Chapter

Resolutions

Author(s):
International Monetary Fund. Secretary's Department
Published Date:
November 1974
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Resolution No. 29-1. Prescription of the Bank for International Settlements as a Holder of Special Drawing Rights

On September 12, 1973, the Bank for International Settlements applied to the Fund to become a holder of special drawing rights. Pursuant to Section 25 of the By-Laws, the Executive Directors resolved on November 26, 1973 that action on the application should not be postponed until the next regular meeting of the Board of Governors.

In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on November 30, 1973 for a vote without meeting:

Whereas the Bank for International Settlements, by a letter dated September 12, 1973, applied to be permitted under Article XXIII, Section 3, of the Articles of Agreement of the International Monetary Fund to accept, hold, and use special drawing rights in certain transactions with participants; and

Whereas pursuant to Section 25 of the By-Laws of the Fund, the Executive Directors, after consultation with the Representatives of the Bank for International Settlements, have recommended that the Bank for International Settlements be prescribed as a holder on the terms and conditions set forth in this Resolution; and

Whereas the Bank for International Settlements has indicated its concurrence in the proposed terms and conditions;

Now, therefore, the Board of Governors, having considered the recommendations of the Executive Directors, hereby resolves that:

The Bank for International Settlements is prescribed as a holder of special drawing rights on the following terms and conditions:

  • Definitions: As used in this Resolution:

    • (a) “Fund” means the International Monetary Fund.

    • (b) “Bank” means the Bank for International Settlements.

    • (c) “Participant” means a participant in the Special Drawing Account of the Fund.

    • (d) “Articles” mean the Articles of Agreement of the Fund.

    • (e) “Article” refers to an identified provision of the Articles.

    • (f) “Need to use special drawing rights” means need as defined in Article XXV, Section 3(a).

  • Application of General Provisions: The provisions of the Articles, By-Laws, Rules and Regulations, and decisions of the Fund that apply to all holders shall apply under this Resolution.

  • Acceptance, Holding, and Use by the Bank:

    • (a) Acceptance: The Bank may accept special drawing rights and provide currency in a transaction in agreement with a participant, which agreement includes an undertaking by the Bank and participant that the Bank will use the same amount of special drawing rights to obtain currency from that participant within a period of up to six months.

    • (b) Holding: The Bank may hold special drawing rights accepted in accordance with (a) above or received from the Fund as interest on its holdings of special drawing rights.

    • (c) Use: The Bank may use special drawing rights to obtain currency in a transaction in agreement with a participant:

      • (i) to fulfill the Bank’s undertaking assumed in accordance with paragraph 3(a) above; or

      • (ii) after consultation with the Fund, to dispose of special drawing rights when the Bank finds that a participant has failed to carry out the agreement referred to in paragraph 3(a) above; and

      • (iii) to dispose of special drawing rights received from the Fund as interest on the Bank’s holdings of special drawing rights.

      The Bank shall return special drawing rights to a participant which is required to accept them in accordance with paragraph 4(a) (ii).

    • (d) Exchange rates: In all transactions under this Resolution the rules which determine the exchange rates applicable to participants under the Articles at the time of each transfer of special drawing rights shall also apply to the Bank.

  • Use and Acceptance by Participants:

    • (a) Use:

      • (i) A participant that represents to the Fund that it has a need to use special drawing rights may enter into a transaction in accordance with paragraph 3(a) above by giving notice to the Fund.

      • (ii) The Fund shall not challenge the representation in (a)(i) above. The Fund, however, may require the participant to accept special drawing rights from the Bank, for currency acceptable to the Bank, to the extent the Fund later finds that the participant did not have a need to use special drawing rights.

    • (b) Acceptance: A participant may accept special drawing rights in accordance with paragraph 3(c) above. A participant shall accept special drawing rights from the Bank and provide currency as required under (a) (ii) above.

  • Information and Recording: The Fund shall inform the Bank of all matters relevant to the acceptance, holding, and use of special drawing rights by the Bank. The Bank and the participant shall inform the Fund promptly of the facts necessary to record any transaction in which the Bank accepts or uses special drawing rights.

  • Consultation and Review: The Bank and the Fund will remain in close consultation with respect to this Resolution. The Executive Directors shall review this Resolution at least once every three years and submit any recommendation that they consider appropriate to the Board of Governors.

  • General Undertaking of Bank: The Bank undertakes, in its acceptance, holding, and use of special drawing rights, to collaborate with the Fund in order to facilitate the effective functioning of the Special Drawing Account and the proper use of special drawing rights in accordance with the Articles and this Resolution.

  • Annual Report: The Executive Directors shall discuss the operation of this Resolution in their annual report as part of their review of the operation of the Special Drawing Account.

