Journal Issue

IMF Survey: Vol.26, 1997

International Monetary Fund. External Relations Dept.
Published Date:
January 1997
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Supplement on the IMF IMF Builds on Initiatives to Meet Challenges Of Globalization

Globalization—the growing economic integration of goods, services, and capital markets—continued to present the IMF and its member countries with opportunities and challenges. Strong recovery in fiscal 1996/97 (May 1996–April 1997) in world economic growth with moderate inflation—and their likely continuation into 1997/98—reflected progress made by many industrial and developing countries and transition economies. Exchange rate turmoil in the summer of 1997 in some of the more dynamic emerging country markets illustrated once again, however, that an increasingly integrated global economic system also posed risks. In addition, a number of low-income and heavily indebted countries were unable to sustain sound macroeconomic and structural policies and remained vulnerable to the risk of marginalization.

Developments in the World Economy

The pace of world economic growth quickened during 1996/97. Global inflation remained subdued, and commitments to reasonable price stability were stronger than at any time in the postwar era. In many countries, structural reforms enhanced the role of market forces, thereby strengthening the basis for sustained, robust growth.

The favorable global economic conditions were underscored by the continued strong growth performance with low inflation in the United States and the United Kingdom, the pickup in growth in Japan in 1996, and improved prospects for strengthened recoveries in continental Europe and Canada. Trade integration among developing countries and regions continued to deepen, supported by growing liberalization. In the developing world, growth picked up in those countries in the Western Hemisphere that had been affected by the financial crisis in Mexico in late 1994–early 1995. Activity also strengthened in the Middle East and Africa, while the transition economies, as a group, registered positive growth for the first time since the collapse of central planning.

Despite the favorable overall picture, contrasts in economic performance across countries have become starker in recent years, and a number of roadblocks could jeopardize future prospects. Among the advanced economies, many of the countries in the European Union continued to be plagued by high and rising unemployment, while progress in labor market reform has been sketchy and piecemeal. Among emerging market countries, high and rising inflows of capital in recent years have tended to reflect the pursuit of sound) market-oriented policies and a more open global financial system. But in some countries, the economic situation has worsened, others have experienced setbacks, and still others are vulnerable to changes in investor sentiment, as recent turbulence in southeastern Asian markets has demonstrated.

The IMF emphasized banking soundness, transparency, and governance in 1997.

Fragile banking systems are of concern across a broad spectrum of countries. Financial sector problems often stem from excessive credit expansion in the past and a lack of adequate prudential supervision. In some emerging market countries, banking sector difficulties linked to significant exposure to foreign exchange risk have become more apparent following the reversal of capital flows from abroad.

IMF in 1997

For the IMF, the challenges of economic integration have prompted a broadening and deepening of its activities. In 1997, the IMF acted to strengthen its surveillance activity, to examine the adequacy of its resources while augmenting its capacity to borrow in special circumstances, and to enhance its efforts to help low-income and heavily indebted countries build their economies and gain entry into the global economy.

Largely because of the successful policy reforms adopted by many countries—including several that had earlier made substantial use of the IMF’s resources—new financial commitments in 1996/97 were below the exceptionally high levels of the two previous years. At the same time, the IMF continued to extend financial support to about one-third of its members. At the end of 1996/97,3 total of 60 Stand-By, Extended, and Enhanced Structural Adjustment Facility (ESAF) Arrangements were in effect. In July 1997, the Emergency Financing Mechanism was activated for the first time in support of the Philippines’ request for an extension and augmentation of its three-year Extended Arrangement. It was used again in August 1997 for Thailand, together with the provision of exceptional financial support.

Strengthening Surveillance. Surveillance over the exchange rate policies of its members—a responsibility at the core of the IMF’s work—remained an important priority in 1996/97. Building on initiatives taken following the Mexican financial crisis to increase the effectiveness of its surveillance, the IMF acted over the past year to strengthen its surveillance operations in the areas of banking soundness, transparency, and good governance.

Banking soundness. The increased attention paid to banking soundness issues was motivated, first, by the fragility of many national banking systems and, second, by the IMF’s unique capacity to alert members to weaknesses in their banking systems or regulatory regimes and to promote—in cooperation with other international institutions—sound banking principles and practices worldwide.

Transparency. A new series of Press Information Notices (PINs) was inaugurated in May 1997. PINs are issued, at the request of a member country, following the conclusion of the Article IV consultation, to make the IMF’s views known to the public. This action is intended to strengthen surveillance over the economic policies of member countries by increasing the transparency of the IMF’s assessment of these policies.

Governance. The Executive Board adopted guidelines covering the role of the IMF in issues of governance. With the issuance of these guidelines, the IMF underscored the critical importance of good governance—particularly, effective and reliable public institutions—for economic efficiency and growth.

Capital Account Convertibility. In light of the rapid growth and increased integration of international capital markets—and mindful of the need to ensure that the IMF is able to effectively discharge its mandate of overseeing an international monetary system increasingly dominated by capital flows—the Executive Board explored the issue of capital account convertibility in 1997. Executive Directors agreed that an open and liberal system of capital movements fostered economic growth and prosperity by contributing to an efficient allocation of world saving and investment. They also agreed that capital account liberalization should be an orderly and sustainable process and part of a broad and well-sequenced reform effort. Given the IMF’s mandate and universal membership, it seemed evident that the IMF should play a central role in promoting capital account liberalization and fostering the smooth operation of international capital markets. At its 1997 spring meeting, the Interim Committee of the IMF’s Board of Governors agreed that the IMF’s Articles of Agreement should be amended to make the promotion of capital account liberalization a specific purpose of the IMF and to give the IMF appropriate jurisdiction over capital movements. The IMF’s Executive Board is expected to make recommendations on some key elements of an amendment at the IMF’s Annual Meeting in Hong Kong, China.

Assistance to Low-Income Countries. In an effort to bolster its assistance to the poorest members, the IMF endorsed the continuation of its concessional financing facility, the ESAF, beyond the year 2000, when current ESAF resources are expected to be fully committed. In connection with the joint IMF-World Bank Initiative to assist heavily indebted poor countries (HIPCs), the IMF set up the ESAF-HIPC Trust to finance special ESAF operations in the form of grants, or highly concessional loans, to countries being assisted under the HIPC Initiative. In April 1997, the IMF’ approved Uganda’s eligibility for assistance under the HIPC Initiative.

IMF Funding

In January 1997, the Executive Board approved the New Arrangements to Borrow (NAB), under which the IMF may borrow up to SDR 34 billion when it needs additional resources to forestall or cope with an impairment of the international monetary system or to deal with an exceptional situation that poses a threat to the stability of the system. Participants in the NAB include, for the first time, a number of developing countries.

The 1997 Annual Meetings will provide a forum for discussions on replenishing the IMF’s resources through an increase in its regular financial resources (or quotas) and on a one-time “equity” SDR allocation to ensure that all members participate in the SDR system.

Organization IMF Structure Shaped by Articles of Agreement

The IMF’s organizational structure is set out in its Articles of Agreement, which entered into force in December 1945. The Articles provide for a Board of Governors, an Executive Board, a Managing Director, and a staff of international civil servants. Since the mid-1970s, the Executive Board has received ministerial guidance from the Interim Committee of the Board of Governors on the International Monetary System (the Interim Committee) and the Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (the Development Committee).

Board of Governors. The highest authority of the IMF resides in its Board of Governors, which consists of one Governor and one Alternate Governor appointed by each member country. The Board of Governors, whose members are usually drawn from ministers of finance or heads of central banks, normally meets once a year, but may meet or vote by mail at other times.

Interim Committee. The Interim Committee provides ministerial guidance to the Executive Board. Composed of 24 IMF Governors, ministers, or other officials of comparable rank, the Interim Committee meets twice a year and reports to the Board of Governors on the management and functioning of the international monetary system and on proposals to amend the Articles of Agreement.

IMF Executive Board

(as of August 1, 1997)


  • Alternate

  • Casting Votes’ of

  • (Percent of IMF total)

Karin Lissakers

  • Barry S. Newman

  • United States

  • (265, 518–17.78 percent)

Bernd Esdar

  • Wolf-Dieter Donecker

  • Germany

  • (82,665–5.54 percent)

Yukio Yoshimura

  • Hidcaki Ono

  • Japan

  • (82,665–5.54 percent)

Marc-Antoine Autheman

  • Ambroise Fayolle

  • France

  • (74,396–4.98 percent)

Gus O’Donnell

  • Jon Shields

  • United Kingdom

  • (74,396–4.98 percent)

Willy Kiekens (Belgium)

  • Johann Prader (Austria)

  • Austria

  • Belarus

  • Belgium

  • Czech Republic

  • Hungary

  • Kazakhstan

  • Luxembourg

  • Slovak Republic

  • Slovenia

  • Turkey

  • (75,983–5.09 percent)

J. de Beaufort Wijnholds (Netherlands)

  • Yuriy G. Yakusha (Ukraine)

  • Armenia

  • Bosnia and Herzegovina

  • Bulgaria

  • Croatia

  • Cyprus

  • Georgia

  • Israel

  • Macedonia, FYR of

  • Moldova

  • Netherlands

  • Romania

  • Ukraine

  • (74,276–4.97 percent)

Juan José Toribio (Spain)

  • Javier Guzmán-Calafell (Mexico)

  • Costa Rica

  • El Salvador

  • Guatemala

  • Honduras

  • Mexico

  • Nicaragua

  • Spain

  • Venezuela

  • (64,295–4.31 percent)

Enzo R. Grilli (Italy)

  • Nikolaos Coumbis (Greece)

  • Albania

  • Greece

  • Italy

  • Malta

  • Portugal

  • San Marino

  • (59,987–4.02 percent)

Thomas A. Bernes (Canada)

  • Charles X. O’Loghlin (Ireland)

  • Antigua and Barbuda

  • Bahamas, The

  • Barbados

  • Belize

  • Canada

  • Dominica

  • Grenada

  • Ireland

  • St. Kitts and Nevis

  • St. Lucia

  • St. Vincent and the Grenadines

  • (55,500–3.72 percent)

Eva Srejber (Sweden)

  • Benny Andersen (Denmark)

  • Denmark

  • Estonia

  • Finland

  • Iceland

  • Latvia

  • Lithuania

  • Norway

  • Sweden

  • (51,771–3.47 percent)

Abdulrahman A. Al-Tuwaijri

  • Sulaiman M. Al-Turki

  • Saudi Arabia

  • (51,556–3.45 percent)

Dinah Z. Guti (Zimbabwe)

  • José Pedro de Morals, Jr. (Angola)

  • Angola

  • Botswana

  • Burundi

  • Eritrea

  • Ethiopia

  • Gambia, The

  • Kenya

  • Lesotho

  • Liberia

  • Malawi

  • Mozambique

  • Namibia

  • Nigeria

  • Sierra Leone

  • South Africa

  • Swaziland

  • Tanzania

  • Uganda

  • Zambia

  • Zimbabwe

  • (51,292–3.43 percent)

G.F. Taylor (Australia)

  • Okyu Kwon (Korea)

  • Australia

  • Kiribati

  • Korea

  • Marshall Islands

  • Micronesia, Fed. States of

  • Mongolia

  • New Zealand

  • Papua New Guinea

  • Philippines

  • Samoa

  • Seychelles

  • Solomon Islands

  • Vanuatu

  • (49,182–3.29 percent)

A. Shakour Shaalan (Egypt)

  • Yacoob Yousef Mohammed (Bahrain)

  • Bahrain

  • Egypt

  • Iraq

  • Jordan

  • Kuwait

  • Lebanon

  • Libya

  • Maldives

  • Oman

  • Qatar

  • Syrian Arab Republic

  • United Arab Emirates

  • Yemen, Republic of

  • (47,646–3, 19 percent)

Zamani Abdul Ghani (Malaysia)

  • Subarjo Joyosumarto (Indonesia)

  • Brunei Darussalam

  • Cambodia

  • Fiji

  • Indonesia

  • Lao PDR

  • Malaysia

  • Myanmar

  • Nepal

  • Singapore

  • Thailand

  • Tonga

  • Vietnam

  • (43,505–2.91 percent)

Aleksei V. Mozhin

  • Andrei Vernikov

  • Russia

  • (43,381–2.90 percent)

Daniel Kaeser (Switzerland)

  • Danuta Gotz-Kozierkiewicz (Poland)

  • Azerbaijan

  • Kyrgyz Republic

  • Poland

  • Switzerland

  • Tajikistan

  • Turkmenistan

  • Uzbekistan

  • (41,229–2.76 percent)

Abbas Mirakhor (Islamic Republic of Iran)

