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IMF History (1966-1971) Volume 2
Chapter

Rules and Regulations of the International Monetary Fund (March 20, 1972)

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

A—Scope of Rules and Regulations

A-1. These Rules and Regulations supplement the Fund Agreement and the By-Laws adopted by the Board of Governors. They are not intended to replace any provision of either the Agreement or the By-Laws. The Rules and Regulations attempt to provide such operating rules, procedures, regulations, and interpretation as are necessary and desirable to carry out the purposes and powers contained in the Agreement, as supplemented by the By-Laws. If any provision in the Rules and Regulations is found to be in conflict with any provision in the Agreement or in the By-Laws, the Agreement and By-Laws shall prevail and an appropriate amendment should be made to these Rules and Regulations.

Adopted September 25, 1946

A-2. Additions to, and changes of, the Rules and Regulations will be made as experience brings to light new problems or suggests modifications in procedures already adopted.

Adopted September 25, 1946

B—Terms, Definitions, and Symbols Employed in this Document

B-1. Executive Director, except where otherwise specified, shall include the Alternate or the temporary Alternate, as the case may be. In matters pertaining exclusively to the Special Drawing Account references in these Rules and Regulations to Executive Director, other than in Rules C-1, C-5 (a), C-15, and C-16, shall apply to an Executive Director appointed or elected by at least one member that is a participant.

Adopted September 25, 1946, amended August 14, 1947, effective September 17, 1947, and September 18, 1969

B-2. Executive Board refers to the Executive Directors presided over by the Chairman.

Adopted September 25, 1946

B-3. Chairman, except where otherwise specified, shall refer to the Chairman or Acting Chairman of the Executive Board.

Adopted September 25, 1946

B-4. Agenda ordinarily refers to both the list of items to be considered at a meeting and the supplementary documents pertinent thereto.

Adopted September 25, 1946

B-5. Fund Agreement refers to the Articles of Agreement of the International Monetary Fund and, where the context is clear, Agreement shall also refer to the Articles of Agreement.

Adopted September 25, 1946

B-6. FA refers to the Fund Agreement.

BL refers to the By-Laws of the International Monetary Fund as adopted by the Board of Governors.

RR refers to these Rules and Regulations.

Adopted September 25, 1946

B-7. Executive Session refers to a Meeting of the Executive Directors in which no person is present except the Executive Directors, Managing Director, and, with the approval of the Board granted separately for each Executive Session, the Secretary of the Board.

Adopted September 25, 1946

B-8. Business day1 refers to the normal working hours of the Fund, 9:00 a.m. to 5:30 p.m. at the official time for the District of Columbia, on Monday through Friday of each week with the following exceptions (which will include the preceding Friday whenever one of the dates below falls on a Saturday and the following Monday whenever one falls on a Sunday):

New Year’s Day, January 1

Washington’s Birthday, the third Monday in February

Memorial Day, the last Monday in May

Independence Day, July 4

Labor Day, the first Monday in September

Columbus Day, the second Monday in October

Veterans Day, the fourth Monday in October

Thanksgiving Day, the fourth Thursday in November

Christmas Day, December 25

Adopted May 28, 1947, amended March 8, 1948, October 27, 1961, and November 24, 1970

C—Meetings of the Executive Board

Meetings

C-1. Meetings of the Executive Directors shall be called by the Chairman as the business of the Fund may require. Except in special circumstances the Chairman shall notify all Executive Directors of meetings at least two business days in advance.

Adopted September 25, 1946, amended May 28, 1947

C-2. The Chairman shall call a meeting at the request of any Executive Director.

Adopted September 25, 1946

C-3. Meetings of the Executive Board shall be open to attendance by the Secretary and such members of the staff as the Chairman indicates. At the request of the Chairman or any Executive Director meetings may be held in Executive Session, or the Executive Board may determine which particular members of the staff may attend any session.

Adopted September 25, 1946, amended January 15, 1948

C-4. The Executive Directors shall meet at the principal office of the Fund unless it is decided that a particular meeting shall be held elsewhere.

Adopted September 25, 1946

C-5. (a) Any Executive Director may participate in any meeting of the Executive Board or committees of the Executive Board.

(b) In the absence of the Managing Director, the Deputy Managing Director shall act as Chairman and shall have a deciding vote in case of an equal division. In the absence of both the Managing Director and the Deputy Managing Director, the Executive Director selected by the Executive Board shall act as Chairman. An Executive Director shall retain his right to vote when serving as Acting Chairman.

Adopted September 25, 1946, amended November 12, 1948 and September 18, 1969

Agenda

C-6. The agenda for each meeting shall be prepared by the Chairman. The agenda shall include any item requested by an Executive Director.

Adopted September 25, 1946

C-7. Except in special circumstances the Chairman shall notify Executive Directors of new items on the agenda at least two full business days before their consideration in meetings. Additional advance notice shall be given at the discretion of the Chairman before the consideration of new items of especial importance which may require consultation with members or the return to the seat of the Fund of Executive Directors who are absent.

Adopted September 25, 1946, amended May 28, 1947

C-8. Matters not on the agenda for a meeting may be considered at that meeting only by unanimous consent of the Executive Directors present.

Adopted September 25, 1946

C-9. Any item of the agenda for a meeting, consideration of which has not been completed at that meeting shall, unless the Executive Directors decide otherwise, be automatically included in the agenda of the next meeting.

Adopted September 25, 1946

Voting

C-10. The Chairman will ordinarily ascertain the sense of the meeting in lieu of a formal vote. Any Executive Director may require a formal vote to be taken with votes cast as prescribed in Article XII, Section 3 (i), or Article XXVII (a) (iii).

Adopted September 25, 1946, amended September 18, 1969

C-11. There shall be no formal voting in committees and subcommittees. The Chairman of the committee or subcommittee shall determine the sense of the meeting (including alternative points of view) which shall be reported.

Adopted September 25, 1946

C-12. No Executive Director may vote at any meeting by proxy or by any other method than in person.

Adopted September 25, 1946

Language

C-13. The working language of the Fund will be English. The discussion, documents, and reports of meetings will ordinarily be in English. Speeches or papers presented in other languages shall be translated into English.