  • Suspension: During any period in which a suspension under Article XXIX, Section 1, is in effect, transactions under this Resolution shall be suspended unless the Executive Directors decide otherwise.

  • Termination: The prescription hereunder may be terminated either by the Bank, or by the Fund on the decision of the Executive Directors, by transmitting a notice in writing to the Fund or the Bank at its principal office. Termination shall become effective on the date the notice is received. After termination the Bank may hold, receive, and use special drawing rights only in accordance with paragraphs 3(b), (c), and (d), above, and participants may accept special drawing rights from the Bank under paragraph 4(b) above.

  • Adherence to Terms and Conditions:

    • (a) The Bank may adhere to this Resolution within six months of the effective date of this Resolution, which date shall be the date of its adoption by the Board of Governors.

    • (b) Adherence hereunder shall be in the form of a letter to the Fund, acknowledging these terms and conditions and bearing signatures which legally commit the Bank.

The Board of Governors adopted the foregoing Resolution, effective January 21, 1974. The Bank for International Settlements adhered to this Resolution in accordance with paragraph 11 of the Resolution by letter dated January 30, 1974.

Resolution No. 29-2. Extension of Suspension of Operation of Article XXV, Section 8(a)

In view of the development of unforeseen circumstances threatening the operations of the Fund with respect to the Special Drawing Account, the Executive Directors decided on November 5, 1973 to suspend the operation of Article XXV, Section 8(a), with respect to transactions between participants conducted pursuant to Article XXV, Section 2(b)(i), for the maximum period of 120 days for which the Executive Directors can adopt a suspension. This period would end on March 5, 1974. As this threat to the operations of the Fund with respect to the Special Drawing Account continued to exist, the Executive Directors resolved on February 1, 1974 to recommend to the Board of Governors the extension of the suspension.

In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on February 4, 1974 for a vote without meeting:

Resolved:

That the suspension of the operation of Article XXV, Section 8(a) with respect to transactions under Article XXV, Section 2(b) (i), which was decided by the Executive Directors on November 5, 1973 for a period of 120 days ending on March 5, 1974, shall be extended for an additional period of 240 days ending on October 31, 1974.

The Board of Governors adopted the foregoing Resolution, effective March 4, 1974.

Resolution No. 29-3. Fifth General Review of Quotas—Nepal

The Government of Nepal requested on April 18, 1974 that payments equivalent to SDR 800,000 each, totaling the equivalent of SDR 1,600,000, relating to the fourth and fifth installments of the increase in quota to which it consented under Board of Governors Resolution No. 25-31and due not later than April 27, 1974 and April 27, 1975, respectively, be postponed until not later than April 30, 1976. The Executive Board resolved on May 22, 1974 that action to amend Board of Governors Resolution No. 25-3 should not be postponed until the next regular meeting of the Board of Governors.

In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on May 24, 1974 for a vote without meeting:

Resolved:

That Board of Governors Resolution No. 25-3, “Increases in Quotas of Members—Fifth General Review,” is amended by inserting at the end of the first sentence of paragraph 6(b) the following: provided that Nepal’s payments of two installments equivalent to SDR 800,000 each, originally due not later than April 27, 1974 and April 27, 1975, respectively, may be paid not later than April 30, 1976.

The Board of Governors adopted the foregoing Resolution, effective June 24, 1974.

Resolution No. 29-4. Remuneration of Executive Directors and Their Alternates

Pursuant to Section 14(e) of the By-Laws, the 1974 Joint Committee on the Remuneration of Executive Directors and their Alternates directed the Secretary of the Fund to transmit its report and recommendations to the Board of Governors of the Fund. The Committee’s report contained the following proposed Resolution for adoption by the Board of Governors.

In accordance with Section 13 of the By-Laws, the Executive Directors requested the Governors to vote without meeting on the above-mentioned Resolution submitted to them on June 10, 1974:

Resolved:

  • That, effective July 1, 1974, the annual rates of remuneration of Executive Directors and their Alternates pursuant to Section 14(e) of the By-Laws shall be as follows:

    • (i) As salary, $37,000 per year for Executive Directors and $29,000 per year for their Alternates;

    • (ii) As supplemental allowance for expenses (including housing and entertainment), except those specified in Section 14(f) of the By-Laws, $5,000 per year for Executive Directors and $4,000 per year for their Alternates.

  • That, effective May 1, 1974, the changes in the Staff Retirement Plan of the Fund made applicable to the staff as of that date, including the accrual of pension on a gross salary basis, shall apply also to those Executive Directors and their Alternates who are participants in the Plan.

The Board of Governors adopted the foregoing Resolution, effective July 8, 1974.

