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IMF History (1966-1971) Volume 2
Chapter

By-Laws of the International Monetary Fund (March 20, 1972)

Author(s):
International Monetary Fund
Published Date:
February 1996
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Contents

These By-Laws are adopted under the authority of, and are intended to be complementary to, the Articles of Agreement of the International Monetary Fund; and they shall be construed accordingly. In the event of a conflict between anything in these By-Laws and any provision or requirement of the Articles of Agreement, the Articles of Agreement shall prevail.

Sec. 1. Places of Business

The principal office of the Fund shall be located within the metropolitan area of Washington, D. C, United States of America.

The Executive Directors may establish and maintain agencies or branch offices at any place in the territories of other members, whenever it is necessary to do so in order to facilitate the efficient conduct of the business of the Fund.

Adopted March 16, 1946

Sec. 2. General Account and Special Drawing Account

In matters pertaining exclusively to the Special Drawing Account the references in these By-Laws, other than in Sections 4, 5, and 13 (b), to members of the Fund or to Governors and Executive Directors shall be understood to refer only to members that are participants or to Governors appointed by members that are participants and Executive Directors appointed or elected by at least one member that is a participant.

Adopted October 2, 1969

Sec. 3. Meetings of the Board of Governors

(a) The annual meeting of the Board of Governors shall be held at such time and place as the Board of Governors shall determine; provided, however, that, if the Executive Directors shall, because of special circumstances, deem it necessary to do so, the Executive Directors may change the time and place of such annual meeting.

(b) Special meetings of the Board of Governors may be called at any time by the Board of Governors or the Executive Directors and shall be called upon the request of five members of the Fund or of members of the Fund having in the aggregate one-fourth of the total voting power. Whenever any member of the Fund shall request the Executive Directors to call a special meeting of the Board of Governors, the Managing Director shall notify all members of the Fund of such request and of the reasons which shall have been given therefor.

(c) A quorum for any meeting of the Board of Governors shall be a majority of the Governors, exercising not less than two-thirds of the total voting power.

Adopted March 16, 1946, amended October 2, 1946

Sec. 4. Notice of Meetings of the Board of Governors

The Managing Director shall cause notice of the time and place of each meeting of the Board of Governors to be given to each member of the Fund by telegram or cable which shall be dispatched not less than 42 days prior to the date set for such meeting, except that in urgent cases such notice shall be sufficient if dispatched by telegram or cable not less than ten days prior to the date set for such meeting.

Adopted March 16, 1946, amended October 2, 1946

Sec. 5. Attendance at Meetings

(a) The Executive Directors and their Alternates may attend all meetings of the Board of Governors and may participate in such meetings, but an Executive Director or his Alternate shall not be entitled to vote at any such meeting unless he shall be entitled to vote as a Governor or an Alternate or temporary Alternate of a Governor.

(b) The Chairman of the Board of Governors in consultation with the Executive Directors, may invite observers to attend any meeting of the Board of Governors.

(c) The Executive Directors are authorized to invite the International Bank for Reconstruction and Development to send a representative of the Bank to meetings of the Board of Governors and Executive Directors who may participate in such meetings, but shall have no vote.

(d) The Executive Directors are authorized to accept invitations from the Bank to send a representative of the Fund to participate in meetings of the Board of Governors or Executive Directors of the Bank.

Adopted March 16, 1946, amended October 2, 1946; paragraphs (c) and (d) were adopted as Sec. 2 on March 16, 1946

Sec. 6. Agenda of Meetings of the Board of Governors

(a) Under the direction of the Executive Directors, the Managing Director shall prepare a brief agenda for each meeting of the Board of Governors and shall cause such agenda to be transmitted to each member of the Fund with the notice of such meeting.

(b) Additional subjects may be placed on the agenda for any meeting of the Board of Governors by any Governor provided that he shall give notice thereof to the Managing Director not less than seven days prior to the date set for such meeting. In special circumstances the Managing Director, by direction of the Executive Directors, may at any time place additional subjects on the agenda for any meeting of the Board of Governors. The Managing Director shall cause notice of the addition of any subjects to the agenda for any meeting of the Board of Governors to be given as promptly as possible to each member of the Fund.

(c) The Board of Governors may at any time authorize any subject to be placed on the agenda for any meeting of such Board even though the notice required by this section shall not have been given.

(d) Except as otherwise specifically directed by the Board of Governors, the Chairman of the Board of Governors jointly with the Managing Director, shall have charge of all arrangements for the holding of meetings of the Board of Governors.