Adopted September 25, 1946

Minutes

C-14. Under the direction of the Managing Director, the Secretary shall be responsible for the preparation of a summary record of the proceedings of the Executive Board.

Adopted September 25, 1946

C-15. Verbatim records will be taken only if the Chairman, the Executive Board or an Executive Director so requests. In such case, the Secretariat shall be given advance notice of the desire for verbatim recording.

Adopted September 25, 1946

C-16. Draft minutes will be circulated to all Executive Directors as quickly as possible after meetings. They will normally be submitted for approval at the next meeting of the Executive Board following the day they are circulated, and in any case will be submitted for approval not later than the third succeeding meeting.

Adopted September 25, 1946, amended May 28, 1947 and August 14, 1947

D—Application for Membership, Changes in Quotas, and Application to be an other Holder of Special Drawing Rights

Application for Membership

D-1. When a country applies for membership in the Fund, and the application is placed before the Executive Board, the Chairman shall announce a reasonable time to be allowed for discussion and preliminary investigation by the Executive Board before a decision is reached to proceed with the formal investigation. If this decision is in the affirmative the Fund may proceed to obtain all relevant information and discuss with the applicant any matters relating to its application. Any Executive Director may request such information to be added to the list requested of the applicant as in his opinion is relevant to the decision to be made. The Executive Board shall then decide whether to submit an application for membership with its views to the Board of Governors for a telegraphic vote or hold the application until the next meeting of the Board of Governors.

Adopted September 25, 1946

Quotas

D-2. When a member requests an adjustment of its quota, the Executive Board, after consulting the member, shall submit a written report on the request to the Board of Governors at its next meeting. If the Board of Governors approves an increase in the quota of a member, and on the date the member consents to the increase its monetary reserves are less than its new quota, the Executive Board may reduce the proportion of the increase to be paid in gold. The member shall, if it desires such a reduction, transmit to the Fund by rapid means of communication within ten days after its consent, the data necessary to determine its monetary reserves as at the date of the consent. The decision of the Executive Board shall be made within ten days after receipt of such data.

Adopted September 25, 1946, amended May 28, 1947

D-3. At least one year prior to the time when a review of quotas must be undertaken by the Fund, the Executive Board shall appoint a committee to study the problem and to prepare a written report.

Adopted September 25, 1946

Other Holders

D-4. When an application to be permitted to accept, hold, and use special drawing rights under Article XXIII, Section 3, is received by the Fund and it is placed before the Executive Board, the Chairman shall announce a reasonable time to be allowed for discussion and preliminary investigation by the Executive Board before a decision is reached to proceed with the formal investigation. If this decision is in the affirmative the Fund may proceed to obtain all relevant information and discuss with the applicant any matters relating to its application. Any Executive Director may request such information to be added to the list requested of the applicant as in his opinion is relevant to the decision to be made. The Executive Board shall then decide whether to submit an application with its views to the Board of Governors for a telegraphic vote or hold the application until the next meeting of the Board of Governors.

Adopted September 18, 1969

E—Subscriptions

E-1. Gold depositories of the Fund shall be established in the United States, United Kingdom, France, and India. The gold of the Fund shall be held with the depositories designated by the members in whose territories they are located at places agreed with the Fund. A member may pay its gold subscription to the Fund at one or more of the specified gold depositories within the terms of Article XIII, Section 2.

Adopted September 25, 1946, amended November 29, 1956

E-2. A member shall pay its currency subscription to the Fund at the designated depository. Each member is authorized to substitute in accordance with Article III, Section 5, non-negotiable, non-interest bearing notes payable to the Fund on demand for that part of the currency holdings of the Fund which exceed 1 per cent of the member’s quota, and the depository shall hold such notes for the account of the Fund. Such notes shall not be accepted until the Fund is satisfied that they are in proper form and that their issue has been authorized. The balances held in the administrative accounts of the Fund shall not be considered as part of the currency holdings of the Fund for the application of this Rule.

Adopted September 25, 1946, amended February 20, 1950

E-3. The Executive Board may agree to alter the 1 per cent requirement in the case of any member should circumstances in the opinion of the Executive Board warrant a different percentage.

Adopted September 25, 1946, amended February 20, 1950

E-4. The member is allowed 24 hours in which to deposit the currency necessary to maintain the amount required under E-2 and E-3.

Adopted September 25, 1946

E-5. For purposes of Article III, Section 3, initial gold payments in excess of the minimum shall be accepted on the same basis as the minimum payment.

Adopted September 25, 1946

F—Par Values

F-1. The Fund shall arrange through the fiscal agencies of members that frequent and regular information as to the market rates of members’ currencies bought and sold in their territories is made available to the Fund.

Adopted September 25, 1946

F-2. Members shall notify the Fund whether for the settlement of international transactions they, in fact, freely buy and sell gold within the prescribed limits of price and shall notify the Fund of any changes in such policy.

Adopted September 25, 1946

F-3. A member desiring to change the par value of its currency shall give the Fund as much notice as the circumstances allow, and shall submit a full and reasoned statement why, in its opinion, such a change is necessary to correct a fundamental disequilibrium.

Adopted September 25, 1946

F-4. For transactions in gold by a member the margin above and below par value shall be, at the option of the member, either:

1. One quarter of one per cent plus the following charges:

  • (a) The actual or computed cost of converting the gold transferred into good delivery bars at the normal center for dealing in gold of either the buying member or the member whose currency is exchanged for the gold;

  • (b) The actual or computed cost of transporting the gold transferred to the normal center for dealing in gold of either the buying member or the member whose currency is exchanged for the gold;

  • (c) Any charges made by the custodian of the gold transferred for effecting the transfer; or

2. One per cent, which one per cent shall be taken to include all of the charges set forth in 1 above.

Adopted June 10, 1947, amended October 15, 1954 and extended November 5, 1954

G—Operations and Transactions

G-1. Each member shall designate a fiscal agency in accordance with Article V, Section 1, and may change the agency after notifying the Fund.

Adopted September 25, 1946, amended September 18, 1969

Foreign Exchange

G-2. Each request from a member to purchase currency from the Fund shall be made by the fiscal agency designated in accordance with Article V, Section 1, such request to be authenticated in the manner agreed upon by the Fund and the agency. In its operations on behalf of the Fund a depository will act only on instructions authenticated in such manner as may be agreed upon by the Fund and the depository.