  • Mohammed Daïri (Morocco)

  • Afghanistan, Islamic State of

  • Algeria

  • Ghana

  • Iran, Islamic Rep. of

  • Morocco

  • Pakistan

  • Tunisia

  • (39,542–2.65 percent)

Alexandre Kafka (Brazil)

  • Hamid O’Brien (Trinidad and Tobago)

  • Brazil

  • Colombia

  • Dominican

  • Republic

  • Ecuador

  • Guyana

  • Haiti

  • Panama

  • Suriname

  • Trinidad and Tobago

  • (39,270–2.63 percent)

M.R. Sivaraman (India)

  • H.B. Disanayaka (Sri Lanka)

  • Bangladesh

  • Bhutan

  • India

  • Sri Lanka

  • (38,561–2.58 percent)

ZHANG Zhixiang

  • HAN Mingzhi

  • China

  • (34,102–2,28 percent)

A. Guillermo Zoccali (Argentina)

  • Nicolás Eyzaguirre (Chile)

  • Argentina

  • Bolivia

  • Chile

  • Paraguay

  • Peru

  • Uruguay

  • (31,985–2.14 percent)

Koffi Yao (Côte d’Ivoire)

  • Alexandre Barro Chambrier (Gabon)

  • Benin

  • Burkina Faso

  • Cameroon

  • Cape Verde

  • Central African Republic

  • Chad

  • Comoros

  • Congo, Rep. of

  • Côte d’Ivoire

  • Djibouti

  • Equatorial Guinea

  • Gabon

  • Guinea

  • Guinea-Bissau

  • Madagascar

  • Mali

  • Mauritania

  • Mauritius

  • Niger

  • Rwanda

  • São Tomé and Principe

  • Senegal

  • Togo

1 As of August 1, 1997, members’ votes totaled 1,493,331, and votes in the Executive Board amounted to 1,492,639. The latter does not include the votes of Somalia, which did not participate in the 1996 Regular Election of Executive Directors. It also does not include the votes of Sudan and the Democratic Republic of the Congo, whose voting rights were suspended effective August 9, 1993, and June 2, 1994, respectively.

Development Committee. The Development Committee, also composed of 24 Governors of the Bank or the IMF, ministers, or other officials of comparable rank, advises and reports to the Boards of Governors of the World Bank and the IMF on development issues.

Executive Board. The Board of Governors has delegated many of its powers to the IMF’s Executive Board, the IMF’s permanent decision-making organ. The Executive Board, which generally meets three times a week at the IMF’s headquarters in Washington, consists of 24 Executive Directors who are appointed or elected by member countries. It deals with a wide variety of policy, operational, and administrative matters, including surveillance of members’ exchange rate policies, provision of IMF financial assistance to member countries, and discussion of systemic issues in the global economy.

Managing Director. Selected by the Executive Board, the IMF’s Managing Director chairs the Executive Board and serves as head of the organization’s staff. Under the direction of the Executive Board, the Managing Director is responsible for conducting the day-to-day business of the IMF. The Managing Director serves a five-year term and may be re-elected to successive terms.

Staff. The Articles of Agreement require that staff appointed to the IMF demonstrate the highest standards of efficiency and technical competence and reflect the organization’s diverse membership. Approximately 125 nationalities are represented among the organization’s 2,300 staff members.

Quotas Quotas Determine Members’ Voting Power, Financial Access

Each member of the IMF has a quota, expressed in SDRs, that is equal to its subscription in the IMF. Its quota, which is designed broadly to reflect the size of the member’s economy, is a fundamental element in a member’s financial and organizational relations with the IMF. Members’ quota subscriptions provide the IMF with financial resources and thereby enable it to fulfill its obligations to members in need of balance of payments assistance from the IMF. A member’s quota determines its voting power in the IMF, which is based on 1 vote for each SDR 100,000 of its quota plus the 250 basic votes to which each member is entitled. Each member’s quota also determines its access to the IMF’s financial resources and its share in SDR allocations. A member is generally required to pay up to 25 percent of its quota subscription in SDRs or in the currencies of other members specified by the IMF, with the concurrence of the issuers; it pays the remainder in its own currency.

Evolution of Quota Formulas

The initial quotas of the original members of the IMF were related to, but not strictly determined by, the Bretton Woods formula. That formula included basic variables, such as average annual import and export flows, gold holdings and dollar balances, the variability of export flows, and national income. It served as the basis for determining initial quotas of new members until the early 1960s.

In 1963, the Bretton Woods formula was revised and a number of other quota formulas were introduced. Taken together, these were used as guides in determining initial quotas of new members and increases in quotas. These formulas incorporated the economic data described above but also included parallel calculations that employed current receipts, current payments, and the variability of current receipts in place of the data on exports, imports, and the variability of exports.

In the early 1980s, the IMF simplified the procedures for calculating quotas and improved the quality of the economic data used in the formulas. GDP replaced national income, a broader measure of official reserves was employed, and more broadly based data for current receipts and payments replaced the corresponding data for “visible” trade.

Quotas of New Members

When a country applies for IMF membership, the IMF staff calculates a quota for the country and compares it with the quotas of existing members of similar economic size and characteristics. The suggested initial quota or quota range is then considered by a membership committee of the Executive Board. After the country has agreed to the terms and conditions of membership—including the amount of the initial quota proposed by the committee—the full Executive Board considers the committee’s recommendations. If it concurs with the committees recommendations and conclusion, it authorizes the forwarding of a proposed resolution on membership to the IMF’s Board of Governors for its consideration and approval. If the membership resolution is approved by the Board of Governors, and assuming that appropriate domestic legal and procedural steps are taken by the applicant country, a representative of the applicant country is invited to Washington to sign the Articles of Agreement, at which time the country becomes a member.

As of August 1, 1997,181 countries were members of the IMF, with total quotas amounting to about SDR 145.3 billion. The Republic of Palau has applied for membership in the IMF The Federal Republic of Yugoslavia (Serbia/Montenegro) has not yet completed arrangements for succession to the membership in the IMF of the former Socialist Federal Republic of Yugoslavia.

Review of Quotas

The Board of Governors is required by the IMF’s Articles of Agreement to conduci a general review of quotas at intervals of not more than five years, these general reviews are meant to assess whether growth in the world economy and changes in the relative size of members’ economies warrant quota adjustments.

The Ninth General Review of Quotas was the last review to result in an increase in IMF quotas. The Board of Governors concluded the Tenth Review without an increase in quotas. The Executive Board decided to monitor closely the adequacy of members’ quotas and the IMF’s liquidity position. Developments in international capital markets, as well as IMF financial support for adjustment programs in a number of transition economies, have since resulted in exceptionally large demands on IMF resources and have heightened the importance of close monitoring of the IMF’s liquidity position.

The Executive Board has continued to work on the Seventh General Review of Quotas, which is to be completed by March 1998, but has reached no decision about an increase. In a series of meetings, the Board discussed factors bearing on the size and distribution ol an increase in quotas, taking into account the importance of changes in the scale of the world economy since the last increase and the potential demand for IMF resources over the next several years, as well as how a member’s quota should reflect its relative position in the world economy. At its April 1997 meeting, the Interim (Committee agreed that the proposed distribution should be predominantly equiproportional (that is, distributed in proportion to currently existing quotas) while helping to correct the most important anomalies in the current quota distribution. Meeting in June 1997, the Board continued to examine way to apportion an increase that were consistent with the Interim Committee’s guidance. Directors expressed their readiness to be flexible to achieve consensus on the overall size and distribution of quotas.

IMF Quotas(Million SDRs)
Afghanistan, Islamic State of120.4
Antigua and Barbuda8.5
Bahamas, The94.9
Bosnia and Herzegovina121.2
Brunei Darussalam150.0
Burkina Faso44.2
Cape Verde7.0
Central African Republic41.2
Congo, Dem. Rep. of the291.0
Congo. Republic of57.9
Costa Rica119.0
Côte d’Ivoire238.2
Czech Republic589.6
Dominican Republic158.8
El Salvador125.6
Equatorial Guinea24.3
Gambia, The22.9
Iran, Islamic Republic of1,078.5
Kyrgyz Republic64.5
Lao People’s Dem. Rep.39.1
Macedonia, FYR of49.6
Marshall Islands2.5
Micronesia, Fed. States of3.5
New Zealand650.1
Papua New Guinea95.3
St. Kitts and Nevis6.5
St. Lucia11.0
St. Vincent and the Grenadines6.0
San Marino10.0
São Tomé and Principe5.5
Saudi Arabia5,130.6
Sierra Leone77.2
Slovak Republic257.4
Solomon Islands73
South Africa1,365.4
Sri Lanka303.6
Syrian Arab Republic209.9
Trinidad and Tobago246.8
United Arab Emirates392.1
United Kingdom7,414.6
United States6326.8
Yemen, Republic of176.5

Quotas are thuse in effect as of August 1, 1997. As of that date, live members had not yet paid fur their quota increases under the Ninth General Resiew of Quotas; the quotas listed for these members are those determined under the Eighth General Review, These members (with their Ninth General Review quotas, in millions of SDRs, appearing in parenthesis) are as follows: Iraq 1864.8), Liberia (96.2), Somalia (60.9), Sudan (233.1), and the Democratic Republic of the Congo (394.8).

Quotas are thuse in effect as of August 1, 1997. As of that date, live members had not yet paid fur their quota increases under the Ninth General Resiew of Quotas; the quotas listed for these members are those determined under the Eighth General Review, These members (with their Ninth General Review quotas, in millions of SDRs, appearing in parenthesis) are as follows: Iraq 1864.8), Liberia (96.2), Somalia (60.9), Sudan (233.1), and the Democratic Republic of the Congo (394.8).

Borrowing New Borrowing Arrangements Supplement IMF’s Ordinary Resources

The IMF’s ordinary resources, currently totaling about SDR 145 billion, derive from its members’ quota subscriptions. The IMF’s Articles of Agreement, however, authorize it to borrow if necessary to supplement those resources. To dale, the IMF has borrowed only from official sources, such as governments and central banks and the Bank for International Settlements, but it is also authorized to borrow from private sources. Currently, the IMF has no outstanding borrowings. However, the General Arrangements to Borrow (GAB) are in place, and the IMF Executive Board has recently approved New Arrangements to Borrow (NAB).

NAB Participants and Credit Arrangements

(million SDRs)
Deutsche Bundesbank3,557
Hong Kong Monetary Authority340
Saudi Arabia1,780
Sveriges Riksbank859
Swiss National Bank1,557
United Kingdom2,577
United States6,712

The GAB are lines of credit from 11 industrial countries or their central banks that are available under specified circumstances at market-related rates of interest. Established in 1962 amid concerns about the adequacy of official sources of international liquidity and the disruptive effects of short-term capital movements, the GAB have been revised and renewed several times. The GAB participants are Belgium, Canada, the Deutsche Bundesbank, France, Italy, Japan, the Netherlands, the Sveriges Riksbank, the Swiss National Bank, the United Kingdom, and the United States. The IMF also has an associated arrangement with Saudi Arabia under similar terms. The potential amount of credit available to the IMF under the GAB currently totals SDR 17 billion, with an additional SDR 1.5 billion available under the associated arrangement with Saudi Arabia. The GAB and the associated arrangement with Saudi Arabia are effective until December 26, 1998, and renewal of these arrangements will be considered by the IMF by late 1997.

The GAB credit lines may be made available to the IMF to finance any exchange transaction of GAB participants with the IMF needed “to forestall or cope with an impairment of the international monetary system.” Stricter criteria are in place for nonparticipants: drawings must be in connection with an IMF-supported adjustment program (or an upper credit tranche drawing), and the IMF must be deemed to face an inadequacy of resources to meet actual and expected requests for financing that reflect an “exceptional situation associated with balance of payments problems of members of a character or aggregate size that could threaten the stability of the international monetary system.”

In the aftermath of the Mexican financial crisis of late 1994 and early 1995 and with the growing realization that substantially more resources might be needed to prevent or cope with future financial emergencies, the Executive Board strengthened the IMF’s ability to borrow by approving new borrowing arrangements in January 1997. Under the NAB, potentially 25 participant countries and institutions (see table) would stand ready to lend the IMF up to SDR 34 billion (about $47 billion) to supplement its regular quota resources when needed to forestall or cope with an impairment of the international monetary system or to deal with an exceptional situation that threatens the stability of the system.

The NAB decision marked the culmination of intensive efforts that began in June 1995 when the Group of Seven industrial countries called for a doubling of the amount available under the GAB to respond to financial emergencies. The NAB will enter into force when the decision has been adhered to by potential participants with credit arrangements amounting to no less than SDR 28.9 billion (85 percent of the total), including the five members or institutions with the largest credit arrangements.

