Chapter

Article V, Sections 8 and 9

Author(s):
International Monetary Fund. Legal Dept.
Published Date:
August 2017
Share
  • ShareShare
Show Summary Details

Charges and Remuneration

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)1 shall apply to all holdings subject to the schedule that are obtained by the Fund after the date of this decision. (EBS/74/138, 5/24/74; and Cor. 1, 6/13/74)

Decision No. 4239-(74/67),

June 13, 1974

Surcharge on Purchases in Credit Tranches and Under Extended Fund Facility

1. Subject to paragraphs 2 and 3 below, the rate of charge under Article V, Section 8(b) on the Fund’s combined holdings of a member’s currency in excess of 187.5 percent of the member’s quota in the Fund resulting from purchases in the credit tranches and under the Extended Fund Facility shall be 200 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for purposes of burden sharing and shall include an additional 100 basis points per annum, as adjusted for purposes of burden sharing, on such holdings in any case where they are outstanding for more than 36 months in the case of purchases in the credit tranches, or 51 months in the case of purchases under the Extended Fund Facility.

2. The relevant threshold in paragraph 1 shall be 300 percent instead of 187.5 percent: (i) for all members until February 17, 2016; and (ii) for members whose quota increase under the 14th Review was not effective on February 17, 2016 until the date their quota increase under the 14th General Review becomes effective, or February 26, 2016, whichever is earlier. If, during the period of February 1 through February 16, 2016, the Fund’s combined holdings of a member’s currency resulting from purchases in the credit tranches and under the Extended Fund Facility fell below 300 percent of the member’s quota, such interruption shall not be taken into account for purposes of calculating the 36 and 51 month periods.

3. A member with credit outstanding in the credit tranches or under the Extended Fund Facility, or with an arrangement in effect on February 17, 2016, may notify the Fund by February 25, 2016 that it elects to have the rate of charge on such existing holdings of the member’s currency, and on holdings of the member’s currency arising from future purchases under such an effective arrangement, to be based on the threshold of 300 percent member’s quota in effect prior to its quota increase under the 14th General Review of Quotas, instead of the threshold of 187.5 percent under paragraph 1 above. Absent such notification, the rate of charge shall be computed pursuant to paragraphs 1 and 2 above. If a member has made an election under this paragraph 2, such election shall cease to apply as of the date of the Fund’s approval of any new access to the Fund’s general resources for that member, including an augmentation of an arrangement in effect on February 17, 2016, and the rate of charge under this Decision shall be computed for all holdings of the member’s currency in the credit tranches or under the Extended Fund Facility pursuant to paragraph 1 above.

4. This Decision shall be reviewed on an as needed basis in accordance with Decision No. 13814-(06/98), adopted November 15, 2006, and Decision No. 15764-(15/39), adopted April 23, 2015, on implementing streamlining of policy reviews. (SM/16/10, Sup. 3, 02/16/16)

Decision Nos. 12346-(00/117),

November 28, 2000,

as amended by Decision Nos. 14285-(09/29), March 24, 2009, and

15943-(16/14), February 17, 2016

Annex

For purposes of paragraph 2(a)(ii) of Decision No. 14285, the framework for surcharges on purchases in the credit tranches and under the Extended Fund Facility that was in effect from November 28, 2000 until the date of Decision No. 14285 is as follows: “The rate of charge under Article V, Section 8(b) on the Fund’s combined holdings of a member’s currency in excess of 200 percent of the member’s quota in the Fund resulting from purchases in the credit tranches and under the Extended Fund Facility made after November 28, 2000 shall be 100 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for purposes of burden sharing, provided that the rate on such holdings in excess of 300 percent of the member’s quota shall be 200 basis points per annum above the rate of charge referred to in Rule I-6(4) as adjusted for purposes of burden sharing.” (SM/09/69, Sup. 2, 03/24/09)

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 another 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. (SM/78/43, 2/3/78)

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

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),1

October 31, 1986

Special Charges on Overdue Financial Obligations to the Fund

I. Overdue Repurchases

1. 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 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). 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

The Fund shall levy a special charge on (i) the amount of overdue interest on Trust Fund loans, at a rate equal to one half of the sum of the rate of interest on Trust Fund loans and the rate of interest on the SDR, and (ii) the overdue amounts of repayments of Trust Fund loans, at a rate equal to one half of the sum of the rate of interest on Trust Fund loans and the rate of interest on the SDR, less one-half percent.