Adopted September 25, 1946, amended February 20, 1947

G-3. When a duly authenticated request for the purchase of foreign exchange in accordance with Article V, Section 3, is received, the Fund shall, on the third business day following the day of receipt of the request, instruct the appropriate depository to make the transfer, except in cases which the Executive Board may indicate. The first business day after receipt of the request shall be regarded as the first of the three days.

Adopted September 25, 1946, amended February 7, 1947

G-4. When a member expects to purchase from the Fund, in a single transaction or a series of transactions, an unusually large sum of any other member’s currency (unusually large relative to the quota of that other member), the member shall give the Fund as much notice of the proposed transaction or transactions as can reasonably be effected.

Adopted September 25, 1946

G-5. When the request of a member, if consummated, would increase to more than 5 per cent of its quota the aggregate purchases by the member pursuant to Article V, Section 3, during the thirty-day period preceding the date of action specified in G-3 the Managing Director shall notify each Executive Director (or his Alternate if the Executive Director is not available) on the first business day after receipt of the request. If neither the Executive Director nor the Alternate is in Washington or its environs, the notification will be assumed to have been duly delivered if appropriate notice is delivered to his office.

At the request of any Executive Director or on the initiative of the Managing Director, a special meeting shall be called by the Managing Director to discuss the request as soon as feasible, but not later than the morning of the second business day.

Adopted February 7, 1947

Gold

G-6. Gold due to the Fund may be delivered at any gold depository of the Fund. Whenever the Fund accepts gold situated elsewhere than at a gold depository of the Fund, the member delivering such gold may be required to assume the actual or estimated costs, as the case may be, of moving the gold to the Fund’s nearest gold depository. Where the member is required to reimburse the Fund for such actual or estimated costs, the Fund shall advise the member in what form reimbursement shall be made.

Adopted July 30, 1948

G-7. When any member sells gold to the Fund pursuant to Article V, Section 6 (a), the member may be required to assume the estimated costs that would be incurred by the Fund if it used the gold so acquired to purchase the currency it has sold. The Fund shall advise the member in what form such payment shall be made.

Adopted July 30, 1948

H—Exchange Controls, Currency Practices, and Agreements

H-1. The Fund shall keep all exchange controls under review and shall consult with members with a view to the progressive removal of exchange restrictions in accordance with the Fund Agreement.

Adopted September 25, 1946

H-2. If a member complains to the Executive Board that another member is not complying with its obligations concerning exchange controls, discriminatory currency arrangements, or multiple currency practices, the complaint shall give all facts pertinent to an examination.

Adopted September 25, 1946

H-3. Upon receipt of a complaint from a member, the Executive Board shall make arrangements promptly for consultation with the members directly involved.

Adopted September 25, 1946

H-4. All requests by a member under Article VIII, Sections 2 and 3, that the Fund approve the imposition of restrictions on the making of payments and transfers for current international transactions, or the use of discriminatory currency arrangements or multiple currency practices, shall be submitted to the Executive Board in writing, with a statement of the reasons for making the request.

Adopted September 25, 1946

H-5. The Executive Board shall decide each request for approval expeditiously.

Adopted September 25, 1946

I—Repurchases and Charges in Respect of General Account Transactions

I-1. The first time that a member has to make a gold payment to the Fund it shall deliver gold of designated weight and fineness at least sufficient in value to meet the payment. Any surplus balance of gold shall be held by the Fund under earmark at the disposal of the member and may be used to meet other payments incurred in the future.

Adopted September 25, 1946

I-2. The service charge payable by a member buying, in exchange for its own currency, the currency of another member or special drawing rights shall be ½ of 1 per cent, except that no service charge shall be payable in respect of any purchase to the extent that it is a gold tranche purchase. The service charge shall be paid at the time the transaction is consummated. The service charge shall be reviewed in connection with any review of charges under Rule I-4.

Adopted September 25, 1946, amended November 19, 1951, November 14, 1952, June 26, 1953, October 14, 1953, December 23, 1953, December 15, 1954, December 27, 1955, May 23, 1956, December 21, 1956, December 9, 1957, December 12, 1958, March 20, 1959, April 20, 1959, April 19, 1960, April 17, 1961, April 25, 1962, April 24, 1963, April 13, 1964, April 28, 1965, April 22, 1966, September 18, 1969, and September 10, 1971

I-3. Rule I-3, adopted September 25, 1946, was eliminated on July 30, 1948, and the substance of the Rule was incorporated into Rule G-6 on that date.

I-4. (a) As soon as possible after July 31, October 31, January 31 and April 30, the Fund shall notify each member by cable of the charges it owes to the Fund pursuant to Article V, Section 8 (c) or (d), for the three calendar months ending on each such date. These charges shall be payable within thirty days after the sending of such notice.

Adopted September 25, 1946, amended July 30, 1948 and February 24, 1954

  • (b) Such charges payable by each member shall be computed on the basis of the “average of the holdings” which, as used in this section, means the average daily balances of its currency held by the Fund in excess of its quota calculated as follows:

    • (i) At the end of each calendar month there shall be averaged for each member the daily amounts by which the Fund’s holdings of its currency on the Fund’s books at the close of each day during that month have exceeded its quota on each such day;

    • (ii) The Fund’s holdings of each member’s currency shall consist of all its currency except amounts, not in excess of 1/10 of 1 per cent of the member’s quota, in a special account to meet administrative expenses and amounts in sundry cash accounts.

    Adopted July 30, 1948, amended November 1, 1968

  • (c) The period of time during which the Fund’s holdings of a member’s currency have been at a particular level shall be the continuous period of time during which the average of the holdings has not fallen below that level, and, in determining periods of time for the application of the charges, changes in the average of the holdings shall affect the calculation of time periods in the following way:

    • (i) Each increase in the average of the holdings shall create a new segment of the holdings which will be equal to the amount of the increase and the period of time during which each segment is held shall be measured from the beginning of the month in which the increase in the average of the holdings occurs.

    • (ii) Each decrease in the average of the holdings shall terminate the period of time during which the holdings have been in excess of the new average and the period of time shall terminate at the end of the month preceding that in which the decrease in the average of the holdings occurs.