Adopted March 16, 1946, amended October 2, 1946

Sec. 7. Election of Chairman and Vice-Chairmen

At each annual meeting the Board of Governors shall select a Governor to act as Chairman and at least two other Governors to act as Vice-Chairmen until the next annual meeting.

In the absence of the Chairman, the Vice-Chairman designated by the Chairman shall act in his place.

Adopted March 16, 1946

Sec. 8. Secretary

The Secretary of the Fund shall serve as Secretary of the Board of Governors.

Adopted March 16, 1946

Sec. 9. Minutes

The Board shall keep a summary record of its proceedings which shall be available to all members and which shall be filed with the Executive Directors for their guidance.

Adopted March 16, 1946

Sec. 10. Report of Executive Directors

The Executive Directors shall have prepared for presentation at the annual meeting of the Board of Governors an annual report in which shall be discussed the operations and policies of the Fund and which shall make recommendations to the Board of Governors on the problems confronting the Fund. The Executive Directors shall review, as part of the annual report, both the operation of the Special Drawing Account and the adequacy of global reserves.

Adopted March 16, 1946, amended October 2, 1969

Sec. 11. Voting

Except as otherwise specifically provided in the Articles of Agreement, all decisions of the Board shall be made by a majority of the votes cast. At any meeting the Chairman may ascertain the sense of the meeting in lieu of a formal vote but he shall require a formal vote upon the request of any Governor. Whenever a formal vote is required the written text of the motion shall be distributed to the voting members.

Adopted March 16, 1946

Sec. 12. Proxies

No Governor or Alternate may vote at any meeting by proxy or by any other method than in person, but a member may make provision for the designation of a temporary Alternate to vote for the Governor at any Board session at which the regularly designated Alternate is unable to be present.

Adopted March 16, 1946

Sec. 13. Voting Without Meeting

(a) Whenever, in the judgment of the Executive Directors, any action by the Fund must be taken by the Board of Governors which should not be postponed until the next regular meeting of the Board and does not warrant the calling of a special meeting of the Board, the Executive Directors shall request Governors to vote without meeting.

(b) The Executive Directors shall present to each member by any rapid means of communication a motion embodying the proposed action.

(c) Votes shall be cast during such period as the Executive Directors may prescribe, provided that no Governor shall vote on any such motion until 7 days after dispatch of the motion, unless he is notified that the Executive Directors have waived this requirement. At the expiration of the period prescribed for voting, the Executive Directors shall record the results and the Managing Director shall notify all members. If the replies received do not include a majority of the Governors exercising two-thirds of the total voting power, which is required for a quorum of the Board of Governors, the motion shall be considered lost.

Adopted March 16, 1946, amended October 2, 1969

Sec. 14. Terms of Service

(a) Governors and Alternates shall receive their actual transport expenses to and from the place of meeting in attending meetings, and $75 for each night which attendance at such meetings requires them to spend away from their normal place of residence, this amount being reduced to $15 for each night when accommodation is included in the price of transportation.

(b) Pending the necessary action being taken by members to exempt from national taxation salaries and allowances paid out of the budget of the Fund, the Governors and the Executive Directors, and their Alternates, the Managing Director and the staff members shall be reimbursed by the Fund for the taxes which they are required to pay on such salaries and allowances.

In computing the amount of tax adjustment to be made with respect to any individual, it shall be presumed for the purposes of the computation that the income received from the Fund is his total income. All salary scales and expense allowances prescribed by this section are stated as net on the above basis.

(c) The salary of the Managing Director shall be $50,000 per annum. The Fund shall also pay any reasonable expenses incurred by the Managing Director in the interest of the Fund (including travel and transportation expenses for himself, and expenses for his family, and his personal effects in moving once to the seat of the Fund during or immediately before his term of office and in moving once from the seat during or immediately after his term of office). The contract of the Managing Director shall be for a term of five years and may be renewed for the same term or for a shorter term at the discretion of the Executive Directors, provided that no person shall be initially appointed to the post of Managing Director after he had reached his sixty-fifth birthday and that no Managing Director shall hold such post beyond his seventieth birthday.

