- International Monetary Fund
- Published Date:
- June 1981
Supplementary Financing Facility: Subsidy Account—Instrument
To help fulfill its purposes, the International Monetary Fund (hereinafter called the Fund) has adopted this Instrument establishing the Supplementary Financing Facility Subsidy Account (hereinafter called the Account), which shall be governed by and administered in accordance with the terms of this Instrument.
Section 1. Purpose
The purpose of the Account shall be to reduce the cost to eligible developing members, in accordance with Section 8, of using the Fund’s resources under the policies of the Fund referred to in Section 7 of this Instrument.
Section 2. Resources
The resources of the Account shall consist of
(a) amounts donated to the Account;
(b) amounts transferred to the Account from the Special Disbursement Account of the Fund;
(c) the proceeds of borrowing by the Fund for the Account; and
(d) the income or net gains from investment of resources of the Account.
Section 3. Donations
The Fund may accept donations of resources for the Account in such amounts and under such arrangements as may be agreed between the Fund and the respective donors, consistent with the provisions of this Instrument.
Section 4. Amounts Transferred from Special Disbursement Account
(a) Subject to (b) below, a total equivalent to SDR 750 million shall be transferred to the Account from the assets received by the Special Disbursement Account of the Fund on termination of the operation, in its present form, of the Trust Fund established by Executive Board Decision No. 5069-(76/72). These transfers to the Account shall be made as the amounts are received in the Special Disbursement Account.
(b) If, on the basis of reasonable estimates, the Executive Board determines at any time that amounts already transferred to the Account, together with the other assets available to the Account, are sufficient to carry out the operations and to meet the liabilities of the Account in full, it may authorize the suspension of further transfers from, and the re-transfer of any surplus back, to the Special Disbursement Account, provided that transfers shall be resumed, up to the total amount specified in (a), if this proves necessary to complete the operations of the Account and to discharge its liabilities in full.
Section 5. Borrowing
(a) The Fund may borrow resources for the Account on such terms and conditions as may be agreed between the Fund and the respective lenders, consistent with the provisions of this Instrument. In undertaking such borrowing, the Fund shall make every effort to obtain loans on concessionary terms. The aggregate amount of such borrowing, including the interest payable on the borrowing, shall not exceed the SDR 750 million that could be transferred to the Account from the Special Disbursement Account under Section 4.
(b) Payments of interest and repayments of the principal amount under each such loan shall be made exclusively from the resources of the Account. All resources of the Account shall be available for such payments, except that donations shall not be used for this purpose without the consent of the donor. Resources transferred to the Account from the Special Disbursement Account pursuant to Section 4 shall be applied, as necessary, to make payments due under such loans, including the interest payable thereon, in priority to other uses of such resources.
Section 6. Investment
Any balances of currency held in the Account and not immediately needed to carry out the operations or to meet the liabilities of the Account shall be invested promptly in accordance with Section 14.
Section 7. Authorized Subsidy
The Fund shall draw upon the resources of the Account, in such order as it may determine, to reduce the cost to eligible members of the periodic charges paid by them to the General Resources Account of the Fund on holdings of their currencies acquired by the Fund as a result of all purchases under the policies referred to below, in respect of the entire periods for which such charges were paid:
(a) under the Supplementary Financing Facility of the Fund established by Executive Board Decision No. 5508-(77/127), and
(b) under the policy on exceptional use of the Fund’s resources incorporated in Executive Board Decision No. 5732-(78/65), as amended by Executive Board Decision No. 5998-(79/1).
Section 8. Eligible Members
(a) Subject to (b) below, members eligible to receive a subsidy under Section 7 shall be those members that, according to the latest data provided by the World Bank before April 30, 1981, had per capita incomes in 1979 not in excess of that of the member with the highest per capita income in 1979 that was eligible to receive assistance from the Trust Fund.
(b) Also eligible to receive a subsidy under Section 7 shall be any other members that, according to the latest data provided by the World Bank before April 30, 1982, had per capita incomes in 1979 not in excess of that of the member with the highest per capita income in 1979 that was eligible to receive assistance from the Trust Fund, that member’s per capita income determined according to the same data.
Section 9. Calculation and Payment of the Subsidy
(a) The amount of the subsidy shall be calculated as a percentage per annum of the currency holdings referred to in Section 7 and, subject to Section 10, shall be determined by the Fund in the light of the resources available to the Account. The determination and payment shall be made annually after the close of each financial year following the date of the Instrument. The Fund shall as far as practicable seek to ensure that, within the limits specified in Section 10, the percentage at which the subsidy is determined shall be equal over the entire period during which a subsidy is provided from the Account.