    Adopted July 30, 1948

[Rule I-4 (d) and (e) have been omitted because the charges provided thereunder are no longer applicable to any segment of the Fund’s holdings. For the text, see the 22nd issue of the By-Laws and Rules and Regulations.]

  • (f) (1) With respect to each segment of the holdings of a member’s currency to the extent that it represents the acquisition of that currency by the Fund from January 1, 1954 through April 30, 1963:

    • (i) The charge to be levied on each segment to the extent that it is within the first bracket of 50 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next fifteen months, and an additional ½ per cent per annum for each subsequent six months.

    • (ii) The charge to be levied on each segment to the extent that it is within the second bracket of more than 50 per cent and not more than 75 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next nine months, and an additional ½ per cent per annum for each subsequent six months.

    • (iii) The charge to be levied on each segment to the extent that it is within the third bracket of more than 100 per cent in excess of the quota shall be nil for the first three months, 2 per cent per annum for the next three months, and an additional ½ per cent per annum for each subsequent six months.

    Adopted April 24, 1963, amended April 13, 1964, April 28, 1965, and April 22, 1966

(g) The Fund and the member shall consider means by which the Fund’s holdings of the currency can be reduced whenever the Fund’s holdings of a member’s currency are such that the charge under (f) above applicable to any segment for any period has reached the rate of 4 per cent per annum. Thereafter, the charges shall rise in accordance with (f) above, provided that the rate shall not increase beyond 5 per cent per annum when agreement is reached under this Rule for repurchase within three to five years after a drawing in accordance with Executive Board Decision No. 102-(52/11). In the case of agreements on means to reduce the Fund’s holdings beyond five years, the Fund may adopt higher maximum rates. In the absence of agreement on means to reduce the Fund’s holdings, the Fund may impose such charges as it deems appropriate after the rate of 5 per cent is reached. When an agreement for repurchase within three to five years after a drawing is not reached or observed, the charges to be imposed shall rise in accordance with (f) above, provided that when the charges payable on any segment have reached 6 per cent the Fund will review the charges to be imposed thereafter. In the case of non-observance, if 5 per cent is payable on any segment at the date of non-observance, it shall continue to be payable only for that part of a period of six months for which it has not yet been payable; and when the repurchases to which the non-observance relates are made or a new agreement for repurchase not later than five years after the drawing is made all charges in excess of 5 per cent shall be reduced to 5 per cent.

Adopted as I-4 (f) November 19, 1951, amended December 23, 1953, April 27, 1959, February 25, 1963, and April 24, 1963

I-5. (a) If, in accordance with Article V, Section 8 (f), a member wishes to pay in its own currency part of any charge due to the Fund pursuant to I-4, the proportion to be paid in such currency shall be calculated on the basis of its monetary reserves at the end of the quarter of the financial year of the Fund to which such charges apply.

Adopted September 25, 1946, amended May 28, 1947 and July 30, 1948

(b) If, in accordance with Article V, Section 8 (f), a member wishes to pay in its own currency part of any charge due to the Fund pursuant to I-2 or I-8, the proportion to be paid in such currency shall be calculated on the basis of its monetary reserves on the day before the day on which the charge is due; provided, however, that if the member would encounter undue difficulties in providing for that day the data required by the Fund in the monetary reserve report forms sent to members, the proportion to be paid in the member’s currency shall be calculated on the basis of its monetary reserves at the end of the quarter of the financial year of the Fund in which the charge becomes due. The member, when making a provisional payment in accordance with (c) below, shall advise the Fund whether the member will provide monetary reserve data for the day before the day on which the charge becomes due or for the end of the quarter in which the charge becomes due.

Adopted July 30, 1948, amended March 24, 1950

(c) Whenever a charge is due under I-2, I-4, or I-8, and the member wishes to pay part thereof in its own currency, the member shall make a provisional payment in gold and currency on the basis of its own estimate of its monetary reserves for the appropriate day or end of quarter of the financial year of the Fund as specified in (a) or (b) above. The member shall provide the Fund with the data, for such appropriate day or end of quarter, required by the Fund in the monetary reserve report forms sent to members, and such data shall be provided to the Fund not later than six months from the aforesaid appropriate day or end of quarter. On the basis of such data, the Fund shall make a final determination of the proportions of the charge to be paid in gold and in currency, and final adjustment of the provisional payment shall be made on the date specified by the Fund. If the member fails to provide its monetary reserve data within the period prescribed herein, the whole of the charge shall be finally payable in gold.

Adopted July 30, 1948

I-6. (a) Each member shall furnish the data necessary for the calculation of its monetary reserves and its repurchase obligation, if any, within two months after the end of each financial year of the Fund, subject to (h) below. All data shall be supplied to the Fund in the monetary reserve report forms sent to members by the Fund.

(b) Each member’s monetary reserves and repurchase obligation, if any, shall be computed on the basis of the aforesaid data.

(c) When a repurchase obligation has thus been computed for a member, the Managing Director, after consultation with the Executive Director appointed or elected by the member, shall notify the member by letter containing all the necessary details of the computation, including the distribution of the amount payable among the types of reserves and any amount to be postponed.

(d) If the member is in agreement with the aforesaid computation, the member shall so advise the Fund within thirty days from the day on which the member receives notice thereof. The Managing Director shall then send to the member a formal request for payment, and shall at the same time notify the Board of such request. The member shall discharge the amount due within thirty days from the day on which the member receives the formal request for payment.

(e) If the member disagrees with the computation notified to it under (c) above, it shall so advise the Fund within thirty days from the day on which the member receives notice thereof, and shall at the same time or within the said thirty days inform the Fund of its reasoned objections. If agreement with the member is not reached within a period regarded by the Managing Director as reasonable in the circumstances of the case, the Managing Director, after consultation with the Executive Director appointed or elected by the member, shall refer the matter to the Executive Board.

(f) After agreement with the member if reached under (e) above, or after a decision by the Executive Board determining the member’s repurchase obligation, the Managing Director shall send to the member a formal request for payment, and shall at the same time notify the Board of such request. The member shall discharge the amount due within thirty days from the day on which the member receives the formal request for payment or within such other period as may be decided by the Executive Board.

(g) The Managing Director shall report to the Executive Board any case in which it appears the above procedure has not been followed.