NAB credit lines may be drawn on for the benefit of all NAB participant countries, or for nonparticipants under circumstances similar to, but somewhat more flexible than, those under the GAB.

The new arrangements, when they become effective, will not replace the GAB but will serve as the first and principal recourse in the event of the need to provide supplementary resources to the IMF. The combined amount available under the GAB and the NAB will not exceed SDR 34 billion.

Surveillance Surveillance in an Integrated Global Economy

Central to the IMF’s purposes and operations is the mandate, under its Articles of Agreement, to “exercise firm surveillance over the exchange rate policies of members” and to adopt specific principles to guide all members with respect to those policies. To carry out this mandate, the IMF examines international monetary issues and analyzes all aspects of members’ macro-economic and related structural policies, since these policies taken together have important implications for the exchange rate system.

IMF surveillance strives to promote sound economic growth and an orderly and stable system of exchange rates. The IMF encourages members to adopt appropriate economic policies and helps identify issues and problems in a timely manner, so that members can implement suitable corrective measures more quickly.

In recent years, fundamental shifts in the global economy—-such as the rapid growth of private capital markets, increased regional and monetary integration, and the implementation of current account convertibility and market-oriented reform in many countries—have heightened the importance of effective and timely surveillance. These transformations are being mirrored in increased responsibilities for the IMF. Its membership has grown rapidly, and its policy advice, financing, and technical assistance and training now extend to a record number of member countries.

The Mexican financial crisis in late 1994 and early 1995 dramatically illustrated the speed with which markets could react to shifts in sentiments about a country’s economic situation. It also highlighted the need for the IMF to monitor economic developments continuously on the basis of accurate and up-to-date data, particularly in a world with increasingly integrated financial markets. Consequently, in 1993, the IMF took steps to strengthen its surveillance, with emphasis on full and timely provision of data and on increasing the continuity, focus, and candor of surveillance.

Tools of Surveillance

The IMF carries out its surveillance responsibilities mainly through regular—normally, annual—consultations with member countries, and through multilateral discussions held in the context of the Executive Board’s twice-yearly World Economic Outlook reviews.

Article IV Consultations, The primary’ channel for collaboration between the IMF and its members, allow the IMF to systematically review economic developments and policies in member countries and assess the impact of these policies on the exchange rate and the balance of payments. Structural policies are also examined since they are germane to macroeconomic developments and policies. In recent years, surveillance has taken more account of regional, social, industrial, labor market, income distribution, governance, and environmental issues, where these have important implications for macroeconomic policies and performance. Article IV consultations provide a comprehensive analysis of recent and prospective domestic and external developments and their effect on the international community. During 1996/97, the IMF concluded 150 Article IV consultations.

World Economic Outlook discussions provide the Executive Board with a framework for reviewing members’ policies from a multilateral perspective, monitoring and analyzing the global economic situation, and assessing prospects for the international economy under various policy assumptions.

The Executive Board supplements this systematic monitoring of individual country and global developments with regular informal sessions on significant developments in selected countries and on world economic and financial market developments. The Board also reviews developments in international capital markets once a year. In addition, the IMF’s Managing Director takes part in some of the policy discussions of the Group of Seven major industrial countries, where he provides a global perspective by focusing on the international implications of G-7 policies.

Article IV Consultations

In accordance with Article IV of the IMF’s Articles of Agreement, IMF staff usually hold annual bilateral meetings with member country officials in their home countries. During these consultations, IMF staff analyze economic developments and policies; examine fiscal, exchange rate, and monetary policies; review balance of payments and external debt developments; and assess the impact of policies—including exchange and trade restrictions—on a members external accounts. The staff’s report then forms the basis for an Executive Board discussion.

Article IV consultations also focus on the international implications of a member’s policies and developments and allow the IMF to deal promptly with a member’s request for the use of IMF resources. Over the years, both the policy content and the breadth of issues have expanded. Increased emphasis has been placed on the appropriateness of exchange rate policies, the medium-term implications of economic policies, structural reform efforts and trade policies. Regional and cross-country issues have increasingly featured in Article IV consultations, as have the growth and welfare implications of a country’s macroeconomic and structural policies. To the extent that social, industrial, labor market, governance, and environmental issues influence macroeconomic policies and performance, these, too, are addressed during IMF Article IV consultations.

Review of Surveillance

Every two years, the IMF reviews the principles and procedures that guide its surveillance, as originally set out in a 1977 Executive Board decision. In the latest review, concluded in April 1997, the Board noted the steady progress made in strengthening surveillance—including the ability to detect incipient financial tensions. The Board cited efforts to improve the continuity of IMF surveillance and the candor of the dialogue with member countries. To make further progress, the Board approved new procedures affording the IMF greater flexibility to adjust the frequency of consultations with members, the size of staff missions, and the materials prepared by the stall” in response to fast-breaking developments.

Although the priorities and focus of IMF surveillance continue to be largely appropriate, the Executive Board agreed that, to remain effective, surveillance must be both comprehensive in treating issues at the core of the IMF’s responsibilities and selective in handling other issues—depending on the individual country’s situation. Executive Directors therefore highlighted the importance of the IMF’s work on exchange rate issues while calling for increased attention to capital account and financial sector issues as a complement to the staff’s usual macro-economic analysis. In view of the growing importance of policy formulation at the regional level—exemplified by the formation of economic and monetary union in Europe—the Board also agreed that the IMF needed to pay increased attention to regional surveillance.

The Executive Board also reviewed developments in data provision and discussed ways to increase transparency in the dissemination of the IMF’s views.

Article VIII

Among the IMF’s purposes is to facilitate the expansion and balanced growth of international trade. In this context, the IMF seeks to promote and maintain high levels of employment and real income and help establish a multilateral system of payments for current transactions between IMF members. The IMF does this in part by encouraging member countries to accept the obligations under Article VIII, Sections 2, 3, and 4, of its Articles of Agreement. By so doing, member countries agree not to impose restrictions on the making of payments and transfers for current international transactions or to engage in discriminatory currency arrangements or multiple currency practices without the approval of the IMF. Historically, members have been slow to accept the obligations of Article VIII. Beginning in early 1993, however, the IMF staff intensified its efforts in this regard. By mid-July 1997, 140 members had accepted Article VIII obligations, with 65 of these countries accepting since 1993.

Provision of Economic Data to the IMF. The Board review confirmed that regular and timely reporting of economic data to the IMF remains critical for effective surveillance. The IMF has identified a core set of economic and financial indicators and encouraged all members to report these data monthly to the IMF. Where shortcomings in member country data are identified, the IMF and individual members remedy them in a cooperative way. The IMF also provides technical assistance to help members compile and report economic data.

Provision of Economic Data to the Public. Timely, reliable data are also critically important for financial markets. In April 1996, the IMF established the Special Data Dissemination Standard (SDDS) for the voluntary dissemination of economic and financial data by member countries that have, or seek access to, international financial markets (see box, page 9). In September 1996, the IMF introduced the Dissemination Standards Bulletin Board (DSBB). The IMF also established in April 1997 a “hyperlink facility” that enables users to move directly from the DSBB to actual country economic and financial data on the Internet. As of July 31, 1997, 42 countries subscribed to the SDDS, and hyperlinks for 8 countries had been established.

The IMF is also developing a General Data Dissemination System (GDDS), whose primary focus is to encourage all members to improve the production and dissemination of core economic data.

Greater Openness. The Executive Board agreed in April 1997 to the issuance of Press Information Notices, following the conclusion of Article IV consultations, for member countries seeking to make known the views of the IMF to the public (see box, page 10).

Evolving Issues

Strengthening Banking Systems. Since 1980, roughly two-thirds of the IMF’s member countries have had problems in their banking sectors, with many bank failures having international repercussions.

At a meeting in March 1997 on the broad principles and characteristics of stable and sound financial systems, the Executive Board noted that the health and stability of financial systems have clear implications for macroeconomic performance, the conduct of macro-economic policies, and the functioning of global markets—matters at the core of the IMF’s work. Executive Directors agreed that the IMF, with its near-universal membership and responsibility for surveillance, had an important role to play in international efforts to promote sound banking principles and practices worldwide. The IMF’s focus should be twofold: helping member countries identity weaknesses in their financial and supervisory systems that had the potential for serious macroeconomic consequences and to formulate corrective policies; and encouraging members to adopt guidelines and standards developed by the supervisory community and monitoring their progress. Directors called for close collaboration in these efforts with other organizations—including the World Bank and the Basle Committee on Banking Supervision—to ensure that each focused on its area of comparative advantage and avoided any potential conflict in standards. In this context, the IMF will help disseminate among its members—through its surveillance and technical assistance—the Basle Committee’s recently published “core principles” for effective banking supervision.

Capital Account Convertibility. The movement of capital among countries is a central concern of the IMF, since an open and liberal system of capital movements fosters economic growth and prosperity by contributing to an efficient allocation of world saving and investment. At meetings in February and April 1997, the Executive Board agreed that capital account liberalization should be an orderly and sustainable process and part of a broad and well-sequenced reform effort involving sound macroeconomic policies and strong financial systems. Although the absence of a formal mandate has not prevented the IMF from playing an important role in supporting members’ efforts toward liberalization and monitoring international capital flows, most Directors supported an amendment of the IMF Articles of Agreement to make the promotion of capital account liberalization a specific purpose of the IMF and to give it jurisdiction over capital movements. In its April 1997 meeting, the Interim Committee endorsed the concept of such an amendment.

IMF Takes Initiative to Improve Members’ Data

In April 1995, the Interim Committee, in the wake of the Mexican financial crisis of December 1994, called on the Executive Board to establish standards to guide members in providing economic and financial statistics to the public. In the ensuing two years, the IMF has developed several important data dissemination initiatives designed to respond to increased global integration of markets and the associated expansion of financial flows for comprehensive, reliable, and timely economic and financial data—with equal and ready access for all users.

Special Data Dissemination Standard (SDDS), Established in April 1996, the goal of the SDDS, participation in which is voluntary, is to encourage the timely publication of economic data used by market participants in evaluating a country’s policies and prospects. The SDDS is aimed at members that have, or seek, access to international capital markets. Countries that subscribe to the SDDS undertake to make the necessary changes to statistical practices to meet the requirements of the SDDS during a transition period (which ends December 31, 1998), and to follow good practices with respect to the four areas covered by the standard: coverage, periodicity, and timeliness of data; access by the public; integrity; and quality. As of July 31, 1997, 42 countries or territorial entities had subscribed to the SDDS.

Dissemination Standards Bulletin Board (DSBB). In September 1996, the IMF opened to public access, through the Internet, an electronic bulletin board for the SDDS. The DSBB posts information on the data dissemination practices of subscribers as well as steps they have taken to move toward full observance of the standard by the end of 1998. It also provides up-to-date information on future release dates of data and identifies contacts in the subscribing country and information on how to obtain the data. The Internet address of the DSBB is The DSBB may also be accessed through the IMF’s public Internet site (

Hyperlinks Between DSBB and National Data. In April 1997, electronic links (hyperlinks) were established that allow data users to move directly from the DSBB to subscribers’ Internet data sites to access the latest economic and financial data. As of July 31, 1997, links were in place for Canada; Hong Kong, China; Israel; Mexico; Singapore; South Africa; Switzerland; and Turkey.

General Data Dissemination System (GDDS). In March 1997, the Executive Board agreed to establish a genera) data dissemination system. Unlike the SDDS, which is aimed at member countries with or seeking access to capital markets, the GDDS will focus on the improvement of data quality and systems for the production and dissemination of statistics for all IMF members. The GDDS framework will consist of a “good-practices” standard for data production and dissemination while serving as a useful guide for countries developing their statistical systems and for data users in assessing the practices of participating countries. The IMF hopes to establish the GDDS by late 1997.

Governance and the IMF. Good governance has come to be widely recognized as essential for economic efficiency and growth. The IMF’s role in this area has been evolving pragmatically as more has been learned about the contribution that attention to governance issues—for example, using public resources efficiently, creating an environment conducive to private sector activity, and bolstering public support for economic reforms—could make to macroeconomic stability and sustainable growth. Reflecting the increased significance that member countries attach to the promotion of good governance, the Executive Board held discussions on the role of the IMF in governance issues in January and May 1997. In July, the Board released Guidelines on Governance for IMF staff, which seek to promote a strengthening of the IMF’s involvement in governance issues, in particular through:

• more comprehensive treatment in the context of Article IV consultations and IMF-supported programs of those governance issues that are within the IMF’s mandate and expertise and that have significant macro-economic implications;

• a more proactive approach in advocating institutions and systems that aim to eliminate corruption and other fraudulent activity;

• evenhanded treatment of governance issues in all member countries; and

• enhanced collaboration with other multilateral institutions.

