CHAPTER IV. Charges, Interest, and Assessments in the SDR Department36

International Monetary Fund
Published Date:
June 1995
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Participants pay charges on their net cumulative allocations, and all holders of SDRs earn interest on their daily holdings. Because the rate for charges is the same as the rate of interest, a participant whose daily holdings equal its net cumulative allocations (i.e., who makes no use of SDRs and does not receive any in transactions) receives interest exactly equal to the charges it pays. Participants whose daily holdings are less than their net cumulative allocations pay net charges, and holders whose holdings exceed their net cumulative allocations receive net interest from the Fund. When a participant fails to pay charges fully and on time, the payment of charges to the Fund is less in aggregate (by the amount of the overdue charges) than the transfer of interest from the Fund. To transfer the full amount of interest owed, the Fund creates SDRs temporarily and cancels them once the overdue charges are paid.

Interest and charges are to be settled immediately after the end of each financial quarter (May 1, August 1, November 1, and February 1), and the Fund makes the necessary debits and credits in participants' and prescribed holders' SDR accounts on those days. Accrued interest and charges are shown on the monthly statements that are airmailed to each participant and prescribed holder. In the event that a participant's holdings are insufficient to cover the charges (and assessment—see below), the participant is obligated and entitled to obtain SDRs in exchange for a currency acceptable to the Fund, in a transaction with the Fund conducted through the GRA. Alternatively, the SDRs may be obtained from another participant through a transaction by agreement.

Participants who have received an allocation are subject to an annual assessment to reimburse the Fund for expenses incurred in operating the SDR Department. The total amount of the estimated expenses is divided among the participants in proportion to their net cumulative allocations and is expressed in the form of a percentage. This assessment is at the same rate for all participants and is a small percentage of participants' net cumulative allocations (normally about 0.01 percent or less) and it is charged to participants' SDR accounts at the end of each financial year (April 30).

See Article XX, p. 64.

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