(h) Notwithstanding (a) above, a member which is unable to report within two months after the end of a financial year of the Fund the necessary data with respect to holdings of its other official institutions and the other banks within its territories and the amounts of currency due to official institutions and banks in the territories of members or nonmembers specified by the Fund shall furnish these data not later than six months after the end of the financial year of the Fund. On the basis of these data and Article XIX (c) the Fund may decide to recalculate the member’s monetary reserves and repurchase obligation calculated in accordance with (b) above. Paragraphs (c) through (g) above shall apply to the recalculated repurchase obligation.

Adopted September 25, 1946, amended July 28, 1950: paragraph (a) amended April 21, 1971; paragraphs (c), (d), and (f) amended May 20, 1970; paragraph (h) added April 21, 1971

I-7. For the purposes of Article V, Section 7, the term “financial year” shall be defined as beginning on May 1 and ending on the succeeding April 30; provided, however, that the first financial year shall begin on March 1, 1947 and end on April 30, 1948.

For purposes of the Fund’s accounts and reports, its fiscal year shall begin on May 1 and end on the succeeding April 30; provided, however, that the fiscal year 1946/47 shall begin on July 1, 1946 and end on June 30, 1947, and the fiscal year 1947/48 shall begin on July 1, 1947 and end on April 30, 1948.

Adopted February 7, 1947, amended May 28, 1947, effective September 17, 1947

I-8. When any member sells gold to the Fund pursuant to Article V, Section 6 (a), or buys gold from the Fund, the Fund may levy a handling charge which shall be paid in accordance with Article V, Section 8 (f).

Adopted February 7, 1947, amended July 30, 1948

I-9. (a) Remuneration shall accrue daily and shall be paid as of the end of each financial year of the Fund. Remuneration shall be paid in gold to the extent that receipts of gold, during the financial year, in payment of charges under Article V, Section 8 (f), exceed payments during that year of gold as transfer charges and interest on borrowings. If the amount of gold thus available is less than the total remuneration to be paid, the gold shall be paid to each member in proportion to the remuneration to which it is entitled.

(b) Payments in gold pursuant to (a) above shall be made only to the extent that these can be effected in bars.

(c) Any remuneration due to each member and not payable in gold shall be paid in that member’s currency.

(d) The Executive Board shall review from time to time the rate of remuneration and the extent to which remuneration shall be paid in gold.

Adopted September 18, 1969

J—Accounting and Reporting

Accounts

J-1 (a) The accounts of the General Account shall be kept in terms of the currencies held in the General Account and in terms of special drawing rights, except that administrative receipts and expenditures shall be recorded in terms of currencies and summarized in special drawing rights. For this purpose, currencies shall be converted at their par values or in accordance with decisions of the Fund.

(b) The accounts of the Special Drawing Account shall be kept in terms of the unit of value of special drawing rights.

Adopted September 25, 1946, amended September 18, 1969 and February 25, 1972, effective March 20, 1972

J-2. The accounts of the General Account and the Special Drawing Account shall be kept in a manner that will show clearly the nature and amount of each operation and transaction, the position of the General Account and the Special Drawing Account, the position of each participant and each other holder, and the nature and amount of all operations and transactions in special drawing rights.

Adopted September 25, 1946, amended September 18, 1969

J-3. (a) A summary statement of the operations and transactions conducted through the General Account and the holdings in the General Account of gold, special drawing rights, and currencies of members shall be issued at intervals of three months or less, and a monthly statement of balances shall be sent to all members.

(b) A summary statement of all operations and transactions in special drawing rights, and the position of each participant and each other holder shall be issued at intervals of three months or less and a monthly statement of balances of special drawing rights shall be sent to participants and other holders.

(c) A monthly summary statement of all transactions under Article XXV, Section 2 (a), (b) (i), and (b) (ii), shall be sent to all participants.

Adopted September 25, 1946, amended September 18, 1969

Annual Budget

J-4. The Managing Director shall prepare an annual administrative budget, which shall include a projection of the expense of conducting the business of the Special Drawing Account, for presentation to the Executive Board for approval not later than April 1 of each year.

Adopted September 25, 1946, amended February 20, 1948 and September 18, 1969

Annual Report

J-5. Not later than June 30 of each year, the Managing Director shall present to the Executive Board a summary of the matters which in his opinion should be included in the annual report to the Board of Governors. At least one month before the annual meeting of the Board of Governors, the Managing Director shall submit to the Executive Board for its consideration, a draft of the annual report.

Adopted September 25, 1946

Audit

J-6. At least one month before the annual meeting of the Board of Governors, the audited accounts of the Fund shall be submitted to the Executive Board for its consideration.

Adopted September 25, 1946

K—Limitation and Ineligibility

K-1. The Managing Director shall report to the Executive Board any case in which it appears to him that a member is not fulfilling obligations under the Fund Agreement that could lead to the application of the provisions of Article XV, Section 2.

Adopted September 25, 1946, amended September 18, 1969

K-2. Whenever the Executive Board would be authorized to declare a member ineligible to use the resources of the Fund it may refrain from making the declaration and indicate the circumstances under which, and/or the extent to which, the member may make use of the resources.

Adopted September 25, 1946

K-3. When a member has changed the par value of its currency despite the objection of the Fund, in cases where the Fund is entitled to object, the Executive Board may determine the circumstances under which, and the extent to which, a member may use the resources of the Fund.

Adopted September 25, 1946

K-4. Before any member is declared, pursuant to Article XV, Section 2 (a), ineligible to use the resources of the Fund, the matter shall be considered by the Executive Board, 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.

Adopted September 25, 1946

K-5. When any member that is ineligible to use the resources of the Fund, or whose use of the resources has been limited, according to K-2 or K-3 above, requests the Executive Board to permit the resumption of exchange transactions with or without special limitations and the Executive Board decides not to permit such resumption, a written report shall be made to the member stating what further action is required before such resumption will be permitted.

Adopted September 25, 1946, corrected October 18, 1950

L—Capital Transfers

L-1. If there is taking place a large or sustained outflow of capital from a member country:

(a) that member or any other member may notify the Fund, presenting such information as it deems necessary; and may request the Fund’s views with respect to such capital movement; and

(b) the Fund may present to the member or members concerned a report setting forth its views, and may request the member or members to report on the situation within a suitable time.

