calculated by the Caisse des Depots et Consignations using the same method as it uses for the yield it publishes weekly;

(b) for the deutsche mark, the yield to maturity on notes and bonds of the Federal Republic, Railways and Post Office with a remaining period to maturity of five years as calculated by the Deutsche Bundesbank on the basis published in the Statistical Supplement (Series 2, Table 8D) to the Bundesbank’s Monthly Report;

(c) for the Japanese yen, the yield to maturity of that ten-year Japanese Government bond with a remaining period to maturity closest to five years, based on the closing market price officially published by the Tokyo Stock Exchange;

(d) for the pound sterling, the calculated redemption yield on British Government securities, determined for a constant maturity of five years, as calculated by the Bank of England on the basis published in its Quarterly Bulletin;

(e) for the U.S. dollar, the yield to maturity on actively traded U.S. Government securities, determined for a constant maturity of five years, as calculated by the U.S. Treasury and presently published each week by the Federal Reserve Board in Statistical Release H. 15; 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 Government of Canada.

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

6. a. The Government of Canada 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 Government of Canada under this agreement with respect to repayment of and interest on the transferred claim.

7. At the request of the Government of Canada, 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 Government of Canada, 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 Government of Canada and the Trustee.

If the foregoing proposal is acceptable to the Government of Canada this communication and your duly authenticated reply accepting this proposal shall constitute an agreement between the Government of Canada and the Trustee, which shall enter into effect on the date the Trustee acknowledges receipt of the communication by which the Government of Canada notifies the Trustee of the completion of the required legislative procedures.*

D. Austrian National Bank

1. Pursuant to Article V, Section 2(b), at the request of the Austrian National Bank (the “Bank”) as set forth in its letter dated May 27, 1988 (Annex II to EBS/88/106), the Fund adopts the Instrument to establish an Account for the administration by the Fund of a deposit to be provided by the Bank on the terms and conditions set forth in the Instrument that is annexed to EBS/88/106 (Annex I).

2. The provisions of the instrument may be amended only by a decision of the Fund and with the concurrence of the Bank.

3. Pursuant to Article V, Section 2(b), the Managing Director is authorized to accept the proposal by the Bank to deposit to the Account an amount in the equivalent of SDR 60 million on a value date to be agreed between the Fund and the Bank, but in any case not later than January 1, 1989 (Annex III, EBS/88/106). The deposit shall be administered in accordance with the provisions of the Instrument adopted under paragraph 1 of this decision. The agreement between the Fund and the Bank is subject to a special Austrian Enabling Act. It shall enter into effect on the date on which the Fund acknowledges receipt of the communication by which the Austrian National Bank notifies the Fund of the completion of the required legislative procedures.*

Decision No. 8895-(88/90) ESAF

June 8, 1988

Annex I to EBS/88/106

Proposed Instrument for an Administered Account Austria

To help fulfill its purposes, the International Monetary Fund (hereinafter called the Fund) has adopted this Instrument to establish an account in accordance with Article V, Section 2(b) (“Administered Account Austria”) at the request of the Austrian National Bank, which shall be governed by, and administered in accordance with, the terms and conditions of this Instrument:

1. The Managing Director is hereby authorized to establish with the Fund an account for the administration of resources deposited in that account by the Austrian National Bank (the “Bank”).

2. The amount of the deposit shall be denominated in SDRs. The amount shall be paid by the Bank by transfer of an equivalent amount of Austrian schillings to an account designated by the Fund.

3. The resources of the account shall be invested by the Fund. The Managing Director is authorized (i) to make all arrangements, including establishment of accounts in the name of the International Monetary Fund, with such depositories of the Fund as may be necessary to carry out the operations of the account, and (ii) to take all measures necessary to implement the provisions of this Instrument.

4. (a) The deposit shall bear interest at an annual rate of one-half of 1 percent per annum.

(b) The amount of interest payable in respect of the amount of the deposit outstanding shall be calculated on the basis of the actual member of days that interest has accrued and a 365-day year and shall be paid by the Fund on each anniversary of the deposit or on the date the relevant principal amount is repaid, whichever is earlier, from the proceeds of the investment.

5. The difference between the interest earned by the Fund on the invested amount and the interest due to the Bank under paragraph 4, net of any cost, shall be transferred promptly to the Subsidy Account of the Enhanced Structural Adjustment Facility Trust.

6. (a) The Fund shall repay the principal amount of the deposit in ten equal semiannual installments, which shall begin not later than the end of the first six months of the sixth year, and be completed at the end of the tenth year, after the date of the deposit.

(b) The Fund shall repay the principal amount of the deposit from the proceeds of the investment.

7. Payments by the Fund of principal and interest shall be made in Austrian schillings and shall be made by crediting the amount due to an account designated by the Bank. If a payment date does not fall on a business day in Austria, payment shall be made on the next succeeding business day in Austria.