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.

Effective May 1, 1992, special charges under Sections I and II above shall not be levied on overdue obligations of a member that is overdue in meeting any financial obligation to the Fund subject to special charges under Sections I and II above for six months or more.

Effective May 1, 1993, special charges under Section III above shall not be levied on overdue obligations of a member that is overdue for six months or more in meeting any financial obligation to the Fund subject to special charges under Section III above.

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 second 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 mid-year 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 Nos. 8496-(87/3) G/TR, January 7, 1987,

8641-(87/101) G/S/TR, July 9, 1987,

8923-(88/110) G/TR, July 21, 1988,

10000-(92/58) G/TR, April 17, 1992,

10337-(93/49) G/TR, April 9, 1993,

10352-(93/49) G/TR, April 9, 1993,

10551-(94/1) G/TR, January 7, 1994, and

13001-(03/39) G/TR,

April 25, 2003

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

Burden Sharing

Income Position—Burden Sharing—Implementation In FY 2000

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

The rate of charge for financial year 2000 referred to in Rule I-6(4) shall be adjusted in accordance with the provisions of Section IV.

Section III. Amount for Special Contingent Account I

An amount equivalent to 5 percent of the Fund’s reserves at the beginning of the financial year shall be generated during financial year 2000 in accordance with the provisions of Section IV, and shall be placed to the Special Contingent Account-1 referred to in Decision No. 9471-(90/98), adopted June 20, 1990.

Section IV. Implementation of Burden Sharing

1. During financial year 2000, 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 to the Special Contingent Account-1 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, 1999, August 1, 1999, November 1, 1999, and February 1, 2000: shortly after July 31 for the period 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) Subject to paragraph 3 of Decision No. 8780-(88/12), adopted January 29, 1988, the balances held in the Special Contingent Account-1 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-1, it shall be recorded in accordance with the principles of proportionality set forth in (c).

Decision No. 11945-(99/49),

April 30, 1999

Implementation of Burden Sharing in FY 2001

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

The rate of charge referred to in Rule I-6(4) shall be adjusted in accordance with the provisions of Sections III and IV.

Section IV. Adjustment for Deferred Charges

1. (a) If income from charges becomes deferred during an adjustment period as defined in (c), notwithstanding Rule I-6(4)(a) and (b) and Rule I-10, the rate of charge referred to in Rule I-6(4), and, subject to the limitation in (b), the rate of remuneration prescribed in Rule I-10, shall be 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, shall not be taken into account.

(b) 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.

(c) The adjustments under this paragraph shall be made as of the first day after each financial quarter beginning May 1, August 1, November 1 and February 1:

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

shortly after October 31 for the period 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.

2. (a) An amount equal to the proceeds of any adjustment for deferred charges shall be distributed, in accordance with the pro-visions 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. Distribution under this provision shall be made quarterly.

(b) Distribution under (a) 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.

(c) 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.

(d) Notwithstanding Paragraph 1 (a) above, the rate of charge and the rate of remuneration determined under this section shall be rounded to three decimal places, provided that an adjustment of at least 0.1 basis point shall be made to both the rate of charge and the rate of remuneration, subject to subparagraph (e) below.

(e) If the amounts generated as a result of paragraph (2) (d) above exceed or fall short of the amounts to be generated from adjustments to the rate of charge or the rate of remuneration under paragraph 1(a) above for the relevant quarterly period, then any excess or shortfall from adjustments to the rate of charge 11 or the rate of remuneration shall be applied, respectively, to the amount to be generated from the adjustment to the same rate for the following quarterly period. No adjustment shall be made if any excess amount generated from the previous quarterly period is equal to or exceeds the amount needed in the following quarterly period. (EBS/09/202, 12/8/09) (EBS/09/202, 12/08/09)

Section V. Review

The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit set forth in paragraphs 2(b) of Section III and 1(b) of Section IV.