Resolution No. 29-5. Amendment of Section 14(e) of the By-Laws

Pursuant to Section 14(e) of the By-Laws, the 1974 Joint Committee on the Remuneration of Executive Directors and their Alternates directed the Secretary of the Fund to transmit its report and recommendations to the Board of Governors of the Fund. The Committee’s report contained the following proposed Resolution for adoption by the Board of Governors.

In accordance with Section 13 of the By-Laws, the Executive Directors requested the Governors to vote without meeting on the above-mentioned Resolution submitted to them on June 10, 1974:

Resolved:

  • That Section 14(e) of the By-Laws of the Fund shall be amended to read as follows: “(e) Executive Directors and their Alternates shall be entitled to remuneration in the form of salary and supplemental allowances at such annual rates as shall be established from time to time by the Board of Governors. Remuneration as established shall continue until changed by the Board of Governors.

    “A standing Joint Committee on the Remuneration of Executive Directors and their Alternates, appointed by the Chairmen of the Boards of Governors of the Fund and Bank and consisting of one of the Chairmen and two former Governors or Alternate Governors of the Fund or Bank, chosen by the Chairmen in consultation with the Managing Director of the Fund and the President of the Bank, shall be constituted annually following the Annual Meeting of each year, beginning with the 1974 Annual Meeting. The Joint Committee shall consider all matters affecting the remuneration and other benefits of the Executive Directors of the Bank and Fund, and of their Alternates, and from time to time, but at least by July 1 of each year in which a regular election of Executive Directors is scheduled to be held, shall make such recommendations for any action by the Board of Governors on the said matters as the Joint Committee shall deem advisable. Reports of the Joint Committee shall be submitted to the Board of Governors for a vote on any recommendation contained therein without meeting in accordance with Section 13 of the By-Laws.”

  • That the Joint Committee to be constituted following the 1974 Annual Meeting pursuant to Section 14(e) of the By-Laws, as so amended, shall review the adequacy of the remuneration of Executive Directors and their Alternates, including a possible provision outside the Staff Retirement Plan for supplements to the withdrawal benefit, and report thereon to the Board of Governors of the Fund by July 1, 1975.

The Board of Governors adopted the foregoing Resolution, effective July 8, 1974.

Resolution No. 29-6. 1974 Regular Election of Executive Directors

The Executive Board resolved on August 7, 1974 that action in connection with the rules for conduct of the 1974 regular election of Executive Directors should not be postponed until the time of the next regular meeting of the Board of Governors, at which the election would take place.

In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on August 14, 1974 for a vote without meeting:

Resolved:

  • (a) That the proposed Rules for the Conduct of the 1974 Regular Election of Executive Directors are hereby adopted;1 and

  • (b) That a Regular Election of Executive Directors shall take place at the Annual Meeting of the Board of Governors in 1976.

The Board of Governors adopted the foregoing Resolution, effective September 16, 1974.

Resolutions Nos. 29-7,29-8, 29-9, and 29-10 2. Composite Resolution on the Work of the Ad Hoc Committee on Reform of the International Monetary System and Related Issues and on a Program of Immediate Action

The Board of Governors having noted:

That the ad hoc Committee on Reform of the International Monetary System and Related Issues, which was established at the Board’s 1972 Annual Meeting to advise and report with respect to all aspects of reform of the international monetary system, has now concluded its work; and

That the Chairman of the ad hoc Committee has transmitted its final report (“Report to the Board of Governors of the International Monetary Fund by the Committee on Reform of the International Monetary System and Related Issues”) accompanied by an “Outline of Reform” (hereinafter referred to as the Outline), consisting of Part I (“The Reformed System”), which records the outcome of the Committee’s discussions and indicates the general direction in which the Committee believes the system could evolve, and Part II (“Immediate Steps”), which sets out the steps that the Committee agrees should be taken immediately; and

That the Executive Directors have been studying various aspects of the international monetary system and in accordance with the Committee’s recommendations on immediate steps in the Report and Outline have adopted certain decisions;

Now, therefore, the Board of Governors hereby takes the following actions:

First Resolution (No. 29–7): Final Report of the Ad Hoc Committee on Reform of the International Monetary System and Related Issues

The Board of Governors hereby resolves as follows:

1. The Board of Governors notes the report of the ad hoc Committee on Reform of the International Monetary System and Related Issues.

2. The Board expresses its deep appreciation to the Committee and its Chairman, to the Deputies and their Chairman, and to the Bureau upon the conclusion of their work on international monetary reform for the valuable contribution that they have made both in indicating the general direction in which the international monetary system could evolve in the future and in proposing immediate steps and other measures on which members could collaborate in an evolutionary process of reform.