8. Unless otherwise agreed between the Bank and the Fund, the transfer under paragraph 2, and all payments of principal and interest, shall be made at the exchange rates for the Austrian schilling, in terms of the SDR, established by the Fund for the second business day of the Fund before the value date of the transfer or payment.

9. The Bank intends to maintain the deposit outstanding through its maturity, subject to paragraphs 6(a) and 10. However, if the Bank represents that because of Austria’s balance of payments and reserve position there is a need to encash all or part of the outstanding deposit, and the Fund, having given this representation the overwhelming benefit of any doubt, agrees, the deposit may be encashed in whole or in part in advance of maturity. The Bank agrees to restore the deposit as soon as practicable in light of developments in Austria’s balance of payments and reserve position.

10. The Fund may repay the principal amount of the deposit in part or in full at any time in advance of maturity.

11. (a) The assets and property of the account shall be kept separate from the assets and property of all other accounts of, or administered by, the Fund. The assets and property held in such other accounts shall not be used to discharge or meet the liabilities, obligations, or losses of the Fund incurred in the administration of the account; nor shall the assets and property of the account be used to discharge or meet the liabilities, obligations, or losses incurred by the Fund in the administration of such other accounts.

(b) Subject to the provisions of this Instrument, the Fund, in administering the account, shall apply mutatis mutandis the same rules and procedures as apply to operations of the General Resources Account of the Fund.

(c) No charge shall be levied on the Bank for the services rendered by the Fund in the administration, operation, and termination of this account.

12. (a) The Fund shall maintain separate financial records and prepare separate financial statements for the account.

(b) The Audit Committee selected under Section 20 of the Fund’s By-Laws shall audit the operations and transactions conducted through the account. The audit shall relate to the financial year of the Fund.

(c) The Fund shall report on the assets and property and on the operations of the account in the Annual Report of the Executive Board to the Board of Governors and shall include in that Annual Report the report of the Audit Committee on the account.

13. The account shall be terminated upon completion of its operation. Once the obligation to repay the deposit has been discharged and the final payment of interest has been made, any surplus remaining in the account shall be transferred to the Subsidy Account of the Enhanced Structural Adjustment Facility Trust.

14. Any question arising hereunder shall be settled by mutual agreement between the Austrian National Bank and the Fund.

Annex II to EBS/88/106

Vienna, May 27, 1988

Dear Mr. Camdessus:

In view of the economic plight many low-income developing countries find themselves in, the Austrian National Bank, welcoming international action to remedy this situation, wishes to share in the financial support for sound policy undertakings by such countries aiming at a substantial and sustained strengthening of their balance of payments and economic growth. Considering the Enhanced Structural Adjustment Facility, administered by the Fund, as a valuable instrument toward this end, the Austrian National Bank proposes to deposit in an account to be established with the International Monetary Fund for the administration of the deposited resources in accordance with Article V, Section 2(b) of the Fund’s Articles of Agreement an amount equivalent to SDR 60 million on a value date to be agreed between the Austrian National Bank and the Fund, but in any case not later than January 1, 1989. It is also proposed that the deposit and its administration be governed by the provisions of the attached Instrument,* which is subject to the approval of the Executive Board of the Fund.

If the foregoing proposal is acceptable to the Fund, this communication and your duly authenticated reply accepting this proposal shall constitute an agreement, between the Fund and the Austrian National Bank. This agreement is subject to a special Austrian Enabling Act. It shall enter into effect on the date the Fund acknowledges receipt of the communication by which the Austrian National Bank notifies the Fund of the completion of the required legislative procedures.**

The Austrian National Bank requests the Fund to open an account for the administration of the deposit in accordance with Article V, Section 2(b) of the Fund’s Articles of Agreement.

Sincerely,

/s/ Kienzl /s/ Lachs

Executive Board of the Austrian National Bank

Mr. Michel Camdessus

Managing Director

International Monetary Fund

Washington, D.C. 20431

U.S.A.

Annex III to EBS/88/106

June 8, 1988

Gentlemen:

I am delighted to acknowledge and thank you for your letter of May 27, 1988 proposing a deposit by the Austrian National Bank for the benefit of the Subsidy Account of the Enhanced Structural Adjustment Facility Trust. 1 have been authorized to accept your proposal for the Bank’s deposit, and 1 am pleased to inform you that the Executive Board has adopted the Instrument to establish an account for the administration of the deposit by the Fund, as set out in the attachment to your letter. I understand that the proposed deposit is subject to legislative procedures; the account will become operational when the deposit is made by the Bank.

Please let me express my deep appreciation, and that of the Fund’s membership, for the generous support the Austrian National Bank is providing for this initiative.

Sincerely,

Michel Camdessus

Dr. Heinz Kienzl

Dr. Thomas Lachs

Executive Board of the Austrian National Bank

Postfach 61

Otto Wagner-Platz 3

A-1011 Vienna, Austria

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