Adopted September 25, 1946

L-2. Whenever the Fund has requested a member to exercise controls to prevent use of the resources of the Fund to meet a large or sustained outflow of capital, the Fund shall request the member to notify it promptly and in detail of the measures taken.

Adopted September 25, 1946

L-3. Each member shall inform the Fund in detail of the measures it is taking to regulate international capital movements and of changes made in such measures.

Adopted September 25, 1946

L-4. If the Fund is of the opinion that the controls exercised by a member to regulate international capital movements are restrictive of payments for current transactions, or unduly delay transfers of funds in settlement of commitments, the Fund shall, subject to the provisions of Article VII, Section 3 (b) and Article XIV, Section 2, consult with the member on the manner in which the controls are exercised. If, after consultation, the Fund is not satisfied that the controls are exercised in a manner consistent with the Fund Agreement, it shall so inform the member in a written report and request it to modify the controls.

Adopted September 25, 1946

M—Relations with Non-Members

M-1. The Fund may request the cooperation of any member with a view to the application of appropriate measures to prevent transactions with non-members or with persons in their territories, contrary to the provisions of the Agreement or the purposes of the Fund.

Adopted September 25, 1946

M-2. When the Fund finds that a member or any of its fiscal agencies referred to in Article V, Section 1, engages in any transaction with or cooperates in practices with a non-member or with persons in a non-member’s territory, contrary to the provisions of the Agreement or the purposes of the Fund, it shall present to the member a report setting forth its views and may request the cessation or modification of the transactions or practices.

Adopted September 25, 1946

M-3. A member shall inform the Fund promptly and in detail of any restrictions which it imposes on exchange transactions with non-members or with persons in their territories.

Adopted September 25, 1946

M-4. Any member may notify the Fund of restrictions imposed by a member on exchange transactions with non-members or with persons in their territories which are deemed to prejudice the interests of members and to be contrary to the purposes of the Fund.

Adopted September 25, 1946

M-5. When the Fund finds that the restrictions imposed by a member on exchange transactions with non-members or with persons in their territories are prejudicial to the interests of members and contrary to the purposes of the Fund, it shall present to the member a report setting forth its views and may request the abolition or modification of the restrictions.

Adopted September 25, 1946

M-6. The Fund deems that it would be prejudicial to the interests of members and contrary to the purposes of the Fund for a member to impose restrictions on exchange transactions with those non-members having entered into special exchange agreements under the General Agreement on Tariffs and Trade, or with persons in their territories, which the member would not in similar circumstances be authorized to impose on exchange transactions with other members or persons in their territories. Therefore, pursuant to Article XI, Section 2, members should not institute restrictions on exchange transactions with such non-members, or persons in their territories, unless the restrictions (a) if instituted on transactions with other members, or persons in their territories, would be authorized under the Fund Agreement, or (b) have been approved in advance by the Fund. Requests for prior approval shall be submitted in writing with a statement of reasons.

Adopted June 7, 1950

N—Staff Regulations

Personnel

N-1. The employment, classification, promotion, and assignment of personnel in the Fund shall be made without discriminating against any person because of sex, race or creed.

Adopted September 25, 1946

N-2. Persons on the staff of the Fund shall be nationals of members of the Fund unless the Executive Board authorizes exceptions in particular cases.

Adopted September 25, 1946

N-3. In the discharge of their functions, the persons on the staff shall owe their duty entirely to the Fund and to no other authority.

Adopted September 25, 1946

N-4. All persons on the staff must avoid any action, and in particular any kind of pronouncement, which may reflect unfavorably upon their position as employees of an international organization, either in their own country or elsewhere. They should always bear in mind the reserve and tact incumbent upon them by reason of their international functions, and they are required to exercise the utmost discretion in regard to matters of official business. At no time should they in any way use to private advantage information known to them by reason of their official position.

Adopted September 25, 1946

N-5. Except in the course of his official duties or by express authorization of the Managing Director, no person on the staff may, during the term of his appointment of service, publish, cause to be published, or assist in the publication of any book, pamphlet, article, letter, or other document relative to the policies or activities of the Fund or to any national political questions; deliver any speech, lecture, or radio broadcast, or grant any press interview on such policies, activities, or questions; or communicate to any person any unpublished information known to him by reason of his official position. After termination of his period of service with the Fund, a person formerly on the staff may not, without the express authorization of the Managing Director, disclose any confidential information he has received during his service with the Fund by reason of his official position.

Adopted September 25, 1946

N-6. No person on the staff shall hold other public or private employment or engage in any occupation or profession which in the Fund’s opinion is incompatible with the proper performance of his official duties.

Adopted September 25, 1946

N-7. A person on the staff may retain re-employment rights or pension rights acquired in the service of a public or private organization.

Adopted September 25, 1946

N-8. Any person on the staff who accepts a public office of a political character shall immediately resign from the Fund.

Adopted September 25, 1946

N-9. No person on the staff may accept any honor, decoration, favor, gift, or bonus from any government, or from any other authority or person external to the Fund, for services rendered during the period of his appointment or service with the Fund.

Adopted September 25, 1946

N-10. Upon appointment, each person on the staff will subscribe in writing to the following affirmation:

I solemnly affirm:

That, to the best of my ability, I will carry out my responsibilities in a manner that will further the purposes of the International Monetary Fund;

That I will refrain from communicating confidential information to persons outside the Fund;

That I will not use to private advantage information known to me by reason of my official position; and

That I will accept no instruction in regard to the performance of my duties from any government or authority external to the Fund.

Adopted September 25, 1946

N-11. All persons appointed to permanent positions on the staff shall be classified by grades or positions according to the nature of their duties and responsibilities. Salary increases within each grade will be progressively available upon the successful completion of successive periods of work or upon the recommendation of supervisors.

Adopted September 25, 1946

N-12. The salary scale for permanent employees of the Fund shall, so far as practicable, conform to the salary scale of the United Nations.

Adopted September 25, 1946

N-13. The Managing Director shall inform the Executive Board at least two weeks in advance of any action to appoint or initiate the dismissal of any person at or above the rank of division chief within a department or office or receiving a salary equal to or more than that of a division chief within a department. All other appointments to the staff shall be made by the Managing Director or his designated representative.