Other Means of Collaborating

While Article IV consultations are the main form of collaboration between the IMF and a member country, members have also sought closer collaboration in other ways, including through precautionary arrangements, enhanced surveillance, and informal monitoring. Precautionary arrangements, by which members reach agreement with the IMF on Stand-By or Extended Arrangements but do not use IMF resources, are useful in indicating the IMF’s endorsement of a member’s policies and serve to boost confidence in those policies. Enhanced surveillance does not imply an IMF endorsement of policies; it was initially established in 1985 to facilitate multi-year debt-rescheduling agreements with commercial banks and has been used sparingly. Informal monitoring provides members with a more intensive dialogue with the IMF staff than under regular Article IV consultations; it is usually based on a quantitative framework proposed by the member in collaboration with IMF staff. It also does not constitute formal IMF endorsement. These less formal arrangements offer members a flexible means of collaborating more closely with the IMF.

PINs: A Major Move Toward Greater Openness

On April 25, the IMF Executive board agreed to the issuance of Press Information Notices (PINs), following the conclusion of Article IV consultation discussions, for those members seeking to make known to the public the IMF’s views about their economies.

This action is intended to strengthen IMF surveillance over the economic policies of member countries by increasing the transparency of the IMF’s assessment of these policies while preserving the integrity and confidentiality of the Article IV consultation process.

PINs are issued at the request of the member country shortly after the Executive Board discussion. They consist of a background section with factual information on the member country’s economy and the IMF’s assessment of the member country’s economic policies and prospects, as reflected in the Executive Board’s discussion of the Article IV review of the member country.

As of August 15, 1997, 19 PINs have been issued. Full texts of PINs are available on the IMF’s web site (

Conditionality Fostering Sustained Policy Implementation

When it provides financial support to a member country, the IMF must be sure the member is pursuing policies that will ameliorate or eliminate its external payments problem. The explicit commitment that members mate to implement remedial measures in return for the IMF’s support is known as “conditionality.” This commitment also ensures that members are able to repay the IMF in a timely manner—which allows the IMF’s limited pool of financial resources to revolve and be available to other members with a balance of payments problem. IMF financing, and the important catalytic effect it has in securing other financing, enables the country to adjust in an orderly fashion, without resort to measures that would be inimical to its own or other countries’ prosperity.

Conditions for IMF financial support may range from general commitments to cooperate with the IMF in setting policies to the formulation of specific, quantified plans for financial policies. IMF financing from its general resources in the “upper credit tranches” (that is, where larger amounts are disbursed in return for implementation of remedial measures) is phased. The IMF requires a “letter of intent,” which outlines a government’s policy intentions during the period of the adjustment program; policy changes to be taken before approval of the arrangement; performance criteria, which are objective indicators for certain policies that must be satisfied on a quarterly, semiannual, or in some instances a monthly basis for drawings to be made; and periodic reviews that allow the Executive Board to assess the consistency of policies with the objectives of the program.

Conditionality Is Flexible

Although IMF conditionality employs specified performance criteria, it does not rely on a rigid set of operational rules. The Executive Board’s guidelines on conditionality:

• encourage members to adopt corrective measures at an early stage;

• stress that the IMF pay due regard to members’ domestic social and political objectives, as well as economic priorities and circumstances;

• permit flexibility in determining the number and content of performance criteria; and

• emphasize that IMF arrangements are decisions of the IMF that set out—in consultation with members—the conditions for its financial assistance.

Photo Credits: Denio Zara and Padraic Hughes for the IMF.

Conditionality in Practice

The IMF takes a pragmatic approach to helping members formulate economic reform programs, recognizing that no one model suits all members. Each IMF-supported program is designed by the member country in close collaboration with the IMF staff. The process involves a comprehensive review of the member’s economy, including the causes and nature of the balance of payments problems and an analysis of the policies needed to achieve a sustainable balance between the demand for, and the availability of, resources.

IMF-supported programs emphasize certain key aggregate economic variables—domestic credit, the public sector deficit, international reserves, and external debt—and crucial elements of the pricing system—including the exchange rate, interest rates, and, in some cases, commodity prices—that significantly affect the country’s public finances and foreign trade and the economy’s supply response.

During a Stand-By or Extended Arrangement, a member’s reform program is monitored by the IMF through performance criteria selected according to the economic and institutional structure of the country, the availability of data, and the desirability of focusing on broad macroeconomic variables, among other considerations. Performance under IMF-supported reform programs is also monitored through periodic reviews by the IMF Executive Board.

Growth-Oriented Adjustment

To bring about a sustained return to external viability, an adjustment program must elicit an adequate response from the supply side of the economy. Interest rates and exchange rates are particularly important, since they influence saving and investment decisions and a member’s growth prospects. IMF-supported policy adjustments by member countries focus on such supply-related—or structural—actions as removing distortions that hamper export growth and increasing the efficiency of government spending—measures that help reduce a country’s imbalances and enhance its growth prospects. The IMF also continues to support appropriate measures that affect demand, which remain essential to achieving sustainable growth.

Given the emphasis on structural reform in IMF-supported programs, close collaboration between the IMF and the World Bank is important. This is particularly true in developing programs to support members’ requests for resources under the IMF’s Extended Fund Facility (EFF) and the Enhanced Structural Adjustment Facility (ESAF).

Social Safety Nets

Adjustment programs typically have an impact on income distribution, employment, and social services. While sound macroeconomic policies and effective structural reforms promote sustained growth and employment, the adjustment process itself may involve short-term social costs for vulnerable groups. Measures built into IMF-supported programs address these costs. In collaboration with the World Bank staff, the IMF staff analyzes the social implications of reform measures and advises the authorities on how best to design social safety nets and target them to assist the neediest groups.

Measures built into IMF-supported programs address the short-term social costs of adjustment.

Conditionality Reviews

Periodically, the Executive Board reviews members’ experience with Stand-By and Extended Arrangements to evaluate the appropriateness of the policy design, policy implementation, and the achievements. In 1994, the Board analyzed the experience of 45 Stand-By and Extended Arrangements in 36 member countries. “The Board examined three principal elements of the IMF’s approach toward adjustment and stabilization: reining in excessive domestic demand, adopting structural reforms, and mobilizing external financing.

Executive Directors concluded that this broad policy paradigm remained appropriate and was particularly effective in correcting external imbalances. But economic growth and investment were frequently slow to respond. IMF-supported programs should therefore:

• be framed in a medium-term context to ensure consistency and credibility;

• pay close attention to the structure of government spending and revenue;

• limit upward pressure on real interest rates by emphasizing an appropriate balance between fiscal and monetary restraint and by measures to promote sound banking practices; and

• strive for a transparent and predictable timetable for structural reforms.

Structural reforms were essential, the Board concluded. Countries had made considerable progress in price, exchange, and trade liberalization, and notable strides in financial market reforms, particularly in auctions for central bank or government paper and in removing controls on a significant range of interest rates. Much still needed to be done to improve prudential controls and bank supervision, address weak bank portfolios, expedite privatization, and restructure public expenditures. In many countries, rigidities in labor markets and insufficient job creation remained serious problems that had not been addressed by adjustment programs.

Financial Facilities and Policies IMF Financing Helps Members Pursue Sound Policies

The IMF uses its financial resources to help members redress balance of payments problems and to help cushion the impact of adjustment. The IMF’s financing is provided through both its general resources and its concessional financing facilities, which are administered separately. IMF financing is subject to Executive Board approval and, in most cases, to the member’s commitment to take steps to address the causes of its payments imbalance (see Conditionality, page 10). Members using the IMF’s general resources “purchase” (or draw) other members’ currencies or SDRs with an equivalent amount of their own currency. The IMF levies charges on these drawings and requires that members “repurchase” their own currency from the IMF (or repay) with other members’ currencies or SDRs within a specified time. Concessional financing under the Enhanced Structural Adjustment Facility’ (ESAF) is provided in the form of low-interest loans.

Total IMF Credit Outstanding to Members1

Billion SDRs; end of period

1The IMF’s financial year begins on May 1 and ends on April 30.

Data: IMF, Annual Report 1997

Regular Facilities

Reserve Tranche. A member has a reserve tranche position if the IMF’s holdings of its currency in the General Resources Account—excluding those holdings that reflect the member’s use of IMF resources—are less than its quota. A member may draw up to the full amount of its reserve tranche position at any time, subject only to the member’s representation of a balance of payments need. A reserve tranche drawing does not constitute a use of IMF credit and is not subject to charges or to an expectation or obligation to repay.

Credit Tranches. IMF credit is subject to different conditionality and phasing, depending on whether it is made available in the first credit “tranche” (or segment) of 25 percent of a member’s quota or in the upper credit tranches (any segment above 25 percent of quota). For drawings in the first credit tranche, members must demonstrate reasonable efforts to overcome their balance of payments difficulties.

Upper credit tranche drawings are made in installments, or phased, and are released when performance targets are met. Such drawings are normally associated with Stand-By or Extended Arrangements, which typically seek to resolve balance of payments difficulties and to support structural policy reforms where appropriate. Performance criteria and periodic reviews are used to assess policy implementation.

Stand-By Arrangements. Stand-By Arrangements give members the right to draw up to a specified amount of IMF financing during a prescribed period. Drawings are normally phased on a quarterly basis, with their release conditional upon meeting performance criteria and the completion of periodic reviews. Performance criteria generally cover bank credit, government or public sector borrowing, trade and payments restrictions, foreign borrowing, and international reserve levels. These criteria allow both the member and the IMF to assess progress and may signal the need for further corrective policies.

Stand-By Arrangements typically cover a 12–18 month period (although they can extend up to three years). Repayments are to be made within 3¼ to 5 years of each drawing.

In 1996/97, 11 new Stand-By Arrangements were approved. These included Stand-By Arrangements for six countries of the former Soviet Union and in central and eastern Europe (Bulgaria with two arrangements, Estonia, Latvia, Romania, Tajikistan, and Ukraine), totaling SDR 1.7 billion; for two Latin American countries (El Salvador and Venezuela), totaling SDR 1.0 billion; and for one Middle Eastern country (Egypt) and one African country (Lesotho), totaling SDR 0.3 billion. As of April 30, 1997, 14 countries had Stand-By Arrangements, with total commitments of SDR 3.8 billion and undrawn balances of SDR 2.5 billion.

Extended Fund Facility (EFF). The EFF provides assistance for adjustment programs over longer periods and with generally larger amounts of financing than under Stand-By Arrangements. Extended Arrangements, which normally run for three years (and can be extended for a fourth), are designed to rectify balance of payments difficulties that stem largely from structural problems and require a longer period of adjustment.

A member requesting an Extended Arrangement outlines its objectives and policies for the period of the arrangement and presents a detailed statement each year of the policies and measures to be pursued over the next 12 months. The phasing and performance criteria are comparable to those of Stand-By Arrangements, although phasing on a semiannual basis is possible. Countries using EFF resources must repay the currencies they have drawn within 4½ to 10 years of the drawing.

In 1996/97, the IMF approved five new Extended Arrangements totaling SDR 1.2 billion for Azerbaijan, Croatia, Kazakhstan, Moldova, and Peru—all transition economies, with the exception of Peru. As of April 30, 1997, 11 countries had Extended Arrangements, with commitments totaling SDR 10.2 billion and undrawn balances of SDR 6.6 billion.

Overall, commitments of IMF resources under Stand-By and Extended Arrangements approved in 1996/97 amounted to SDR 4.2 billion. Nearly three-fourths of the total was approved for the economies in transition.

Special Facilities

The IMF’s special facilities include the Compensatory and Contingency Financing Facility (CCFF) and the Buffer Stock Financing Facility, although the latter has not been used since 1983.

Compensatory and Contingency Financing Facility. The export compensatory clement of the CCFF provides financing to members experiencing a balance of payments need related to temporary shortfalls in export earnings. This element of the facility has been used particularly by commodity exporters. The cereal clement compensates for the temporary excesses in cereal import costs attributable to factors largely beyond the member’s control. The contingency element helps members with IMF arrangements keep their adjustment programs on track when laced with unforeseen adverse external shocks largely beyond their control. The affected variables could include export earnings, import prices, and international interest rates; workers’ remittances and tourism receipts may also be covered if they are a significant component in the member’s current account. In 1996/97, two countries—Algeria and Bulgaria—made use of the CCFF, with drawings totaling SDR 0.3 billion.

Buffer Stock Financing Facility. Under this facility, the IMF helps finance members’ contributions to approved international buffer stocks, if the member demonstrates a balance of payments need. No drawings have been made under this facility for the past 13 years.