(b) Eligible members that, in accordance with Section 8, had per capita incomes in 1979 not in excess of the per capita income used for determining eligibility for assistance from the International Development Association shall receive the full amount of the subsidy calculated pursuant to (a) above. All other eligible members shall receive a subsidy equal to one half of that amount.
(c) The amount of subsidy determined pursuant to (a) and (b) above shall be paid to each eligible member as soon as practicable after the determination is made.
Section 10. Amount of Subsidy
The subsidy provided to any member pursuant to Section 9 shall not exceed the equivalent of three per cent per annum of the currency holdings specified in Section 7, nor reduce the effective charges on such holdings:
(a) if the holdings were acquired under a stand-by arrangement, below the charges which would have been applicable had such holdings been acquired under the Fund’s policies on the regular use of its resources in the credit tranches; or
(b) if the holdings were acquired under an extended arrangement, below the charges which would have been applicable had such holdings been acquired under the Extended Fund Facility.
Section 11. Administration of the Account
The Account shall be administered by the Fund as Trustee. Subject to the provisions of this Instrument, the Fund in administering the Account shall apply the same rules and procedures as apply to operations and transactions in the General Resources Account of the Fund.
Section 12. Separation of Assets
(a) The resources of the Account shall be held separately from the resources of all other accounts of the Fund, including other administered accounts, and shall be used only for the purposes of the Account.
(b) Except to the extent contemplated in Section 4, property and assets of the Fund held or administered in its other accounts shall not be available or used to discharge liabilities or to meet losses arising from the operations of the Account.
Section 13. Exchange of Resources
(a) Resources donated pursuant to Section 3 or loaned pursuant to Section 5 shall be paid in a freely usable currency, provided that a donor or lender which is a member or the fiscal agency of a member may, at its option, pay in the currency of the member. Amounts paid in a member’s currency shall, at the time of payment, be exchanged by the member for freely usable currency, if so requested by the Fund. Donations and loans may also be made available in special drawing rights in accordance with arrangements made by the Fund for the holding and use of such special drawing rights.
(b) The Fund may sell or exchange any of the resources of the Account, provided that balances of currencies held in the Account may be exchanged only with the concurrence of the issuers of such currencies.
Section 14. Authorized Investments
Investments pursuant to Section 6 may be made in any of the following: (a) marketable obligations issued by an international financial organization and denominated in special drawing rights or in the currency of a member of the Fund; (b) marketable obligations issued by a member or by a national official financial institution of a member and denominated in special drawing rights or in the currency of that member; and (c) deposits with a commerical bank, a national official financial institution of a member, or an international financial institution that are denominated in special drawing rights or in the currency of a member. Investment which does not involve an exchange of currency shall be made only after consultation with the member whose currency is to be used.
Section 15. Administrative Expenses
In order to compensate the Fund for the expenses of carrying out the business of the Account, the Account shall pay annually to the General Resources Account an amount equivalent to one thousandth per annum of the value of the resources in the Account at the end of each financial year, other than resources attributable to donations made under Section 3, provided that this amount may be varied if the Fund, on the basis of a reasonable estimate of its expenses, considers such variation to be appropriate.
Section 16. Accounts, Audit and Reports
(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 financial transactions and records of the Account. The audit shall relate to the financial year of the Fund.
(c) The Fund shall report on the resources and 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.
Section 17. Amendment
The Fund may amend the provisions of this Instrument, except this Section and Sections 1, 4, 5 (b), 12, and 18, and the Account and its resources shall thereafter be governed by the Instrument as amended.
Section 18. Termination Arrangements
Upon completion of the subsidy operations authorized by this Instrument the Fund shall wind up the affairs of the Account. Any resources remaining in the Account after all outstanding liabilities of the Account have been discharged in full shall be applied first to reimburse the Special Disbursement Account up to the full amount transferred to the Account under Section 4, net of any previous re-transfers, and then to reimburse donors pro rata, up to the amounts of their donations. Any remaining balance in the Account shall be transferred to the Special Disbursement Account.
Decision No. 6683-(80/185) G/TR
December 17, 1980
Supplementary Financing Facility: Subsidy Account—Investment
The Managing Director shall place in deposits, denominated in SDRs, with the Bank for International Settlements the currencies received by the SFF Subsidy Account, unless the Managing Director considers that the terms offered by the BIS on an intended deposit denominated in SDRs are not sufficiently attractive. In that event the Managing Director shall inform the Executive Board promptly and make other proposals to it for investment in SDR denominated obligations.