Adopted September 25, 1946, amended July 1, 1959

N-14. The Managing Director is authorized to issue General Orders, with the approval of the Executive Board, concerning the general personnel policies which shall apply to the operating staff of the Fund.

Adopted September 25, 1946

Travel

N-15. (a) Official travel will be undertaken by staff members only with the approval of the Managing Director or officials designated by him. In the case of travel outside the continental United States, however, the specific approval of the Managing Director is required.

Adopted September 25, 1946, amended February 11, 1948

(b) The Managing Director will inform the Executive Board of all such travel at least once a month.

Adopted February 11, 1948

(c) Staff participation in activities of national agencies and staff travel to a member’s territory require consultation in advance with the Executive Director appointed or elected by the member.

Adopted February 11, 1948

(d) Staff participation in deliberations or activities of international agencies or conferences as well as staff travel to a member’s territory, undertaken in response to a formal invitation, require the advance approval of the Executive Board.

Adopted February 11, 1948

O—Transactions Involving Special Drawing Rights

Currency Convertible in Fact

O-1. In deciding whether currency is convertible in fact under Article XXXII (b), the Fund will consult participants with respect to

(i) procedures for the convertibility of currencies in accordance with Article XXXII (b) (1), and

(ii) arrangements for the conversion of balances of currency into a currency convertible in accordance with Article XXXII (b) (1).

The Fund shall inform all participants of the procedures or arrangements for conversion. Participants shall consult the Fund with respect to any changes they propose to make in their procedures or arrangements.

Adopted September 18, 1969

O-2. (a) Currency shall cease to be convertible in fact if

  • (i) the issuer of that currency notifies the Fund that the currency will no longer be convertible in fact; or

  • (ii) the Fund decides after consultation with the issuer of the currency that the currency is no longer convertible in fact.

(b) If a participant receives currency in a transaction under Article XXV, Section 2 (a), which cannot be converted into the currency desired in accordance with Rule O-6 it shall inform the Managing Director and may return the currency to the designated participant which shall substitute other currency convertible in fact.

Adopted September 18, 1969

Exchange Rates

O-3. The exchange rate in terms of special drawing rights for a currency provided in a transaction between participants or involved in a conversion associated with such a transaction, shall be

  • (i) for the United States dollar: its par value;

  • (ii) for the currency of a participant having an exchange market in which the Fund finds that a representative rate for spot delivery for the United States dollar can be readily ascertained: that representative rate;

  • (iii) for the currency of a participant having an exchange market in which the Fund finds that a representative rate for spot delivery for the United States dollar cannot be readily ascertained but in which a representative rate can be readily ascertained for spot delivery for a currency as described in (ii): the rate calculated by reference to the representative rate for spot delivery for that currency and the rate ascertained pursuant to (ii) above for the United States dollar in terms of that currency;

  • (iv) for any other currency: a rate determined by the Fund.

Adopted September 18, 1969

O-4. The exchange rate for each currency for the purposes of Rule O-3 shall be determined as of:

  • (i) the date of dispatch of the Fund’s designation instruction in a transaction under Article XXV, Section 2 (a), or

  • (ii) the date of dispatch of the notification under Rule O-10 by the participant using special drawing rights in any other transaction.

Adopted September 19, 1969

O-5. Exchange rates shall be determined under Rules O-3 and O-4 by procedures established in consultation between the Fund and the participants.

Adopted September 18, 1969

Provision and Conversion of Currency

O-6. A participant shall inform the Fund of its intention to use special drawing rights in a transaction under Article XXV, Section 2 (a). If it desires a particular currency convertible in fact pursuant to Rule O-1 (i), the participant shall indicate this in its communication.

Adopted September 18, 1969

O-7. In a transaction under Article XXV, Section 2 (a), the instructions for any conversion of currency provided pursuant to Rule O-1 (i) or Rule O-1 (ii) shall be given by the Fund in accordance with the indication under Rule O-6. In any other transaction, a participant using special drawing rights may ask the Fund in its notification under Rule O-10 to give instructions for any conversion of currency.

Adopted September 18, 1969

O-8. Currency convertible in fact shall be provided at, or converted through, an official agency of the participant issuing the currency and in accordance with the procedures or arrangements under Article XXXII (b) and Rule O-1. Instructions for the provision or conversion of any currency shall be carried out promptly.

Adopted September 18, 1969

O-9. No participant shall levy any charge in respect of the provision or conversion of currency in connection with the use of special drawing rights.

Adopted September 18, 1969

Notification

O-10. Both parties to a transaction, except for participants designated under Article XXV, Section 5, or the General Account, shall notify the Fund under which provision of the Articles, or prescription under Article XXV, Section 2 (b) (ii), that transaction is undertaken.

Adopted September 18, 1969

O-11. A participant using special drawing rights under Article XXV, Section 2, shall declare in its notification under Rule O-10 that the use is in accordance with Article XXV, Section 3 (a), or a specific prescription under Article XXV, Section 3 (c).

Adopted September 18, 1969

Recording

O-12. A participant using special drawing rights shall inform the Fund immediately of the receipt of currency in accordance with the Articles of Agreement and these Rules and Regulations.

Adopted September 18, 1969

O-13. The Fund shall record a transaction in the Special Drawing Account when it is satisfied that the transaction is in conformity with the obligations of participants under the Articles of Agreement and with the Rules and Regulations and any applicable decisions of the Fund. A transaction shall be recorded as of the date on which currency is provided.

Adopted September 18, 1969

Designation of Participants to Provide Currency

O-14. At quarterly intervals the Executive Board shall decide, in accordance with Article XXV, Section 5, and Schedule F, on the plan, including the amounts, by which designations will be made until the next decision takes effect.

On the request of any participant, an Executive Director, or the Managing Director, the Executive Board shall review, and if necessary amend, any plan adopted pursuant to this Rule.

Adopted September 18, 1969

Transactions Without Designation

O-15. The Executive Board may prescribe transactions or categories of transactions under Article XXV, Section 2 (b) (ii), without designation under Article XXV, Section 5, in which a participant in agreement with any other participant may use its special drawing rights. The Managing Director shall inform participants from time to time of the participants and the amounts of special drawing rights each may receive under any prescription made under this Rule.