Decision No. 12189-(00/45),

April 28, 2000,

effective May 2, 2000,

as amended by Decision Nos. 13911-(07/35), April 25, 2007,

14496-(09/125), December 15, 2009, and

15676-(14/94),

October 24, 2014

Burden Sharing—Implementation in FY 2007

Section I. Principles of Burden Sharing

1. The financial consequences for the Fund that 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

The rate of charge referred to in Rule I-6(4) shall be adjusted in accordance with the provisions of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45), adopted April 28, 2000.

Section III. Adjustment for Deferred Charges

Notwithstanding paragraph 1(a) of Section IV of Executive Board Decision No. 12189-(00/45), adopted April 28, 2000, the rate of charge and the rate of remuneration determined under that Section shall be rounded to two decimal places.

Section IV. Amount for Special Contingent Account-1

1. An amount of SDR 60 million shall be generated during financial year 2007 in accordance with the provisions of this Section and shall be placed to the Special Contingent Account-1 referred to in Decision No. 9471-(90/98), adopted June 20, 1990.

2. (a) In order to generate the amount to be placed to the Special Contingent Account-1 in accordance with paragraph 1 of this Section, notwithstanding Rule I-6(4)(a) and (b) and Rule I-10, the rate of charge referred to in Rule I-6(4) and, subject to the limitation in (b), the rate of remuneration prescribed in Rule I-10 shall be adjusted in accordance with the provisions of this paragraph.

(b) Notwithstanding paragraph 1 above, adjustments to the rate of charge and the rate of remuneration under this paragraph shall be rounded to two decimal places. 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.

(c) The adjustments under this paragraph shall be made as of May 1, 2006, August 1, 2006, November 1, 2006 and February 1, 2007; shortly after July 31 for the period 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.

3. (a) Subject to paragraph 3 of Decision No. 8780-(88/12), adopted January 29, 1988, the balances held in the Special Contingent Account-1 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) Distributions under (a) shall be made in proportion to the amounts that have been paid or have not been received by each member because of the respective adjustments.

(c) 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.

(d) Subject to paragraph 4 of Decision No. 8780-(88/12), adopted January 29, 1988, if any loss is charged against the Special Contingent Account-1, it shall be recorded in accordance with the principles of proportionality set forth in (b).

Section V. Review

The operation of this decision shall be reviewed when the adjustment in the rate of remuneration reduces the remuneration coefficient to the limit set forth in paragraph 2(b) of Section IV of this decision and Section IV of Executive Board Decision No. 12189-(00/45), adopted April 28, 2000. (EBS/06/51, 4/12/06)

Decision No. 13707-(06/40),

April 28, 2006

Review of the Fund’s Income Position for FY 2012 and FY 2013-14—PRGT Reserve Account Transfer to Subsidy Account

In accordance with paragraph 19 of Executive Board Decision No. 14354-(09/79), adopted on July 23, 2009, in lieu of reimbursement to the General Resources Account, an amount equivalent to SDR 63.133 million, representing the cost of administering the Poverty Reduction and Growth Trust (PRGT) for FY 2012, shall be transferred from the Reserve Account of the PRGT (through the Special Disbursement Account) to the General Subsidy Account of the PRGT. (EBS/12/63, 4/12/12)

Decision No. 15141-(12/39),

April 26, 2012

Review of the Fund’s Income Position for FY 2016 and FY 2017-2018—the Rate of Charge on the Use of Fund Resources for FY 2017 and FY 2018

Pursuant to Rule I-6(4)(a), last sentence of the Fund’s Rules and Regulations, the rate of charge for FY 2017 and FY 2018 shall be 100 basis points over the SDR interest rate under Rule T-1 of the Fund’s Rules and Regulations.

Decision No. 15980-(16/33),

April 22, 2016

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

Ed. Note: This decision replaced Decision No. 7930-(85/41), March 13, 1985

    Other Resources Citing This Publication