Concessional Facilities

Enhanced Structural Adjustment Facility (ESAF). Established by the Executive Board in 1987 and extended and enlarged in February 1994, this facility is the principal means by which the IMF provides financial support, in the form of highly concessional loans, to low-income member countries facing protracted balance of payments problems.

At the same time that the ESAF was extended and enlarged, no new resources were made available for the Structural Adjustment Facility (SAF), which had been established in 1986 for the purpose of making concessional credit available to low-income countries with protracted balance of payments problems. SAF resources remaining at that time were disbursed as of December 1995, mainly to Sierra Leone and Zambia. The objectives and primary features of the SAF were similar to those of the ESAF, but ESAF arrangements were expected to be more ambitious with regard to macroeconomic policy and structural reform measures.

ESAF resources are intended to support strong medium-term structural adjustment programs. Eligible members seeking ESAF resources must develop, with the assistance of the staffs of the IMF and the World Bank, a policy framework paper (PFP) for a three-year adjustment program. The PFP, which is updated annually, describes the authorities’ economic objectives, macroeconomic and structural policies during the three-year period, and associated external financing needs and major sources of financing. The PIT, which is a document of the national authorities, is intended to ensure a consistent framework for economic policies and to attract financial and technical assistance in support of the adjustment program.

Adjustment measures under ESAF-supported programs are expected to strengthen substantially a country’s balance of payments position and foster growth during the three-year period. Monitoring under ESAF arrangements is conducted through quarterly financial and structural benchmarks. In addition, semiannual performance criteria are set for key quantitative and structural targets. ESAF loans are disbursed semiannually, initially upon approval of an annual arrangement and subsequently based on the observance of performance criteria and after completion of a midterm review. ESAF loans are repaid in ten equal semiannual installments, beginning 5½ years and ending 10 years after the date of each disbursement. The interest rate on ESAF loans is 0.5 percent a year.

As of April 30, 1997, 35 ESAF arrangements were in effect. In 1996/97, the IMF approved 12 ESAF arrangements totaling SDR 0.9 billion for Azerbaijan, Benin, Burkina Faso, the Republic of Congo, Ethiopia, Guinea, Haiti, the former Yugoslav Republic of Macedonia, Madagascar, Mozambique, Niger, and Tanzania.

Cumulative commitments under all approved SAF and ESAF arrangements (excluding undisbursed amounts under expired and canceled arrangements) totaled SDR 8.8 billion as of April 30, 1997, compared with SDR 8.0 billion a year earlier. ESAF disbursements in 1996/97 totaled SDR 0.7 billion, compared with SAF and ESAF disbursements of SDR 1.5 billion in 1995/96, bringing cumulative disbursements through April 30, 1997, to SDR 7.2 billion.

Making ESAF Self Sustaining. Based on the broad agreement that the ESAF is, and will remain, the centerpiece of the IMF’s support for the poorest countries—including in the context of the HIPC (highly indebted poor countries) debt initiative (see Debt Strategy, page 15)—the Executive Board in 1996 agreed on a framework for the continuation of ESAF operations. Under current projections, existing ESAF resources are expected to meet demands until about the end of 2000. A self-sustained ESAF, with a commitment capacity of about SDR 0.8 billion a year, would begin in the year 2005, or perhaps earlier, financed from IMF-owned resources (the ESAF Reserve Account) currently used to provide security for ESAF lenders against the risk of nonpayment by borrowers, which will be freed as lenders are repaid. This would leave an interim period of about four years during which the necessary financing—to meet an expected commitment level of SDR 1 billion a year—would come from either the General Resources Account or a new round of bilateral lending to the ESAF Reserve Trust.

Other IMF Policies and Procedures

For specific circumstances that cannot be adequately addressed under its regular and special facilities, the IMF extends financing to member countries under a variety of special mechanisms. These include an emergency’ financing mechanism, support for currency stabilization funds, and emergency assistance to members facing balance of payments difficulties arising from sudden and unforeseeable natural disasters or in post-conflict situations.

Emergency Financing Mechanism (EFM). A set of procedures to facilitate rapid Executive Board approval of IMF financial support while ensuring the conditionality necessary to warrant such support, these emergency measures are used only in circumstances representing, or threatening to give rise to, a crisis in a member’s external accounts that requires an immediate IMF response. The EFM was first activated in support of the Philippines’ request in July 1997 for an extension and augmentation of its three-year extended arrangement. It was used again in August 1997, together with the provision of exceptional financial support, for Thailand.

Support for Currency Stabilization Funds. In the framework of an upper credit tranche Stand-By or Extended Arrangement, IMF financial support for the establishment of a currency stabilization fund is meant to bolster confidence, for a transitional period, in an exchange-rate-based stabilization strategy. For a currency stabilization fund to play its intended role, economic policies have to be sufficiently tight to deliver an inflation path compatible with the targeted exchange rate anchor, so that little, if any, use of the currency stabilization fund would be expected. The most appropriate arrangement to be supported by a currency stabilization fund would be an exchange rate peg with relatively narrow margins or a preannounced crawl.

Access Limits Are Guided by Quotas

The rules governing access to the IMF’s general resources apply uniformly to all members. Access is determined primarily by a member’s balance of payments need, the strength of its adjustment policies, and its capacity to repay the IMF. Access is permitted up to limits defined in relation to the member’s quota.

The Executive Board reviews the access limits in the credit tranches and under the Extended Fund Facility (EFF) annually in light of many elements, including the magnitude of members’ payments problems and developments in the IMF’s liquidity. Guided by the principle that strong adjustment programs deserve strong support and by the need to safeguard the monetary character and catalytic role of the IMF, the Executive Board decided that, for a three-year period beginning October 24, 1994, the annual limit for access to the IMF’s general resources in the credit tranches and under extended arrangements would rise to 100 percent of quota from 68 percent of quota. The cumulative access limit was left unchanged at 300 percent of quota, net of scheduled repayments.

These limits may be exceeded in exceptional cases. The limits exclude drawings under the Compensatory and Contingency Financing Facility (CCFF), the Buffer Stock Financing Faculty (BSFF), and loans under the Enhanced Structural Adjustment Facility (ESAF). The current overall access limit under the CCFF is set at 95 percent of a member’s quota. For the BSFF, the access limit is 35 percent of quota.

Access Limits(Percent of member’s quota)
Stand-By and Extended Arrangements1
Special Facilities
Compensatory and Contingency
Financing Facility
Export earnings shortfall230
Excess cereal import costs215
Contingency financing330
Optional tranche420
Buffer Stock Financing Facility35
Enhanced Structure Adjustment Facility1
Three-year access5190

Under exceptional circumstances, these limits may be exceeded.

When a member has a satisfactory balance of payments position—except for the effect of an export earnings shortfall or an excess in cereal import costs—a limit of 65 percent of quota applies to either the export earnings shortfall or the excess cereal import costs, with a joint limit of 80 percent.

A sublimit of 25 percent of quota applies on account of deviations in interest rates.

May be applied to supplement the amounts for export earnings shortfalls, excesses in cereal import costs, or contingency financing.

Average access expected at 110 percent of quota for first-time users.

Under exceptional circumstances, these limits may be exceeded.

When a member has a satisfactory balance of payments position—except for the effect of an export earnings shortfall or an excess in cereal import costs—a limit of 65 percent of quota applies to either the export earnings shortfall or the excess cereal import costs, with a joint limit of 80 percent.

A sublimit of 25 percent of quota applies on account of deviations in interest rates.

May be applied to supplement the amounts for export earnings shortfalls, excesses in cereal import costs, or contingency financing.

Average access expected at 110 percent of quota for first-time users.

Access under ESAF arrangements also differs according to members’ balance of payments needs, the strength of their adjustment efforts, and their capacity to repay. An eligible member country may borrow a maximum of 190 percent of its quota under a three-year ESAF arrangement, although this limit may be increased, under exceptional circumstances, up to a maximum of 255 percent of quota. ESAF access is expected to average about 110 percent of quota for first-time users.

IMF support would be conditional upon fiscal adjustment and credit creation consistent with targeted inflation, appropriate measures to deal with backward-looking wage and other indexation schemes, a high degree of current account convertibility and an open trade regime, contingency plans to deal with large capital account outflows or inflows, integrated management of foreign exchange reserves and intervention policy, and other structural and institutional elements designed to reduce inflation sharply.

Emergency Assistance. The IMF can also provide emergency’ financial assistance to a member facing balance of payments difficulties caused by a natural disaster. This assistance is available through outright purchases, usually limited to 25 percent of quota, provided that the member is cooperating with the IMF to find a solution to its balance of payments problem. In most cases, this assistance has been followed by an arrangement with the IMF under one of its regular facilities.

In 1995, the policy on emergency’ assistance was expanded to cover post-conflict situations. This assistance may be provided when the member’s administrative capacity has been disrupted as a result of the conflict but there is still sufficient capacity for planning and policy implementation and a demonstrated commitment on the part of the authorities; there is an urgent balance of payments need; and IMF support is part of a concerted international effort. Conditions for the assistance include a statement of economic policies, a quantified macroeconomic framework to the extent possible, and a statement of the authorities’ intention to move as soon as possible to a regular IMF arrangement. The conditionality is tailored to the individual country situation and to rebuilding the country’s administrative and institutional capacity.

Debt Strategy IMF Strategy Emphasizes Adequate Financial Support

The IMF has played a central role, through its policy guidance and financial support, in helping member countries cope with both official and commercial external debt problems. The IMF’s ultimate objective is to ensure that debtor countries achieve sustainable growth and balance of payments viability and establish normal relations with creditors, including access to international financial markets. While the instruments used have evolved over time, the basic elements of the IMF’s debt strategy continue to be:

• promotion of growth-oriented adjustment and structural reform in debtor countries;

• maintenance of a favorable global economic environment; and

• assurance of adequate financial support from official (bilateral and multilateral) and private sources.

Commercial Bank Debt Operations

The IMF continues to support commercial bank debt- and debt-service-reduction operations on a case-by-case basis. It evaluates proposed packages in light of the strength of the member’s economic policies, the likelihood that the country would regain access to credit markets and attain external viability with growth, and the assurance that the package represents an efficient use of scarce resources.

Net Present Value of Debt

The face value of the external debt stock is not a good measure of a country’s debt burden if a significant part of the external debt is contracted on concessional terms; for example, with an interest rate below the prevailing market rate. The net present value (NPV) of debt is a measure that takes into account the degree of concessionality. It is defined as the sum of all future debt-service obligations (interest and principal) on existing debt, discounted at the market interest rate. Whenever the interest rate on a loan is lower than the market rate, the resulting NPV of debt is smaller than its face value, with the difference reflecting the grant element. For the heavily indebted poor countries as a group, the NPV of external debt at the end of 1994—based on the World Bank’s World Debt Tables—was approximately $190 billion, compared with a nominal external debt stock of $241 billion.

The Executive Board takes into account the appropriate balance between debt and debt-service reduction in bank debt packages. It considers whether the resulting debt-service profile on restructured debt is consistent with a country’s likely debt-service capacity; whether the package is cost effective; whether it would imply continued commercial bank involvement, where appropriate, and where it could facilitate a return to normal commercial financing; and whether the menu of options is both balanced and sufficiently broad to ensure a high rate of participation in the package.

Official Debt Rescheduling

Member countries seeking to reschedule official debt normally approach the Paris Club of official creditors. This arrangement provides a forum for indebted countries and their official bilateral creditors to work out agreements that generally provide for the rescheduling of eligible arrears and current maturities of eligible debt service falling due during the consolidation period (generally the period of the IMF arrangement), with a repayment period stretching over many years. To ensure that such relief helps restore balance of payments viability and achieves sustainable economic growth, the Paris Club links debt relief to the formulation of economic programs endorsed by the IMF. In deciding on the coverage and terms of individual rescheduling agreements, Paris Club creditors also draw upon the IMF’s analysis and assessment of countries’ debt situations.

Uganda is the first country to be declared eligible for assistance under the HIPC Initiative.

In December 1994, Paris Club creditors agreed on “Naples terms,” under which debt service on eligible debt for low-income countries is reduced by up to 67 percent in net-present-value terms (see box, page 15). Naples terms also provide concessional rescheduling of the stock of eligible debt—with a net-present-value reduction of up to 67 percent—for those countries that have demonstrated a good track record under rescheduling agreements and IMF-supported programs and that envisage no further reschedulings.

Sound policies coupled with new concessional financial assistance and debt relief under Naples terms are expected to allow most indebted low-income developing countries to achieve debt sustainability over the medium term (sustainability means that a country’s export earnings, capital, and aid flows are sufficient to service its debt comfortably).