3. The Committee shall cease to exist on October 2, 1974.

Second Resolution (No. 29–8): Establishment of an Interim Committee of the Board of Governors on the International Monetary System

Whereas the Committee of the Board of Governors of the International Monetary Fund on Reform of the International Monetary System and Related Issues has referred to the desirability of establishing by amendment of the Articles of Agreement a permanent and representative Council with appropriate powers; and

Whereas it is desirable, pending the establishment of the Council, to establish an Interim Committee of the Board of Governors on the International Monetary System with an advisory role, and with a composition similar to that of the Council; and

Whereas it is desirable that the Interim Committee shall come into existence when the Committee on Reform of the International Monetary System and Related Issues ceases to exist;

Now, therefore, the Board of Governors hereby resolves as follows:

1. Composition of the Interim Committee

(a) There shall be established an Interim Committee of the Board of Governors on the International Monetary System. The members of the Committee shall be governors of the Fund, ministers, or others of comparable rank. Each member of the Fund that appoints an executive director and each group of members of the Fund that elected an executive director on or after the date on which the last regular election took place shall appoint

  • (i) one member of the Committee, and not more than

  • (ii) seven associates.

Each member of the Committee and each associate shall serve until a new appointment is made.

(b) Members of the Committee, associates, and executive directors or in their absence their alternates, shall be entitled to attend meetings of the Committee, unless the Committee decides to hold a more restricted session. Each member of the Fund that appoints an executive director and each group of members of the Fund referred to in (a) above may designate an alternate to participate in the place of the member of the Committee at any meeting when he is not present. Participation in respect of each item on the agenda of a meeting shall be limited to one person, who shall be a member of the Committee, an associate, or an executive director.

(c) The Committee shall select a Chairman, who shall serve for such period as the Committee determines. The Chairman of the Board of Governors, or a governor designated by him, shall convene the first meeting of the Committee and shall preside over it until a Chairman has been selected.

(d) The Managing Director shall be entitled to participate in all meetings of the Committee, and may designate a representative to participate in his place at any meeting when he is not present. The Managing Director or his representative may be accompanied normally by not more than two members of the staff, unless the Committee decides to hold a restricted session.

2. Representation of Members Not Entitled to Appoint a Member of the Committee

A member of the Fund not entitled to appoint a member of the Committee may send a representative to participate in any meeting of the Committee when a request made by, or a matter particularly affecting, that member is under consideration. The Committee shall determine, upon request by the member, whether a matter under consideration particularly affects the member.

3. Terms of Reference

The Committee shall advise and report to the Board of Governors with respect to the functions of the Board of Governors in:

  • (i) supervising the management and adaptation of the international monetary system, including the continuing operation of the adjustment process, and in this connection reviewing developments in global liquidity and the transfer of real resources to developing countries;

  • (ii) considering proposals by the Executive Directors to amend the Articles of Agreement; and

  • (iii) dealing with sudden disturbances that might threaten the system.

In addition, the Committee shall advise and report to the Board of Governors on any other matters on which the Board of Governors may seek the advice of the Committee.

In performing its duties, the Committee shall take account of the work of other bodies having specialized responsibilities in related fields.

4. Procedures

(a) The Committee shall meet ordinarily three or four times a year. The Chairman may call meetings after consulting the members of the Committee, and shall consult the members of the Committee on calling a meeting if so requested by any member of the Committee.

(b) A quorum for any meeting of the Committee shall be two thirds of the members of the Committee.

(c) Meetings of the Committee shall be held within the metropolitan area in which the Fund has its principal office, or at such other places as the Committee may provide or, in the absence of such provision, as the Chairman shall determine after consulting the members of the Committee.

(d) Appropriate arrangements shall be made for the effective coordination of the work of the Committee and of the Executive Directors. The Secretary of the Fund shall serve as the Secretary of the Committee.

(e) In reporting any recommendations or views of the Committee, the Chairman shall seek to establish a sense of the meeting. In the event of a failure to reach a unanimous view, all views shall be reported, and the members holding such views shall be identified. Reports of the Committee shall be made available to the Executive Directors.

(f) The Committee may invite observers to attend during the discussion of an item on the agenda of a meeting, and may determine any aspect of its procedure that is not established by this Resolution.