Decision No. 6854-(81/78) SBS
May 8, 1981
Oil Facility: Subsidy Account
In order to help fulfill the purposes of the Fund as stated in Article I of the Articles of Agreement, including the promotion of cooperation between members and the Fund and among members on international monetary problems, the Fund will establish a Subsidy Account in cooperation with members to assist those members that are most seriously affected by the current situation to meet the cost of using resources made available through the Fund’s oil facility for 1975. The Subsidy Account will be subject to the following provisions.
1. The Managing Director is authorized (i) to make arrangements to establish a Subsidy Account in the name of the International Monetary Fund with such depositories of the Fund as may be necessary, to be operated in accordance with the same administrative procedures as those that the Fund applies in operating its other accounts; and (ii) to take all measures necessary to implement this Decision.
2. The Subsidy Account will consist of currency deposited by donors on the basis of this Decision, securities in which currency in the Account is invested, currency representing the income of investment, and the proceeds of disinvestment. In contributing to the Subsidy Account, a donor may make a single deposit or may inform the Fund of its intention to make periodic deposits. The donor will specify the procedure that it intends to follow in making deposits and will consult the Fund on any subsequent changes.
(a) Payments will be made from the Subsidy Account to each of the members listed in Annex A* that have made purchases under Executive Board Decision No. 4634-(75/47) (here inafter referred to as the recipients).
(b) Payments, after meeting any expenses, will be made as soon as is practicable after the end of each financial year of the Fund and will be calculated as a percentage per annum of the average daily balances of the Fund’s holdings of the currency of each recipient subject to charges outstanding under Executive Board Decision No. 4634-(75/47) during the year. The percentage applicable will be the same for all recipients during a given financial year. To the extent that it proves financially possible, the Fund will equalize the percentages payable to all recipients during the period of payments under this Decision.
4. Currency held in the Subsidy Account may be invested in government securities issued by members, subject to the approval of the government in whose securities the investment is made.
5. The assets and records of the Subsidy Account will be kept separate from the assets and records of all other Accounts of the Fund and will be audited at the time of the annual audit of the Fund by the committee selected under Section 20 of the Fund’s By-Laws. The property and assets of the Fund held in other Accounts will not be used to discharge liabilities or meet losses arising out of administration of the Subsidy Account; nor will the assets in the Subsidy Account be used to discharge liabilities or meet losses incurred in the administration of other Accounts.
(a) If the Executive Directors find that the Subsidy Account is no longer necessary or that its purpose cannot be carried out, the Account will be terminated.
(b) If any assets remain in the Subsidy Account on the date of its termination, the amount will be divided among the donors that have made deposits in it in proportion to their contributions.
7. If the Fund amends paragraph 3 or Annex A* of this Decision, a donor (i) will be entitled to request and obtain the return of an amount equivalent to that part of its contribution that has not been used, to the same extent that it could obtain repayment under paragraph 6(b) of this Decision in the event that the Subsidy Account were terminated; and (ii) may cancel any notice of intention to make further deposits that it has given in accordance with paragraph 2 of this Decision. Calculations under this paragraph will be made as of the date of receipt by the Fund of the request or cancellation.
8. The Executive Directors will review this Decision annually.**
Decision No. 4773-(75/136),
August 1, 1975, as amended by
Decision No. 5694-(78/35),
March 17, 1978
Annual Review for Financial Year 1981
1. Subsidy payments shall be made at the rate of 5 per cent per annum on the average daily balances of the Fund’s holdings of each member’s currency that were subject to charges under the 1975 Oil Facility, that is, Executive Board Decision No. 4634-(75/47), as follows:
(i) for the financial year ending April 30, 1981, to the beneficiaries listed in Table 2, Part 1 of EBS/81/92,* and
(ii) for the financial years ending April 30, 1978, 1979, 1980 and 1981, to the additional beneficiaries listed in Table 2, Part 2 of EBS/81/92.*
2. The payments shall be made in U.S. dollars on June 1, 1981 based on the U.S. dollar exchange rate in terms of the SDR three business days prior to the value date.
3. No charge shall be levied for the services rendered by the Fund in the administration and operation of the Subsidy Account for the financial year ending April 30, 1981.
4. The next review of Executive Board Decision No. 4773-(75/136), as amended, shall be conducted in April 1982.
Decision No. 6842-(81/71)
April 30, 1981