The HIPC Initiative

For some heavily indebted poor countries (HIPCs), the burden of external debt has become extremely heavy, jeopardizing adjustment and growth. Against this background, the IMF and the World Bank jointly developed a program of action designed to resolve the debt problems of poor countries that follow sound policies. This program—the so-called HIPC Initiative—was adopted by the IMF’s Interim Committee and the IMF and World Bank’s Development Committee in September 1996. The Initiative is designed to provide exceptional assistance to eligible countries following sound policies to help them reduce their external debt burden to levels that will enable them to service their debt through export earnings, aid, and capital inflows. This exceptional assistance will entail a reduction in net present value of the future claims on the indebted country. Such assistance will help provide incentives for investment and broaden domestic support for policy reforms.

The Initiative is a comprehensive, integrated, and coordinated approach to external debt that requires the participation of all creditors—bilateral, multilateral, and commercial. Central to the Initiative is the country’s continued efforts toward macroeconomic adjustment and its implementation of structural and social policy reforms. In addition, the Initiative focuses on social sector reform programs—primarily in basic health and education.

The Initiative is open to all heavily indebted poor countries that are eligible for funding under the IMF’s Enhanced Structural Adjustment Facility (ESAF) and the World Bank’s International Development Association (IDA) and that pursue or adopt adjustment programs supported by the IMF and the World Rank through the fall of 1998, when the Initiative will be reviewed.

The Initiative is set up in two stages (sec chart, page 17). In the first stage, the debtor country pursues a strong adjustment and reform program, supported by the IMF and the World Bank, and receives flow reschedulings on Naples terms from bilateral creditors. The decision point is typically reached after the country has established a three-year policy track record, which marks the end of the first stage. At this point, the country’s eligibility for assistance under the Initiative is assessed. IMF and World Bank staff, together with the country authorities, analyze the sustainability of the country’s debt burden projected for the completion point (typically, three years later) on the basis of:

• the net present value of public and publicly guaranteed external debt in percent of exports—which should fall below a country-specific target level in the range of 200–250 percent;

• the ratio of external debt service to exports—which should decline below 20–25 percent; or

• for very open economies with a high fiscal burden of debt service and strong efforts to generate fiscal revenue, the net present value of the debt-to-fiscal revenue ratio—which should not exceed 280 percent.

A country with a debt burden that—based on the full use of traditional debt-relief mechanisms (notably Naples terms from Paris Club creditors)—cannot be brought to sustainable levels would enter the second stage and be expected to continue to demonstrate a strong track record under a second three-year adjustment program, with continued financial support from the international financial community. The country’s creditors would make a commitment to bring its debt burden to sustainable levels at the end of the second, stage (the completion point). The required six year performance period will be implemented flexibly on a case-by-case basis, particularly for countries that already have established a long track record of adjustment and reform.

Heavily Indebted Poor Countries Initiative

To finance the IMF’s participation in the Initiative, in February 1997, the Executive Board established the ESAF-HIPC Trust. The IMF will contribute to the assistance provided at the completion point through special ESAF operations, mainly in the form of grants that will be used to retire obligations falling due to the IMF.

In April 1997, Uganda became the first country to reach its decision point and be declared eligible for assistance under the HIPC Initiative. The Boards of the IMF and IDA also held preliminary discussions on the eligibility of Bolivia, Burkina Faso, and Côte d’Ivoire, which are expected to reach their decision points in the second half of 1997.

Technical Assistance Technical Assistance Complements IMF’s Surveillance and Financing

The expansion of the IMF’s membership and the adoption of market-oriented reforms by a large number of countries worldwide fueled a rapid growth of IMF technical assistance activity during 1990–94. Since then, owing to budgetary and staffing constraints, the quantity of technical assistance and training delivered by the IMF has leveled off to slightly more than 300 years of staff and expert time, plus some $10 million annually for scholarships and trainees. Technical assistance activity represents approximately 14 percent of the IMF’s total administrative expenditures.

An emerging consensus on the elements required for sustainable growth—macroeconomic stability, market reform, a liberalized trade and exchange regime, and accountable government—has facilitated the development of a more productive and synergetic relationship between macroeconomic policy and technical assistance objectives. Member countries and the IMF have become increasingly convinced that the timely provision of effective technical assistance is a key ingredient in supporting governments’ efforts to sustain policy and institutional reform.

Setting Priorities

Demand for the IMF’s technical assistance exceeds its capacity. This requires rigorous prioritization and allocation of technical assistance resources among member countries and regions. As part of this process, the IMF’s area (regional) departments play a major role in helping to identify and prioritize countries’ technical assistance needs, often in consultation with other donors. The allocation of resources and determination of the IMF’s technical assistance policies and procedures are facilitated by the Technical Assistance Committee, an interdepartmental committee of senior IMF staff.

The IMF’s Executive Board has paid increasing attention to technical assistance matters in recent years. In addition to commenting on the importance of technical assistance in individual country cases, the Board has provided guidance on evaluation of technical assistance, financing arrangements, and areas of priority. There is a growing consensus that a careful blending of policy and institution-building technical assistance in support of governments’ macroeconomic objectives is a critical ingredient for creating and maintaining sustainable growth. Indeed, technical assistance is viewed as one of the three legs of the IMF stool, along with surveillance and program design and financing.

Types of Technical Assistance

The IMF provides technical assistance and training in four broad areas: designing and implementing fiscal and monetary policies; institution-building (such as the development of central banks, treasuries, lax and customs administration); collecting and refining statistical data; and drafting and reviewing financial legislation. The IMF provides technical assistance through a number of its departments. These include:

The Monetary and Exchange Affairs Department (MAE) focuses its assistance on central banking and exchange system issues and in designing or improving monetary policy instruments. In 1996/97, MAE’s assistance covered banking regulation, supervision, and restructuring; foreign exchange management and operations; central bank organization and management; central banking accounting; clearing and settlement systems for payments; monetary operations and money market development; and monetary analysis and research.

The Fiscal Affairs Department is chiefly responsible for providing policy advice on tax and customs administration, public expenditure management and budgeting, tax policy issues, pension reform and social safety net design, and public expenditure reviews.

The Statistics Department helps members comply with internationally accepted standards of statistical reporting. The agreement on the Special Data Dissemination Standard has already prompted an increase in the demand for its technical assistance, which cover, monetary, balance of payments, real sector, and government finance statistics and includes a substantial training element through regional and local seminars.

The IMF Institute provides training for officials at IMF headquarters, the Joint Vienna Institute, and national and regional centers. Courses and seminars cover a range of topics, including financial programming and policy, financial analysis, public finance, and external sector policies, statistics, and monetary exchange operations. The IMF Institute also manages several scholarship programs for economists from Asia—funded by Japan and Australia—in Japan, in Australia, and at North American universities. To meet the growing demand for training in the future, training opportunities will be expanded through distance learning, increased collaboration with other regional training, institutions, and the introduction of specialized courses for high-level officials.

The legal Department provides assistance to members in drafting legislation and educating senior government lawyers, mainly in the law of central banking, commercial banking, foreign exchange, and fiscal affairs. This assistance is provided in coordination with other IMF departments and with legal departments of other international financial institutions, such as the World Bank.

The Treasurer’s Department provides technical assistance on the IMF’s financial organization and operations, the establishment and maintenance of IMF accounts, accounting for IMF transactions and positions by members, and other matters related to members’ transactions with the IMF. The Pokey Development and Review Department provides advice on debt policy and management and on the design and implementation of trade policy reforms. The Bureau of Computing Services has assisted in the modernization of computer systems in central banks, finance ministries, and statistical offices.

Delivering Technical Assistance

Advisory missions provide an important component of assistance. They offer advice on monetary, fiscal, and statistical problems that often lie at the heart of the macroeconomic imbalances that countries wish to address. In addition, the IMF places experts in the field for periods ranging from six months to two years to assist in the implementation of policy reform recommendations.

Traditionally, IMF technical assistance has a single, well-focused objective and a relatively short time span. In recent years, technical assistance projects have grown both larger and more complex. Time horizons have lengthened, and multiple sources of financing have been needed to underwrite costs. Large projects now commonly involve more than one IMF department and more than one donor.

External Cooperation and Coordination

Beginning in 1989, the IMF took formal steps to coordinate its technical assistance policies and cooperate with other multilateral and bilateral agencies to minimize conflicting advice and redundant activities. It also began to explore ways of complementing its own resources through various financing arrangements with other technical assistance suppliers. This cooperation has led to a more integrated approach to the planning and implementation of technical assistance—particularly at the country level, where comprehensive, multiyear programs of technical assistance are being implemented with the United Nations Development Program (UNDP), the World Bank, and the European Union. The Japanese government has continued its generous annual contribution to IMF technical assistance and the scholarship program.

Coordination has also progressed at the global level through specialized technical steering committees and working groups. The IMF continues to participate in international forums, such as the Development Assistance Committee of the Organization for Economic Cooperation and Development, which reviews and coordinates technical assistance policies and procedures. In the central banking area, coordination has led to operational cooperation between the IMF and 24 central banks in providing technical assistance and training to the countries of the former Soviet Union. The IMF coordinates this arrangement with support from the Bank for International Settlements.

IMF Technical Assistance: 1996/97

(In person years)

Note: IMF technical assistance is conducted under the IMF’s own grant resources and through financing arrangements with the Unite Nations Development Program, the World Bank, the European Union, the Japanese government, and other donors.

1 Including legal and computer services.

Data: IMF Technical Assistance Committee.

In recent years, the IMF has concluded general technical assistance agreements with the UNDP and the Japanese government, as well as several individual country agreements with the World Bank and the European Union. A number of bilateral contributors have also supported IMF-administered technical assistance by making cash contributions to UNDPIMF projects. To accommodate the growing interest of other potential contributors in supporting IMF technical assistance, the Executive Board authorized the establishment of a Technical Assistance Framework Account in April 1995. Under the Framework Account, separate subaccounts are created for individual contributors to support IMF technical assistance activities. Subaccounts can be established easily and quickly and can be used to finance a variety of short-or long-term technical assistance and training activities that a contributor may wish to support through the IMF.

SDR An International Reserve Asset

The SDR (special drawing right) is an international reserve asset created by the IMF in 1969 and allocated to its members to supplement existing reserve assets. The IMF has allocated a total of SDR 21.4 billion in two series of allocations since 1970. As of April 30, 1997, holdings of SDRs by member countries amounted to 1.7 percent of their total nongold reserves.

Member countries of the IMF are eligible to receive allocations of SDRs and may use SDRs in transactions and operations among themselves, with 15 “prescribed institutional holders,” and with the IMF itself. The SDR is the unit of account of the IMF and is used as a unit of account, or as a basis for a unit of account, by a number of other international and regional organizations and international conventions. The SDR can also be used to denominate private financial instruments. In addition, as of April 30, 1997, the currencies of two member countries were pegged to the SDR.

The value of the SDR is determined daily on the basis of a basket of five currencies: the U.S. dollar, the deutsche mark, the French franc, the Japanese yen, and the pound sterling. The value of the SDR tends to be more stable than that of any single currency in the basket; movement in the exchange rate of any one component currency will tend to be partly or fully offset by movements in the exchange rates of the other currencies.

The SDR valuation basket is revised every five years, most recently on January 1, 1996. The currencies included in the current basket, which are those of the five member countries with the largest exports of goods and services during 1990–94, remain unchanged from the previous basket. However, the initial weights of these currencies were modified to reflect changes in their relative importance in international trade and reserves. The current basket will be in effect until December 31, 2000.

The SDR interest rate, which is adjusted weekly, is a weighted average of the yields on specified short-term instruments in the domestic money markets of the five countries whose currencies are included in the SDR basket. The financial instruments used in this calculation were reviewed in 1995 and remain unchanged. These instruments are the market yield on three-month U.S. treasury bills, the three-month German interbank deposit rate, the three-month rate on Japanese certificates of deposit, the three-month rate on French treasury bills, and the market yield on three-month U.K. treasury bills.

Use of SDRs

Members with a balance of payments need may use SDRs to acquire foreign exchange in a transaction “with designation”—that is, one in which another member, designated by the IMF, provides a freely usable currency in exchange for the SDRs. The IMF may designate members to provide currencies in exchange for SDRs on the basis of the strength of their balance of payments and reserve positions. A member’s obligation to provide currency is limited to its holding of SDRs not exceeding three times its net cumulative allocation, although the IMF and the member may agree on a higher limit.