Third Resolution (No. 29-9): Establishment of Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries

Whereas the Committee of the Board of Governors of the International Monetary Fund on Reform of the International Monetary System has recommended the establishment of a joint ministerial committee of the Boards of Governors of the International Monetary Fund (the Fund) and the International Bank for Reconstruction and Development (the Bank) to carry forward the study of the broad question of the transfer of real resources to developing countries and to recommend measures to be adopted in order to implement its conclusions;

Whereas it is desirable to consider the question of the transfer of real resources to developing countries in relation to existing or prospective arrangements among countries, including those involving international trade and payments, the flow of capital, investment, and official development assistance;

Whereas the said Committee has invited the Managing Director of the Fund to discuss with the President of the Bank the preparation of appropriate parallel draft resolutions on the establishment of such a joint ministerial committee for adoption by the respective Boards of Governors of the Fund and Bank;

Whereas pursuant to such discussions the President of the Bank and the Managing Director of the Fund have proposed to the Executive Directors of the Bank and Fund, respectively, and the Executive Directors of the Fund have approved the submission of this Draft Resolution to the Board of Governors of the Fund and the Executive Directors of the Bank have approved the submission of a parallel Draft Resolution to the Board of Governors of the Bank;

Whereas the Committee as envisaged would be helpful in providing a focal point in the structure of international economic cooperation for formation of a comprehensive overview of diverse international activities in the development area, for efficient and prompt consideration of development issues, and for coordination of international efforts to deal with problems of financing development; and

Whereas the Board of Governors of the Bank is considering the said parallel resolution;

Now, therefore, the Board of Governors hereby resolves:

1. Establishment and Composition of Joint Ministerial Committee

(a) There is established a Joint Ministerial Committee of the Boards of Governors of the Bank and Fund on the Transfer of Real Resources to Developing Countries (hereinafter called the Development Committee).

(b) The members of the Development Committee shall be governors of the Bank, governors of the Fund, ministers, or others of comparable rank.

(c) The members of the Development Committee shall be appointed in turn for successive periods of two years by the members of the Bank and the members of the Fund. The members of the Bank shall appoint the members of the Committee for the first period of two years, which shall run from the date of the adoption of this Resolution until the date of the regular election of executive directors in 1976.

(d) Each member government of the Bank or the Fund, as the case may be, that appoints an executive director and each group of member governments of the Bank or of the Fund, as the case may be, that elects an executive director shall appoint one member of the Development Committee and up to seven associates, and, for any meeting when the member of the Committee is not present, may appoint an alternate with full power to act for the member at such meeting.

(e) Each member and associate shall serve until a new appointment is made by the member government or member governments of the Bank or the Fund, as the case may be, that are entitled to make the appointment or until the next succeeding regular election of executive directors, whichever is earlier.

2. Chairman

The Development Committee shall select a Chairman from among its members, who shall serve for such period as the Committee determines. The Chairman of the Boards of Governors of the Bank and the Fund, or a governor designated by him shall convene the first meeting of the Committee and shall preside over it until the Chairman has been selected.

3. Meetings

(a) Members of the Development Committee, associates, and the executive directors of the Bank and the Fund, or in their absence their alternates, shall be entitled to participate in meetings of the Committee, unless the Committee decides to hold a session restricted to members, the President of the Bank, and the Managing Director of the Fund. Participation in respect of each item on the agenda of a meeting shall be limited to one person in respect of each member government or group of member governments that appoint a member of the Committee.

(b) The President of the Bank and the Managing Director of the Fund shall be entitled to participate in all meetings of the Development Committee, and each may designate a representative to participate in his place at any meeting when he is not present. Each may be accompanied normally by two members of his staff, at any unrestricted session of the Committee.

(c) The Development Committee shall invite the heads of other international financial or economic organizations, as well as other persons, to attend or participate in meetings of the Committee relating to their areas of responsibility.

4. Terms of Reference

(a) The Development Committee shall maintain an overview of the development process and shall advise and report to the Boards of Governors of the Bank and the Fund on all aspects of the broad question of the transfer of real resources to developing countries, and shall make suggestions for consideration by those concerned regarding the implementation of its conclusions. The Committee shall review, on a continuing basis, the progress made in fulfillment of its suggestions.

(b) The Development Committee shall establish a detailed program of work, taking account of the topics listed in Annex 10 of the Outline of Reform. The Committee in carrying out its work shall bear in mind the need for coordination with other international bodies.

(c) The Development Committee shall give urgent attention to the problems of (i) the least developed countries and (ii) those developing countries most seriously affected by balance of payments difficulties in the current situation.

5. Procedures

(a) The Development Committee shall meet at the time of the annual meetings of the Boards of Governors of the Bank and the Fund and, in addition, as often as required. The Chairman may call meetings after consulting the members of the Committee and shall consult them on calling a meeting if so requested by any member of the Committee.

(b) A quorum for any meeting of the Development Committee shall be two thirds of the members of the Committee.

(c) The Development Committee may establish subcommittees or working groups from time to time.

(d) The Committee shall appoint an Executive Secretary who shall be entitled to participate in all Committee meetings. The Executive Secretary, supported by a small staff as necessary, and drawing on the staffs of the Bank and the Fund to the maximum extent feasible, shall be responsible to the Committee for carrying out the work directed by the Committee.

(e) Appropriate arrangements shall be made for the coordination of the work of the Development Committee and the work of the Executive Directors of the Bank and the Fund.