(d) It shall be the duty of an Executive Director and his Alternate to devote all the time and attention to the business of the Fund that its interests require, and, between them, to be continuously available at the principal office of the Fund; however, in the event that both an Executive Director and his Alternate are unable to be available at the principal office of the Fund for reasons of health, absence while on business of the Fund, or similar reasons, the Executive Director may designate a temporary Alternate to act for him for periods of time which shall not in the aggregate exceed fifteen business days in the course of any financial year. An Advisor to Executive Director may be designated to serve as a temporary Alternate for an additional aggregate period not exceeding fifteen business days. A temporary Alternate shall receive no salary or expense allowance for his services in this capacity.

(e) The maximum salary and expense allowance including housing, entertainment and all other expenses [except those specified in subsection (f)] shall be $35,000 per year for Executive Directors and $27,000 per year for Alternates. It will be the duty of each Executive Director and each Alternate to state how much of these amounts he intends to draw whether as salary or as expense allowance.

A Joint Committee on the Remuneration of Executive Directors and their Alternates, appointed by the Chairmen of the Boards of Governors of the Fund and Bank and consisting of one of the Chairmen and two former Governors or Alternate Governors of the Fund or Bank chosen by the Chairmen in consultation with the Managing Director of the Fund and the President of the Bank, shall be constituted in January of each year in which a regular election of Executive Directors is scheduled, starting with the year 1972, to consider the adequacy of the remuneration of Executive Directors of the Fund and the Bank, and their Alternates, and to prepare a report, which shall be submitted to the Board of Governors of the Fund by July 1 of that year, containing such recommendations for any changes in such remuneration or for any other action by the Board of Governors relating thereto as the Joint Committee shall deem appropriate.

(f) The Executive Directors and their Alternates are to be reimbursed, in addition, for all reasonable expenses incurred during absence from the seat of the Fund while on official Fund business, and for reasonable expenses actually incurred by them in Washington or in the place of the annual meeting of the Board of Governors in connection with official Fund business to entertain senior officials coming from the countries that appointed, elected, or designated them. They shall also be reimbursed for travel and transportation expenses for themselves, their families, and their personal effects in moving once to the seat of the Fund during or immediately before their periods of service, and in moving once from the seat during or within a reasonable period after their periods of service.

In addition, any Executive Director or Alternate shall in the third year of continuous full-time service in either capacity and in every second year of such service thereafter be entitled to reimbursement for the cost of transportation expenses for his family in traveling once to and from the country of which he or his wife is a national, provided that in cases where the wife is a national of another country the reimbursement for transportation expenses to and from her country does not exceed that to and from the country of which he is a national. For home leave travel more frequent than every third year, reimbursement shall be made on the basis of cabin- or economy-class accommodations.

(g) Where not specified, it is assumed that the Director and Alternate will be a full-time Director and Alternate. Where it is intended that he shall not devote his full time, it shall be so indicated. Where an Executive Director or Alternate indicates that he intends to devote only part of his time to the Fund, his remuneration shall be pro-rated on the basis of a representation by him of the proportion of his time he has devoted to the interests of the Fund. He may make such representation each month.

(h) Where an individual is serving both Fund and Bank, the aggregate of salary received from both shall not exceed the full annual single salary indicated above.

In all cases of salaries or expenses involving dual offices in the Fund or Bank, or both, the individual affected is entitled to take his choice as to which salary or expense he elects, but he shall not be entitled to both.

(i) An individual putting forward a claim for reimbursement for any expenses incurred by him shall include therewith a representation that he has not received and will not claim reimbursement in respect to those expenses from any other source.

(j) Secretarial, staff services, office space, and other services incidental to the performance of the duties of the Executive Directors and Alternates shall be provided by the Fund.

Adopted March 16, 1946; paragraph (a) amended March 18, 1946 and June 6, 1966; paragraph (c) amended July 27, 1951; December 14, 1960, effective December 1, 1960; and February 13, 1969, effective November 1, 1968; paragraph (d) amended September 17, 1947 and December 20, 1971; paragraph (e) amended January 5, 1951, effective January 1, 1951; December 2, 1957, effective November 1, 1957; December 28, 1959, effective November 1, 1959; November 7, 1962, effective September 1, 1962; August 8, 1966, effective November 1, 1965; February 13, 1969, effective November 1, 1968; and July 30, 1969, effective August 1, 1969; paragraph (f) amended September 17, 1947, September 30, 1948, August 18, 1961, September 10, 1964, and February 13, 1969.