IMF members may use SDRs in a variety of voluntary transfers. These include transactions “by agreement”—that is, spot exchanges of SDRs for other monetary assets—and operations among themselves and with prescribed holders. In addition, SDRs may be used in operations under the Enhanced Structural Adjustment Facility. These operations require the involvement of prescribed holders because the IMF’s Special Disbursement Account and accounts administered by the IMF may not hold SDRs directly.

The uses of SDRs between members and the IMF consist of receipts of SDRs by the IMF’s General Resources Account from members and transfers of SDRs from the General Resources Account to members. IMF receipts mainly take the form of charges levied on members’ use of IMF resources, repurchases (repayments), and quota subscriptions. Transfers from the IMF consist mainly of purchases (drawings); remuneration on members’ creditor positions; and repayments of, and interest payments on, IMF borrowing.

SDR Transfers

The use of SDRs by member countries to discharge their financial obligations to the IMF fell to SDR 19.8 billion in 1996/97, following a climb to a record high of SDR 27.4 billion in 1995/96. Delays in a number of large purchases by members during 1996/97, together with the need of the General Resources Account to expand its receipts of currencies, limited the availability of SDRs for members and contributed to the decline.

Transfers of SDRs from participants to the General Resources Account fell to SDR 6.0 billion in 1996/97 from SDR 7.7 billion in 1995/96, largely reflecting a decrease in the use of SDRs for repurchases. Charges paid in SDRs declined to SDR 1.6 billion in 1996/97 from SDR 2.0 billion in 1995/96, mainly the result of lower interest rates.

The relatively low level of holdings of SDRs in the General Resources Account at the beginning of the year, combined with the reduced receipts of SDRs and delays in several large purchases, limited transfers from the General Resources Account to participants to SDR 5.4 billion in 1996/97. Members’ drawings from the IMF represented the largest category of transfers (SDR 4.1 billion), followed by remuneration payments to members with creditor positions vis-à-vis the IMF (SDR 1.1 billion). Acquisitions by member countries for the pav-rnent of charges, the third largest outflow, increased sharply to SDR 224 million in 1996/97, from a low of SDR 49 million a year earlier.

Transfers among participants and prescribed holders fell to SDR 8.4 billion in 1996/97 from SDR 11.9 billion in 1995/96. Countries continued to acquire substantial amounts of SDRs in transactions by agreement during 1996/97 to discharge their financial obligations to the IMF and build up their holdings of SDRs.

Transactions by agreement declined to SDR 7.4 billion during the year from SDR 8.9 billion in 1995/96. These transactions continued to be facilitated by “two-way arrangements,” under which members stand ready-to buy or sell SDRs for one or more freely usable currencies at any time, provided that their SDR holdings remain within certain limits.

SDR Valuation on July 31, 1997

Exchange Rate

on July 312
U.S. Dollar

Deutsche mark0.44601.832900.243330
French franc0,81306.181500.131521
Japanese yen27.2000118.290000.229943
Pound sterling0,10501.636400.171822
U.S. dollar0.58201.000000.582000
SDR 1 = US$1,35862US$1 = SDR 0.7360434

The currency components of the SDR basket.

Exchange rates in terms of currency units per U.S. dollar, except for the pound sterling, which is expressed in U.S. dollars per pound.

The U.S. dollar equivalents of the currency amounts divided by the exchange rates.

The official SDR value of the U.S. dollar, which is the reciprocal of the total of the U.S. dollar equivalent—that is, 1+1.358616, rounded to six significant digits.

Data: IMF Treasurer’s Department
SDR 1 = US$1,35862US$1 = SDR 0.7360434

The currency components of the SDR basket.

Exchange rates in terms of currency units per U.S. dollar, except for the pound sterling, which is expressed in U.S. dollars per pound.

The U.S. dollar equivalents of the currency amounts divided by the exchange rates.

The official SDR value of the U.S. dollar, which is the reciprocal of the total of the U.S. dollar equivalent—that is, 1+1.358616, rounded to six significant digits.

Data: IMF Treasurer’s Department

SDR Allocations

One of the IMF’s principal goals is to facilitate the expansion and balanced growth of international trade, which requires adequate levels of reserves. If the IMF identifies a long-term global need for reserves, it can supplement existing assets through an allocation of SDRs. The timing and size of that allocation are determined by the Board of Governors. The IMF has the authority to create unconditional liquidity by allocating SDRs to all member countries in proportion to their quotas. It cannot allocate SDRs to itself or to prescribed holders. The most recent allocation was on January 1, 1981, when SDR 4.1 billion was allocated to the IMF’s then 141 member countries.

At present, more than one-fifth of IMF member countries have never received an SDR allocation, because these countries joined the IMF after the last SDR allocation. In addition, other members have not participated in every allocation. For some time, the Executive Board has been in broad agreement that the IMF should make a special one-time “equity” allocation of SDRs to correct for this unbalanced distribution. In 1996/97, the Executive Board broadly agreed on the elements of a special one-time allocation but did not conclude its deliberations on the amount.

Liquidity IMF Position Improves

Following two consecutive years of record high demand for its resources, the IMF’s liquidity position improved significantly, reflecting a lower demand for the use of its resources and an increase in the pool of currencies used by the IMF to provide financial assistance to its members.

The liquid resources of the IMF consist of usable currencies and SDRs held in its General Resources Account. Usable currencies, the largest component of liquid resources, are those of members whose balance of payments and reserve positions are sufficiently strong to warrant the use of their currencies in financing IMF operations and transactions. At the end of April 1947, with the addition of two countries whose external positions were judged to be sufficiently strong, the IMF’s liquid resources had risen to SDR 62.7 billion, compared with SDR 56.4 billion a year ago.

Conference Focuses on Implications of EMU for Monetary System

European economic and monetary union (EMU) could well be one of the most important international monetary developments in the post-Bretton Woods era. The implications of EMU for the international monetary system are therefore of considerable interest and concern. In March 1997, the IMF and the Fondation Camille Gutt co-sponsored a conference on EMU and the international monetary system. Participants included a wide range of outside experts—from the public and private sector—as well as senior IMF officials. Key questions considered at the conference included:

• how the IMF would need to adapt its procedures and relationships with its European Union (EU) members once the European central bank (ECB) had responsibility for European monetary policy and the euro had replaced national currencies; and

• the prospects for international economic policy’ coordination—in particular, what EMU would mean for policy coordination among the Group of Seven industrial countries.

EMU will not affect the rights and obligations of IMF members under the Articles of Agreement. However, the transfer of national monetary policy responsibilities to the ECB and the replacement of existing European currencies by the euro raise a number of issues for the IMF, including:

• how surveillance would be carried out;

• whether and how IMF resources should be made available to EMU members;

• how IMF quotas might be affected;

• whether the SDR would need to be redefined; and

• how the euro would be used in IMF operations.

Since neither the Maastricht treaty nor the IMF’s Articles of Agreement provide alt the answers to these important questions, Philippe Maystadt, Belgian Deputy Prime Minister and Minister of Finance and Foreign Trade and Chairman of the IMF Interim Committee, said the IMF should take ail the necessary steps to be ready in time to welcome the euro as the new currency of a group of its members, and to reach agreement with all relevant parties on how to deal with the questions that will require consultation at the international level.

Also, because EMU might be associated with increased exchange rate volatility, it is important that international economic policy coordination be facilitated, Indeed, enhanced. In this regard, IMF Managing Director Michel Camdessus called for the IMF’s greater involvement in analyzing equilibrium exchange rates and advising EU governments in the run-up to EMU and during its early years.

Although the conference did not provide definitive answers to all the important questions concerning EMU and the international monetary system, it clarified some issues. It was generally expected that the timetable for EMU would be respected (EMU is set to begin on January 1, 1999, and would include all countries that have met the eligibility criteria as set out in the Maastricht treaty) and that the euro would be associated with good anti-inflationary performance and a credible European central bank. As a result, the euro should become an important international currency, second only to the U.S. dollar. Further, the move to a more symmetric European monetary policy under EMU is likely to promote stability of major macroeconomic variables, including output, inflation, and interest rates.

In assessing the adequacy of the IMF ‘s liquidity, the stock of usable currencies and SDRs has traditionally been reduced by the amount of resources committed under arrangements and expected to be drawn. A further reduction has also been made to lake account of the staff’s assessment of the need to maintain working balances of currencies and the possibility that the currencies of some members in relatively weak external positions would have to be removed from the operational budget. After these adjustments were made, the IMF’s uncommitted and adjusted liquid resources totaled SDR 43.5 billion as of April 30, 1997, compared with SDR 33.5 billion a year earlier.

The ratio of the IMF’s uncommitted and adjusted liquid resources to its liquid liabilities—the so-called liquidity ratio—increased to 120.5 percent at the end of April 1997 from 89.8 percent a year earlier.

IMF Liquidity Ratio

(percent; end of period)

1 Figure for 1997 is as of April, 30.

Data: IMF, Annual Report 1997

The IMF currently has no outstanding borrowing. When supplementary resources are needed to prevent or cope with a crisis, the IMF can borrow under the General Arrangements to borrow and under an associated agreement with Saudi Arabia. Once the New Arrangements to Borrow become effective, the amount potentially available for supplementary resources will essentially double (see Borrowing, page 6).

Income and Charges Annual Net Income Target Supplements IMF Reserves

The IMF aims for a target amount of net income each financial year to add to its reserves, after both covering its administrative expenses and remunerating its creditor positions. The rate of charge on the use of IMF resources is linked to the SDR interest rate, which changes weekly, while the rate of remuneration is equal to the SDR interest rate. At the beginning of each financial year, the IMF sets the rate of charge as a proportion of the SDR interest rate, so as to achieve a predetermined net income tar-gel. This mechanism ensures that the IMF’s operational income is adjusted to reflect its main operational costs.

For 1996/97, the IMF set the proportion of the rate of charge to the SDR interest rate at 109.4 percent, based on a net income target of 5 percent of the IMF’s reserves at the beginning of the financial year. At the end of the year, the actual net income in excess of the target was refunded to members paying charges during the year, effectively reducing the proportion of the rate of charge to the SDR interest rate to 108.6 percent.

To strengthen its financial position against the consequences of overdue obligations, the IMF has adopted “burden-sharing” measures to accumulate additional precautionary balances and to distribute the financial burden of overdue obligations between debtor and creditor members. As part of this mechanism, adjustments are made to the rate of charge and the rate of remuneration. The resources so generated are intended to protect the IMF against risks associated with arrears (see Arrears, page 24) and to provide additional liquidity.

For 1996/97, the adjustments under burden sharing resulted in an average rate of charge of 4.51 percent and an average rate of remuneration of 3.53 percent. Net income for 1996/97—after the retroactive reduction of the rate of charge—equaled the target amount of SDR 44 million, which was added to the IMF’s reserves. This addition increased IMF reserves to SDR 1.97 billion as of April 30, 1997, from SDR 1.88 billion a year earlier. The Executive Board established a net income target of SDR 99 million for 1997/98 and set the proportion for the rate of charge at 109.6 percent of the SDR interest rate.

Arrears IMF Strategy Stresses Prevention, Cooperation

To maintain the cooperative nature and protect the monetary character of the IMF and to keep other sources of official and private credit open to them, members must meet their financial obligations on time. When arrears do arise, they are expected to be settled as quickly as possible. The IMF’s strengthened cooperative strategy, introduced in 1990, helps deter new cases of arrears from emerging or becoming protracted and assists members that are willing to cooperate with the IMF in finding a solution to their arrears problems. At the same time, the strategy allows for appropriate remedial actions to be taken in cases of failure to cooperate with the IMF. The strategy entails a more intense collaboration among the IMF, the World Bank, and other international financial organizations in encouraging cooperating member countries to resolve their arrears problems.

Prevention. The first key element of the IMF’s arrears strategy is to prevent new cases of arrears from emerging and to keep existing arrears from becoming protracted. To forestall new arrears, the IMF applies conditionality on the use of its resources; assesses borrowers’ medium-term balance of payments viability and capacity to repay; cooperates with donors and other official creditors to ensure that IMF-supported adjustment programs are adequately financed; and provides technical assistance to help members formulate and implement appropriate adjustment programs.

Strengthened surveillance—as well as debt sustainability analyses prepared jointly by the IMF and the World Bank staffs and the country authorities for the heavily indebted poor countries (HIPCs) in the context of the HIPC Initiative—has reinforced the IMF’s ability to assess a member’s capacity to repay. At the end of 1996, preliminary debt sustainability analyses had been prepared for 37 of 41 indebted poor countries.