(f) The President of the Bank and the Managing Director of the Fund shall arrange to carry out technical work requested by the Committee and provide administrative support for the Committee within the competence of their organizations.

(g) The Committee may request assistance from international organizations or other bodies or individuals in connection with the preparation of its work.

(h) In reporting any suggestions or views of the Development Committee, the Chairman shall seek to establish a sense of the meeting. In the event of a failure to reach a unanimous view, all views shall be reported, and the members holding such views shall be identified.

(i) The Development Committee shall report not less than once a year to the Boards of Governors on the progress of its work and may publish such other reports as it deems desirable to carry out its purposes.

(j) The Development Committee may determine any aspect of its procedure that is not established by this Resolution.

6. Administrative Costs

The Bank and the Fund shall make such financial appropriations, in equal proportions, as are necessary for carrying out the work of the Development Committee.

7. Review

At the end of two years from the effective date of this Resolution, the Boards of Governors of the Fund and the Bank shall review the performance of the Committee, and shall take such action as they deem appropriate.

Fourth Resolution (No. 29–10): Other Immediate Steps

The Board of Governors hereby resolves as follows:

1. Need for Immediate Steps

The Board of Governors notes the view of the Committee on Reform of the International Monetary System and Related Issues (hereinafter referred to as the Committee) that it will be some time before a reformed system can be finally agreed and fully implemented, and it endorses the Committee’s proposal that, in the interim period, the Fund and its members should pursue the general objectives set out in paragraph 1 of the Outline adopted by the Committee and should observe, so far as they are applicable, the principles contained in Part I of the Outline. The Board notes that in Part II of the Outline the Committee proposes that a number of steps should be taken immediately to begin an evolutionary process of reform and to help meet the current problems facing both developed and developing members. The Board of Governors endorses the proposals of the Committee and the Committee’s calls upon members to collaborate with the Fund and with each other to give effect to those proposals.

2. The Adjustment Process

The Board of Governors notes that the Committee has recognized that in the interim period, with the prospect of significant changes in the structure of balances of payments in the world, there is need for close international consultation and for surveillance of the adjustment process. The Board endorses the Committee’s recommendation that members should be guided in their adjustment action by the general principles set out in paragraph 4 of the Outline. The Board endorses the Committee’s call to members to cooperate with one another and with international institutions, during the current period of exceptional and widespread payments imbalances, to find orderly means to deal with these imbalances without adopting policies that would aggravate the problems of other members, and to promote equilibrating capital flows. In this connection, the Board of Governors welcomes Decision No. 4241-(74/67),3 adopted by the Executive Directors on June 13, 1974, to establish a facility in the Fund to assist members in meeting the initial impact of the increase in the cost of oil imports.

The Fund shall exercise surveillance of the adjustment process through the Council when established (and, for the time being, the Interim Committee on the International Monetary System) and the Executive Directors, on the lines of the procedures set out in paragraphs 5–10 of the Outline, and subject for the time being to the following provisos, namely that:

(a) the Fund shall seek to gain further experience in the use of the objective indicators, including reserve indicators, on an experimental basis, as an aid in assessing the need for adjustment, but shall not use such indicators to establish any presumptive or automatic application of pressures;

(b) determination of what is a disproportionate movement in reserves shall be made in the light of the broad objectives of members for the development of their reserves over a period ahead, as discussed with the Fund; and

(c) the pressures that may be applied to members in large and persistent imbalance shall continue to be those at present available to the Fund.

3. Exchange Rates

The Board of Governors notes that the Committee has stressed that, during the interim period, exchange rates will continue to be a matter for international concern and consultation, and has attached particular importance to the avoidance of competitive depreciation or undervaluation. The Board endorses these views and notes with satisfaction that in accordance with the Committee’s recommendation the Executive Directors have taken Decision No. 4232-(74/67),4 adopted June 13, 1974, on guidelines for the management of floating exchange rates during the present period of widespread floating.

4. Controls

The Board of Governors endorses the Committee’s recommendation that, during the interim period, countries should be guided by the principles set out in paragraphs 14-17 of the Outline in relation to controls and to cooperative action to limit disequilibrating capital flows. The Board endorses the Committee’s view that particular importance must be attached to avoiding the escalation of restrictions on trade and payments for balance of payments purposes during the interim period. The Board endorses the invitation to members to subscribe on a voluntary basis to the Declaration concerning trade and other current account measures for balance of payments purposes attached to the Committee’s final communiqué, and requests members to consider subscribing to the Declaration if they have not already done so. The Board notes with satisfaction that the Executive Directors are developing the necessary procedures in connection with the Declaration, and are making arrangements for continuing close cooperation with the Contracting Parties to the General Agreement on Tariffs and Trade.