Sec. 15. Delegation of Authority

The Executive Directors are authorized by the Board of Governors to exercise all the powers of the Fund except those reserved to the Board by Article XII, Section 2 (b), Article XXVII (a) (i), and other provisions of the Articles of Agreement. The Executive Directors shall not take any action pursuant to powers delegated by the Board of Governors which is inconsistent with any action taken by the Board.

Adopted March 16, 1946, amended October 2, 1969

Sec. 16. Rules and Regulations

The Executive Directors are authorized by the Board of Governors to adopt such Rules and Regulations, including financial regulations, as may be necessary or appropriate to conduct the business of the Fund. Any Rules and Regulations so adopted, and any amendments thereof, shall be subject to review by the Board of Governors at their next annual meeting.

Adopted March 16, 1946

Sec. 17. Vacant Directorships

Whenever a new Director must be elected because of a vacancy requiring an election, the Managing Director shall notify the members who elected the former Director of the existence of the vacancy. He may convene a meeting of the Governors of such countries exclusively for the purpose of electing a new Director; or he may request nominations by mail or telegraph and conduct ballots by mail or telegraph. Successive ballots shall be cast until one candidate has a majority; and after each ballot, the candidate with the smallest number of votes shall be dropped from the next ballot.

When a new elective Director is named, the office of Alternate shall be deemed to be vacant and an Alternate shall be named by the newly-elected Director.

Adopted March 16, 1946

Sec. 18. Additional Directors

At least one month before the second and subsequent regular elections of Directors, the Managing Director shall notify all members of the two members whose currencies held by the Fund have been, on the average over the preceding two years, reduced below their quotas by the largest absolute amounts. He shall state whether either or both are entitled to appoint a Director in accordance with Article XII, Section 3 (c) of the Articles of Agreement.

When a member becomes entitled to appoint a Director in accordance with Article XII, Section 3 (b) (i) and 3 (c) of the Articles of Agreement, it shall not participate in the election of any Director.

Adopted March 16, 1946

Sec. 19. Representation of Members not Entitled to Appoint a Director

(a) Each member not entitled to appoint a Director may, in accordance with the regulations provided in this section, send a representative to attend any meeting of the Executive Directors when a request made by, or a matter particularly affecting, that member is under consideration. A member, so electing, may waive its rights under this provision. The Executive Directors shall determine whether a matter under consideration particularly affects a member not entitled to appoint a Director, which determination shall be final.

(b) Whenever a member not entitled to appoint a Director desires to present its views at the meeting of the Executive Directors at which a request the member has made is to be considered, it shall so notify the Fund when it makes the request and shall designate a representative for this purpose who shall be available at the seat of the Fund. Failure to give such notice or to designate an available representative shall constitute a waiver of the member’s right to present its views at the meeting.

(c) Whenever the Executive Directors are to consider a matter which has been determined particularly to affect a member not entitled to appoint a Director, the member shall be promptly informed by rapid means of communication of the date set for its consideration. No final action shall be taken by the Executive Directors with respect to such matter, nor any question particularly affecting such member submitted to the Boards of Governors, until the member has either waived its rights under paragraph (a) of this section or has been given an opportunity to present its views through an appropriately authorized representative at a meeting of the Executive Directors, of which the member has had reasonable notice.

Adopted March 16, 1946, amended September 17, 1947

Sec. 20. Budget and Audits

(a) The Executive Directors shall instruct the Managing Director to prepare an annual administrative budget to be presented to them for approval. The budget so approved shall be incorporated in the annual report to be presented to the Board of Governors at their annual meeting.

(b) An external audit of the financial records and transactions of the Fund shall be made annually and such audit shall relate to the period representing the fiscal year of the Fund. The Executive Directors shall submit the Fund’s audited balance sheet and audited statement of income and expense to the Board of Governors to be considered by them at their annual meeting.

The annual audit shall be made by an audit committee consisting of either three or five persons each of whom shall be nominated by a different member of the Fund and confirmed by the Executive Directors. At least one person serving on each audit committee shall be nominated by one of the six members of the Fund having the largest quotas, and at least one person shall be nominated by a member that is also a participant. The Executive Directors shall determine, in the case of each audit, whether the audit committee shall consist of three or five persons and which members of the Fund shall be requested to nominate persons to serve on the committee. The service of the members of each audit committee shall terminate upon completion of the annual audit and submission of the report on audit.

Each audit committee shall elect one of its members as chairman, shall determine its own procedure, and shall otherwise be independent of the Management of the Fund in conducting the annual audit according to generally accepted auditing standards.