Intensified Collaboration and the Rights Approach. Intensified collaboration provides a framework for countries in arrears to the IMF to establish a track record of policy and payments performance, mobilize resources from international creditors and donors, and normalize relations with the IMF including clearing arrears. In some cases, a country’s economic policies are formulated in the context of a “rights accumulation program” or an IMF- or staff-monitored program. A rights accumulation program shares many of the features of a regular IMF-supported macroeconomic stabilization and structural reform program. It allows a country in protracted arrears to accumulate rights to future drawings of IMF resources—through adjustment and reform efforts—in accordance with a phased schedule and in amounts up to the level of arrears outstanding at the beginning of the program. Disbursements are made only after the arrears are cleared and are conditional upon satisfactory conclusion of the rights program and IMF approach of a successor arrangement or arrangements.

The availability of the rights approach is limited to the 11 countries that were in protracted arrears to the IMF at the end of 1989. Five of the original 11 eligible countries—Cambodia, Guyana, Honduras, Panama, and Vietnam—cleared their arrears to the IMF without recourse to the rights approach. Peru, Sierra Leone, and Zambia adopted rights accumulation programs and have successfully completed those programs and cleared their arrears. Liberia, Somalia, and Sudan continue to have outstanding overdue obligations to the IMF.

Remedial Measures. The arrears strategy includes a timetable of remedial measures—of increasing intensity—to be applied when members with protracted arrears do not actively cooperate with the IMF in resolving their arrears problems. The steps can range from a temporary limitation on the member’s use of IMF resources through the final and most severe sanction: compulsory withdrawal. In accordance with the timetable, one notification was issued to the Executive Board at the one-month stage of arrears in 1996/97, but the arrears in this instance were cleared before a complaint was issued to the Board. In the case of Sudan, which has the largest and most protracted overdue obligations to the IMF, the Board decided not to recommend compulsory withdrawal, given a commitment by Sudan to make monthly payments to the IMF and to adopt and implement an appropriate economic adjustment program.


The level of outstanding overdue financial obligations to the IMF increased slightly in 1996/97, by SDR 36 million, to SDR 2.2 billion as of April 30, 1997. The number of countries in arrears to the IMF by six months or more increased from six to seven. As of April 30, 1997, four countries remained ineligible to use the IMF’s general resources. Declarations of noncooperation remained in effect for three countries.

In March 1997, the Executive Board approved an extension of the rights accumulation approach for another year, until the time of the spring 1998 Interim Committee meeting. The Board further agreed that the future of the rights approach would be reviewed earlier as appropriate in light of discussions on funding for the interim ESAF and the HIPC Initiative.

IMF Chronology Over Half a Century Of Challenge and Change


July 1–22

IMF and World Bank Articles of Agreement formulated at the International Monetary and Financial Conference, Bretton Woods, New Hampshire.


December 27

Articles of Agreement enter into force upon signature by 29 governments, representing 80 percent of original quotas.


March 8–18

Inaugural meeting of Board of Governors in Savannah, Georgia: by-laws adopted, agreement to locate IMF headquarters in Washington, first Executive Directors elected.

May 6

Twelve Executive Directors—five appointed and seven elected—hold inaugural meeting in Washington.

September 27–October 5

First Annual Meetings of Boards of Governors of IMF and World Bank in Washington.


March 1

IMF begins operations. May 8

March 8

First drawing from IMF (by France).


August 13–14

Germany and Japan become members.

October 1

Executive Board approves proposals for standardized Stand-By arrangements.


January 5

Executive Board adopts terms and conditions of General Arrangements to Borrow (GAB).


February 27

Compensatory Financing Facility created.


September 29

Board of Governors approves plan to establish special drawing rights (SDRs).


June 25

Buffer Stock Financing Facility established.

July 28

First Amendment to Articles of Agreement, establishing a facility based on the SDR, takes effect alter acceptance by three-fifths of membership representing four-fifths of voting power.


January 1

First allocation of SDRs.


August 15

United States informs IMF it will no longer freely buy and sell gold to settle international transactions. Far values and convertibility of the dollar—two main features of Bretton Woods system—cease to exist.

December 18

After four months of negotiating, Smithsonian Agreement provides for realignment of industrial country currencies and increase in price of gold. IMF establishes temporary regime of central rates and wider margins.


July 26

Board of Governors adopts resolution establishing a Committee on Reform of the International Monetary System, known as the Committee of 20.


March 19

“Generalized floating” begins as European Community countries introduce joint float for their currencies against U.S. dollar.


January 17–18

Committee of 20 agrees that world economic conditions require evolutionary approach to monetary reform.

June 12–13

Committee of 20 concludes work, agreeing on immediate program to help monetary system evolve. Executive Board establishes oil facility; adopts “Guidelines for the Management of Floating Exchange Rates” and new method of SDR valuation based on basket of 16 currencies.

September 13

IMF sets up Extended Fund Facility to give medium-term assistance to members with balance of payments problems owing to structural economic changes.

October 3

Interim Committee holds inaugural meeting, following its establishment on October 2.


August 1

Executive Board establishes a Subsidy Account, funded by contributions, to assist the most seriously affected members using the oil facility.


January 7–8

Interim Committee agrees on “interim reform” of monetary system, including amendment of Article IV, and other issues.

May 5

Executive Board establishes a Trust Fund to provide balance of payments assistance to developing country members with profits from sale of gold. The Board decides on policies and procedures for selling gold.

June 2

IMF holds first gold auction under Interim Committee understandings on disposition of one-third of IMF gold holdings. Proceeds of sales to go to Trust Fund to benefit developing countries.


February 4

IMF makes first loan disbursements under Trust Fund.

August 29

Executive Board establishes Supplementary Financing Facility.


April 1

Second Amendment of Articles of Agreement enters into force, establishing right of members to adopt exchange rate arrangements of their choice.

September 24

Interim Committee approves 50 percent quota increase under Seventh Review, which, when accepted by all members, raises IMF general resources to SDR 58.6 billion; it also agrees on new allocations of SDR 4 billion each year for three years beginning January 1979.

December 13

Board of Governors adopts resolutions enabling members to increase their quotas by 50 percent under Seventh General Review of Quotas and provides for allocation of SDR 12 billion during 1979–81.


February 23

Supplementary Financing Facility enters into force.


April 25

Interim Committee agrees IMF should be ready to play growing role in adjustment and financing of payments imbalances by providing assistance over longer periods and in larger amounts.

September 17

IMF decides to unify and simplify, as of January 1, 1981, currency baskets determining value and interest rate on SDR. Unified basket to be composed of currencies of five members with largest exports of goods and services during 1975–79—U.S. dollar, deutsche mark, French franc, Japanese yen, and pound sterling.

December 1

IMF announces that 128 members have consented to quota increases under Seventh General Review, meeting the minimum participation requirement for quota increase, under which aggregate quotas would be raised to SDR 60 billion.


January 1

IMF begins to use simplified basket of five currencies to determine daily valuation of SDR.

March 13

IMF decides to institute policy of enlarged access to its resources following full commitment of resources from Supplementary Financing Facility and until Eighth General Review of Quotas takes effect.

April 23

IMF announces decisions to enhance SDRs attractiveness as reserve asset. Measures include making interest rate more competitive and eliminating reconstitution requirement (allowing members to use SDRs permanently).

May 7

IMF Managing Director and Governor of Saudi Arabian Monetary Agency (SAMA) sign loan agreement allowing IMF to borrow up to SDR 8 billion to finance IMF’s policy of enlarged access, which thus becomes operative.

May 13

IMF reaches agreement in principle with central banks or official agencies of 13 industrial countries, under which they will make available SDR 1.1 billion over two years to help finance the IMF’s policy on enlarged access.

May 21

IMF extends financing to members encountering balance of payments difficulties produced by excesses in cost of cereal imports. Assistance integrated into IMF’s Compensatory Financing Facility.


January 13

Executive Board adopts guidelines for borrowing by-IMF as important temporary measure, but member country quotas remain main source of IMF financing.

August 13

Mexico encounters serious problems servicing its foreign debt, marking onset of debt crisis. In following months, IMF supports major adjustment programs in Mexico and several other countries facing severe debt-servicing difficulties.



Interim Committee agrees to increase IMF quotas under Eighth General Review. IMF Board of Governors adopts resolution on quota increase.

November 30

Increases in quotas under Eighth General Review take-effect.

December 30

Ten participants in General Arrangements to borrow (GAB) concur on plans to revise and enlarge the GAB.


October 6–7

Interim Committee agrees that approximately SDR 2.7 billion in Trust Fund reflows to become available during 1985–91 be used to provide concessional lending to low-income members.

December 2

IMF Managing Director and World Bank President express broad support for the debt initiative proposed by U.S. Treasury Secretary James A. Baker. It calls for comprehensive adjustment measures by debtors, increased and more effective structural lending by multilateral development banks, and expanded lending by commercial banks.


March 27

IMF establishes Structural Adjustment Facility (SAF) to provide balance of payments assistance on concessional terms to low-income developing countries.

April 9–10

Interim Committee calls for enhanced policy coordination to improve functioning of floating exchange-rate system.


February 22

Finance ministers of six major nations meet; IMF Managing Director participates. Ministers agree, in Louvre Accord, to intensify policy coordination by periodically reviewing medium-term economic objectives and projections and regularly examining current economic developments, and agree to cooperate closely to foster stability of exchange rates “around current levels.”

December 29

IMF establishes Enhanced Structural Adjustment Facility (ESAF) to provide resources to low-income members undertaking strong three-year macroeconomic and structural programs to improve their balance of payments and foster growth.


April 14–15

Interim Committee agrees on measures to strengthen IMF assistance to members. Extended Fund Facility strengthened, and contributor countries agree to make ESAF operational.

August 23

IMF Executive Board establishes Compensatory and Contingency Financing Facility to compensate members with shortfalls in export earnings because of circumstances beyond their control and to help maintain adjustment programs in the face of external shocks.

September 25–26

Interim Committee endorses intensified collaborative approach to arrears problem.


April 3–4

Interim Committee asks Executive Board to consider proposals for developing country debt relief, based in part on proposals by U.S. Treasury Secretary Nicholas F. Brady.

May 23

Executive Board adopts guidelines to deal with developing country debt problem. These include linking support for debt-reduction strategies to sustained medium-term adjustment programs with strong element of structural reform and access to IMF resources for debt or debt-service reduction.


May 7–8

Interim Committee agrees to 50 percent quota increase. Committee suggests Executive Board propose Third Amendment to Articles of Agreement, providing for suspension of voting and other membership rights for members that do not fulfill financial obligations to IMF. Committee also approves rights accumulation program, which permits members with protracted arrears to establish a track record on policies and payments performance and accumulate rights for future drawings.

June 28

Executive Board proposes increasing total IMF quotas from SDR 90.1 billion to SDR 135.2 billion under the Ninth General Review of Quotas.


Executive Board approves temporary expansion of IMF facilities to support countries affected by Middle East crisis.


October 5

U.S.S.R. signs agreement with IMF providing for technical assistance, pending its application for full membership.



Executive Board approves membership of many states of the former Soviet Union.

August 5

IMF approves SDR 719 million Stand-By Arrangement for Russia.


Executive Board adopts Third Amendment of Articles of Agreement. Executive Board also determines that requirements for quota increases under Ninth General Review of Quotas have been met.


April 16

Executive Board approves creation of Systemic Transformation Facility (STF)—to assist countries facing balance of payments difficulties arising from transformation from a planned to a market economy—to be in place through 1994.

May 13

Kyrgyz Republic is first member to use STF.


February 23

Executive Board initiates operations under renewed and enlarged ESAF.


IMF approves arrangements for 13 countries of the CFA franc zone, following January realignment of CFA franc.

June 6

IMF announces creation of three Deputy Managing Director posts.

October 2

Interim Committee adopts the Madrid Declaration, calling on industrial countries to sustain growth, reduce unemployment, and prevent a resurgence of inflation; developing countries to extend growth; and transition economies in pursue hold stabilization and reform efforts.


February 1

Executive Board approves a Stand-By arrangement of SDR 12.1 billion for Mexico, the largest financial commitment in IMF history.


March 26

Executive Board approves an SDR 6.9 billion Extended Fund Facility for Russia—the largest EFF in IMF history.

April 16

IMF establishes voluntary Special Data Dissemination Standard for member countries having, or seeking, access to international capital markets. A General Data Dissemination System will be implemented later.


Interim and Development Committees endorse joint initiative for heavily indebted poor countries (HIPCs).


January 27

Executive Board approves New Arrangements to Borrow (NAB) as the first and principal recourse in the event of a need to provide supplementary resources to the IMF.

April 25

Executive Board approves issuance of Press Information Notices following the conclusion of members’ Article IV consultations with the IMF—at the request of the member—to make the IMF’s views known to the public.

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