5. Global Liquidity

The Board of Governors endorses the Committee’s call to members to cooperate with the Fund during the interim period in seeking to promote the principle of better management in global liquidity as set out in paragraph 2(d) of the Outline. In accordance with the Committee’s recommendation, the Fund shall assess global reserves and take decisions on the allocation and cancellation of special drawing rights consistently with paragraph 25 of the Outline. The Fund shall periodically review the aggregate volume of official currency holdings in accordance with paragraph 19 of the Outline and, if they are judged to show an excessive increase, the Fund shall consider with the members concerned what steps might be taken to secure an orderly reduction.

In accordance with the Committee’s recommendation, the Fund shall give consideration to substitution arrangements.

In accordance with the Committee’s recommendation, the Fund shall give further study to arrangements for gold in the light of the agreed objectives of reform.

6. Valuation of the Special Drawing Right

The Board of Governors notes with satisfaction that, following the Committee’s recommendation concerning the interim valuation and interest rate of the special drawing right, the Executive Directors have taken the following decisions on these questions: No. 4233-(74/67) S, adopted June 13, 1974; No. 4234-(74/67) S, adopted June 13, 1974; No. 4236-(74/67) S, adopted June 13, 1974; No. 4257-(74/76), adopted June 28, 1974; and No. 4261-(74/78) S, adopted July 1, 1974.5 These decisions provide for an interim valuation of the special drawing right without prejudice to the method of valuation to be adopted in a reformed system.

7. The Special Interests of Developing Countries

The Committee has recognized the serious difficulties that are facing many developing members, and has agreed that their needs for financial resources will be greatly increased. It has urged all members with available resources to make every effort to supply these needs on appropriate terms. To this end, the Committee has called upon members with available resources and upon development finance institutions to make arrangements to increase the flow of concessionary funds, and to give consideration to various measures including the redistribution of aid effort in favor of members in greatest need, interest subsidies, and short-term debt relief on official loans in the special circumstances of members without access to financial markets. The Board of Governors notes with satisfaction that, following the Committee’s recommendation, the Executive Directors have taken Decision No. 4377-(74/l 14),6 adopted September 13, 1974, to establish a new facility in the Fund under which developing members in particular are likely to receive balance of payments finance for longer periods and in amounts larger in relation to quota than has been the practice under existing tranche policies. The Board notes that the Committee is not unanimous on the question of establishing a link between development assistance and the allocation of special drawing rights and invites the Interim Committee established by the Second Resolution to consider the possibility and modalities of establishing such a link simultaneously with the preparation by the Executive Directors of draft amendments of the Articles of Agreement, which it is envisaged would be presented for the approval of the Board by February 1975.

8. General Review of Quotas

The Board of Governors endorses the Committee’s request to the Executive Directors to complete, as soon as possible, their work on the current general review of quotas, and in doing so to bear in mind the general purposes of the reform.

9. Amendments to the Articles of Agreement

The Board of Governors notes that certain of the immediate steps recommended in Part II of the Outline require amendment of the Articles of Agreement, and that, following the Committee’s recommendation in paragraph 41 of the Outline, the Executive Directors have begun their consideration of draft amendments of the Articles of Agreement to give effect to this Part of the Outline or as otherwise desired.

The Board requests the Executive Directors to transmit any draft amendments that they prepare pursuant to paragraph 41 of the Outline to the Interim Committee for consideration in accordance with paragraph 3 (ii) of the Second Resolution and, if agreed, for presentation to the Board of Governors for its approval.

Resolution No. 29–111

Financial Statements, Report on Audit, and Administrative Budget

Resolved:

That the Board of Governors of the Fund considers the Report on Audit for the Fiscal Year ended April 30, 1974, the Financial Statements contained therein, and the Administrative Budget for the Fiscal Year ending April 30, 1975 as fulfilling the requirements of Article XII, Section 7 of the Articles of Agreement and Section 20 of the By-Laws.

Resolution No. 29–12 1. Amendments of the Rules and Regulations

Resolved:

That the Board of Governors of the Fund hereby notifies the Executive Directors that it has reviewed the adoption and amendment of Rule 1–4 (h), the adoption of Rule 1–4(i) and Rule I-10, and the amendments of Rules E-2 and E-3, I-4(f) and (g), O–3, and Q-l since the 1973 Annual Meeting and has no changes to suggest.