The annual audit shall be comprehensive with respect to examination of the financial records of the Fund; shall extend, insofar as practicable, to the ascertainment that operations and transactions conducted through the General Account or the Special Drawing Account during the period under review are supported by the necessary authority; and shall determine that there is adequate and faithful accounting for the assets and liabilities of the Fund and for special drawing rights. It shall thereby establish an appropriate basis for conclusion concerning the financial position of the Fund at the close of the fiscal year and the results of its operations and transactions during that year. For this purpose, the audit committee shall have access to the accounting records of the Fund and other supporting evidence of its operations and transactions, and shall be furnished by the Management of the Fund with such information and representations as may be required in connection with the audit. The members of the audit committee shall respect the confidential nature of their service and the information made available for purposes of the audit.

All accounts of the General Account shall be summarized in special drawing rights of the value prescribed in Article XXI, Section 2. The currencies of members shall be converted at their par values, or in accordance with decisions of the Fund. The accounts of the Special Drawing Account shall be summarized in units of value of special drawing rights.

The Executive Directors shall decide all questions of policy raised by requests of the audit committee for particular information or the inspection of particular records or documents. The refusal of any such requests for reasons of policy shall be explained in the comments of the Executive Directors forwarded to the Board of Governors with the report on audit.

Any question the audit committee may have concerning interpretation of the Articles of Agreement, the By-Laws, or the Rules and Regulations shall be discussed with the Managing Director, or officials designated by him, and if the reply is not completely satisfactory to the audit committee, shall be referred to the Executive Directors through the Managing Director.

The audit committee shall submit its report on audit to the Board of Governors for consideration by them at their annual meeting. Such submission shall be made through the Managing Director and the Executive Directors who shall forward with the report on audit their comments thereon. The audit committee shall afford the Managing Director an opportunity for explanation to them before deciding that any matter seems to require criticism in the report on audit.

The audit committee may formally furnish the Managing Director and Executive Directors their views and suggestions concerning the system of accounting, internal financial control, and documentary or other procedure which may technically strengthen or improve the administration of the Fund’s financial affairs. Such matters need not be dealt with in the report on audit unless the audit committee believes they are of such moment as to warrant inclusion.

The Managing Director shall determine what expenses are necessary and reasonable in connection with each annual audit and the Fund shall bear such expenses.

Adopted March 16, 1946, amended September 17, 1947, October 2, 1969, and March 20, 1972

Sec. 21. Applications for Membership

Subject to any special provisions that may be made for countries listed in Schedule A of the Articles of Agreement, any country may apply for membership in the Fund by filing with the Fund an application setting forth all relevant facts.

When submitting an application to the Board of Governors, the Executive Directors after consultation with the applicant country shall recommend to the Board the amount of the quota, the form of payment, the parity of the currency, conditions regarding exchange restrictions, and such other conditions as, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe.

Adopted March 16, 1946

Sec. 22. Compulsory Withdrawal

Before any member is required to withdraw from membership in the Fund, the matter shall be considered by the Executive Directors who shall inform the member in reasonable time of the complaint against it and allow the member an adequate opportunity for stating its case both orally and in writing. The Executive Directors shall recommend to the Board of Governors the action they deem appropriate. The member shall be informed of the recommendation and the date on which its case will be considered by the Board and shall be given a reasonable time within which to present its case to the Board both orally and in writing. Any member so electing may waive this provision.

Adopted March 16, 1946

Sec. 23. Committee on Interpretation

[to be adopted]

Sec. 24. Settlement of Disagreements

The President of the International Court of Justice is prescribed as the authority to appoint an umpire whenever there arises a disagreement of the type referred to in Article XVIII (c) or Article XXVII (d) of the Articles of Agreement.

Adopted as Sec. 23 March 16, 1946, amended October 2, 1969

Sec. 25. Other Holders

Applications to be permitted to accept, hold, and use special drawing rights under Article XXIII, Section 3, shall be filed with the Fund with all relevant facts. When submitting an application to the Board of Governors, the Executive Directors after consultation with the applicant shall recommend to the Board such terms and conditions as, in the opinion of the Executive Directors, the Board of Governors may wish to prescribe.

Adopted October 2, 1969

Sec. 26. Amendment of By-Laws

These By-Laws may be amended by the Board of Governors at any meeting thereof or by vote without a meeting as provided in Section 13.

Adopted as Sec. 24 October 2, 1946

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