Adopted September 18, 1969

Transactions Without the Requirement of Need

O-16. The Executive Board may prescribe transactions or categories of transactions under Article XXV, Section 3 (c), in which a participant may use its special drawing rights without regard to the requirement of need in Article XXV, Section 3 (a). The Managing Director shall inform participants from time to time of the participants and the amounts each may use under any prescription made under this Rule.

Adopted September 18, 1969

P—Reconstitution

P-1. Any period of five years ending five years after the first allocation or at the end of any calendar quarter thereafter shall be a reconstitution period under Schedule G, paragraph 1.

Adopted September 18, 1969

P-2. The calculations for each participant under Schedule G, paragraph 1 (a) (ii), shall be based on the assumptions that the Executive Board makes from time to time with respect to allocations or cancellations during the remainder of any reconstitution period and on the assumptions that a participant will

  • (i) make no use of special drawing rights during the remainder of the reconstitution period for which the calculation is made; and

  • (ii) obtain any net additional amount of special drawing rights which it needs to hold, in addition to allocations assumed pursuant to this Rule, in order to comply with the requirement in Schedule G, paragraph 1 (a) (i), in equal quarterly amounts on the fifteenth day of each calendar quarter during the remainder of the reconstitution period for which the calculation is made.

Adopted September 18, 1969

P-3. When these calculations indicate that a participant would need to obtain special drawing rights in order to comply with the requirement in Schedule G, paragraph 1 (a) (i), the Managing Director shall inform the participant of the amount it would have to obtain quarterly and hold during the remainder of the reconstitution period in order to comply with this requirement.

Adopted September 18, 1969

P-4. When these calculations indicate that a participant would need to obtain special drawing rights for any reconstitution period in an amount per quarter that equals or exceeds ten per cent of the participant’s net cumulative allocation at the end of the reconstitution period, the participant shall be subject to designation under Article XXV, Section 5 (a) (ii), as of the beginning of the calendar quarter following the calculation, for an amount of special drawing rights equal to the largest amount per quarter calculated for any reconstitution period.

Adopted September 18, 1969

P-5. The Managing Director shall give the special notice required under Schedule G, paragraph 1 (a) (iii), when these calculations indicate that the quarterly amount of special drawing rights which the participant needs to obtain in order to comply with the reconstitution requirement in Schedule G, paragraph 1 (a) (i), for any reconstitution period equals or exceeds 50 per cent of its net cumulative allocation at the end of the reconstitution period.

Adopted September 18, 1969

P-6. To the extent that a participant may receive special drawing rights in a transaction under any prescription to promote reconstitution by it, the Fund shall provide special drawing rights held in the General Account to the participant at its request for gold or currency acceptable to the Fund. A participant shall consult the Managing Director before making a request under this Rule.

Adopted September 18, 1969

P-7. The Fund shall specify the participant and the amount of special drawing rights it shall provide when this is required by Schedule G, paragraph 1 (a) (iv); Article XXVI, Section 5; and Article XXX, Section 3.

Adopted September 18, 1969

Q—Interest, Charges, and Assessments in Respect of Special Drawing Rights

Q-1. Interest and charges in respect of special drawing rights shall accrue daily and shall be paid promptly as of the end of each financial year of the Fund. The accounts of participants shall be credited with the excess of interest due over charges or debited with the excess of charges over the interest due. The accounts of holders that are not participants shall be credited with the interest due.

Adopted September 18, 1969

Q-2. Assessments shall be levied promptly, as of the end of each financial year of the Fund, on the basis of a reasonable estimate of the expenses of conducting the business of the Special Drawing Account for the financial year, and the accounts of participants shall be debited with the amounts of the assessments.

Adopted September 18, 1969

R—Suspension of Use of Special Drawing Rights

R-1. The Managing Director shall report to the Executive Board any facts on the basis of which it appears to him that a participant is not fulfilling obligations under the Fund Agreement that could lead to suspension under Article XXIX, Section 2, and may include a complaint in his report.

Adopted September 18, 1969

R-2. A participant may complain that another participant is not fulfilling obligations under the Fund Agreement that could lead to suspension under Article XXIX, Section 2, and the Managing Director shall transmit the complaint to the Executive Board with his comments. Any complaint shall be made in writing or by any rapid means of communication, and it shall be accompanied by a statement of the facts on which the participant bases its complaint.

Adopted September 18, 1969

R-3. The Managing Director shall immediately inform a participant of any complaint against it and the statement of the facts on which the complaint is based.

Adopted September 18, 1969

R-4. If the complaint is that the participant has failed to fulfill its obligations under Article XXV, Section 4, the participant shall not use special drawing rights and this limitation shall continue pending the disposition of the complaint.

Adopted September 18, 1969

R-5. A participant against which a complaint has been made under Rule R-1 or Rule R-2, the Managing Director, or an Executive Director may request the Executive Board to dismiss the complaint. The Executive Board shall consider the request forthwith.

Adopted September 18, 1969

R-6. If the right of a participant to use special drawing rights has been limited under Rule R-4, and a request under Rule R-5 has been made by a participant, the complaint shall be deemed to have been dismissed at the end of ten business days after the request, or at the end of such longer period as the participant states in the request, unless within this time the Executive Board has taken a decision disposing of the complaint.

Adopted September 18, 1969

The first two sentences of this paragraph came into effect on March 20, 1972 and are not relevant to Volume I of this history, for which the closing date is December 31, 1971. On that date, these two sentences were one and read as follows: “AII accounts of the General Account shall be summarized in United States dollars; and for this purpose gold shall be valued in terms of United States dollars at the par value of the United States dollar, and all members’ currencies shall be converted at their par values or in accordance with a decision of the Fund pursuant to Article IV, Section 8 of the Articles of Agreement”

The definition of “business day” does not affect in any way the arrangements which have been made for the receipt of messages at all times and for prompt action upon them as required by circumstances and the Fund Agreement, By-Laws and Rules and Regulations.

This paragraph came into effect on March 20, 1972 and is not relevant to Volume I of this history, for which the closing date is December 31, 1971. On that date, Rule J-1 (a) read as follows: “The accounts of the General Account shall be kept in terms of the currencies held in the General Account and United States dollars on the basis of the established parities.

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