Resolution No. 29-13 1. Membership for Papua New Guinea

Whereas, the Government of Papua New Guinea on February 12, 1974 applied for admission, on the attainment by that country of constitutional independence, to membership in the International Monetary Fund in accordance with Section 2 of Article II of the Articles of Agreement of the Fund; and

Whereas, it is expected that Papua New Guinea will attain constitutional independence in the near future following settlement of the final details of the new Constitution; and

Whereas, pursuant to Section 21 of the By-Laws of the Fund, the Executive Directors have consulted with the representative of that Government and have agreed upon the terms and conditions which, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe for admitting Papua New Guinea to membership in the Fund;

Now, therefore, the Board of Governors, having considered the recommendations of the Executive Directors, hereby resolves that the terms and conditions upon which Papua New Guinea shall be admitted to membership in the Fund upon attainment of constitutional independence shall be as follows:

  • Definitions: As used in this Resolution:

    • (a) The term “Fund” means the International Monetary Fund.

    • (b) The term “Articles” means the Articles of Agreement of the International Monetary Fund.

    • (c) The term “SDR” means special drawing rights, the value of which is defined in Article XXI, Section 2 of the Articles.

  • Quota: The quota of Papua New Guinea shall be the equivalent of SDR 20 million.

  • Subscription: The subscription of Papua New Guinea shall be equal to its quota.

  • Payment of Subscription: Papua New Guinea shall pay the subscription in the currency of Papua New Guinea within six months after becoming a member. For this purpose, Papua New Guinea shall agree with the Fund on a provisional rate of exchange for the currency of Papua New Guinea, unless a par value has been agreed in accordance with paragraph 5 below. Papua New Guinea shall repurchase within 90 days after having paid the subscription an amount equivalent to SDR 5 million in gold, SDRs, or convertible currencies acceptable to the Fund, in accordance with the Fund’s policies and practices at the time of repurchase; provided, however, that if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period for the payment of the subscription the Executive Directors may extend such period or periods until a date not later than the thirtieth day after the initial par value of Papua New Guinea has been agreed in accordance with paragraph 5 below.

  • Determination of Par Value: Within 30 days after the Fund so requests, Papua New Guinea shall communicate to the Fund a proposed par value for its currency, and within 60 days following the Fund’s receipt of the proposed par value, Papua New Guinea and the Fund shall agree on an initial par value for the currency; provided that the Fund may extend the period of 60 days and that Papua New Guinea shall be deemed to have withdrawn from the Fund if agreement on a par value has not been reached when the said period of 60 days or any extended period expires. In the period between accepting membership and the establishment of an initial par value pursuant to this paragraph, Papua New Guinea shall not change its exchange rate prevailing at the time of accepting membership without agreement with the Fund after prior consultation.

  • Exchange Transactions with the Fund: Except as provided in paragraph 4 above, Papua New Guinea may not engage in exchange transactions with the Fund until both (a) the par value of its currency has been agreed in accordance with paragraph 5 above and put into operation and (b) its subscription has been paid in full; provided, however, that at any time before the requirements under (a) and (b) have been met, the Executive Directors are authorized to permit exchange transactions with Papua New Guinea under such conditions and in such amounts as may be prescribed by the Executive Directors.

  • Representation and Information: Before accepting membership in the Fund, Papua New Guinea shall represent to the Fund that it has taken all action necessary to sign and deposit the Instrument of Acceptance and sign the Articles, as contemplated by paragraph 8(a) and (b) of this Resolution, and Papua New Guinea shall furnish to the Fund such information in respect of such action as the Fund may request.

  • Acceptance of Membership: After the Fund shall have informed the Government of the United States of America that Papua New Guinea has complied with the conditions set forth in paragraph 7 of this Resolution, Papua New Guinea shall become a member of the Fund as of the date when Papua New Guinea shall have complied with the following requirements:

    • (a) Papua New Guinea shall deposit with the Government of the United States of America an instrument stating that it accepts in accordance with its law the Articles and all the terms and conditions prescribed in this Resolution, and that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and this Resolution; and

    • (b) Papua New Guinea shall sign the original copy of the Articles held in the Archives of the Government of the United States of America.

  • Period for Acceptance of Membership: Papua New Guinea may accept membership in the Fund pursuant to this Resolution on or subsequent to the date on which it attains constitutional independence but not later than six months after the effective date of this Resolution, which date shall be the date of its adoption by the Board of Governors; provided, however, that if extraordinary circumstances are deemed by the Executive Directors to warrant an extension of the period during which the applicant may accept membership pursuant to this Resolution, the Executive Directors may extend such period until such later date as they may determine.

See Summary Proceedings, 1970, pages 257–61.

See pages 332–38.

Adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the Bank, IFC and IDA, on October 2, 1974.

See Annual Report, 1974, pages 122–23.

Ibid., pages 112–16.

Ibid., pages 116–19, and Selected Decisions, 7th issue.

Selected Decisions, 7th issue.

Adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the Bank, IFC and IDA, on October 4, 1974.

Adopted by the Board of Governors of the Fund, in Joint Session with the Boards of Governors of the Bank, IFC and IDA, on October 4, 1974.

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