International Financial Organisations
INTERNATIONAL FINANCIAL
ORGANISATIONS ACT
CHAPTER 70:01
LAWS OF TRINIDAD AND TOBAGO
Act
23 of 1963
Amended by
9 of 1965
37 of 1967
26 of 1969
36 of 1972
290/1998
Current Authorised Pages
Pages Authorised
(inclusive) by L.R.O.
1–159 ..
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Note on Subsidiary Legislation
This Chapter contains no subsidiary legislation.
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CHAPTER 70:01
INTERNATIONAL FINANCIAL
ORGANISATIONS ACT
ARRANGEMENT OF SECTIONS
SECTION
1. Short title.
2. Interpretation.
3. Authorisation for signing of and accepting the Agreements.
4. Financial provisions.
5. Certain provisions of Agreements given force of law in Trinidad
and Tobago.
6. Power of President to make Orders.
FIRST SCHEDULE.
SECOND SCHEDULE.
THIRD SCHEDULE.
FOURTH SCHEDULE.
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CHAPTER 70:01
INTERNATIONAL FINANCIAL ORGANISATIONS ACT
An Act to enable Trinidad and Tobago to become a Member of the
International Monetary Fund, the International Bank for
Reconstruction and Development, the International Finance
Corporation and the International Development Association.
[18TH JULY 1963]
WHEREAS pursuant to the Articles of Agreement drawn up at the United
Nations Monetary and Financial Conference held in the year nineteen
hundred and forty-four at Bretton Woods in New Hampshire in the
United States of America, two international bodies known as the
International Monetary Fund and the International Bank for
Reconstruction and Development were established:
And whereas pursuant to the Articles of Agreement approved by
the executive directors of the said International Bank for Reconstruction
and Development in the year nineteen hundred and fifty-five an
international body known as the International Fiance Corporation
was established:
And whereas pursuant to the Articles of Agreement approved by
the directors of the said International Bank for Reconstruction and
Development in the year nineteen hundred and sixty an international
body known as the International Development Association was
established:
And whereas in pursuance of the said several Articles of Agreement
the said international bodies have each prescribed terms and conditions
on which the Government of Trinidad and Tobago may become a
member of each such body and on which the Articles of Agreement
relating to each such body may be signed and accepted on behalf of
the Government of Trinidad and Tobago:
And whereas it is expedient that the Government of Trinidad and
Tobago should be a member of the said International bodies.
1. This Act may be cited as the International Financial
Organisations Act.
23 of 1963.
Commencement.
Preamble.
Short title.
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Interpretation.
[26 of 1969].
Fourth
Schedule.
Second
Schedule.
Third Schedule.
First Schedule.
Authorisation
for signing of
and accepting
the Agreements.
[26 of 1969].
2. In this Act—
“amendment” means the amendment of the Articles of Agreement
of the International Monetary Fund approved by its Board
of Governors in Resolution No. 23-5 of May 31, 1968.
“Association” means the International Development Association;
“Association Agreement” means the Articles of Agreement for the
establishment and operation of the Association set out in the
Fourth Schedule;
“Bank” means the International Bank for Reconstruction and
Development;
“Bank Agreement” means the Articles of Agreement for the
establishment and operation of the Bank set out in the
Second Schedule;
“Corporation” means the International Finance Corporation;
“Corporation Agreement” means the Articles of Agreement for
the establishment and operation of the Corporation as
amended, set out in the Third Schedule;
“Fund” means the International Monetary Fund;
“Fund Agreement” means the Articles of Agreement for the
establishment and operation of the Fund set out in the First
Schedule as amended by the amendment;
“Membership Resolutions” means the resolutions adopted by the
Board of Governors of the Fund, the Bank, the Corporation
and the Association, respectively, specifying the terms and
conditions upon which Trinidad and Tobago shall be
admitted to membership in these organisations.
3. (1) The Minister is hereby authorised on behalf of the
Government of Trinidad and Tobago to sign any or all of the following
agreements, that is to say, the Fund Agreement, the Bank Agreement,
the Corporation Agreement and the Association Agreement and to
deposit, in the cases of the Fund Agreement and the Bank Agreement,
with the Government of the United States, and, in the cases of the
Corporation Agreement and the Association Agreement, with the Bank,
instruments of acceptance of the said Agreements and of the terms
and conditions respectively prescribed thereunder relating to the
admission of the Government of Trinidad and Tobago to membership,
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or by instruments under his hand, to empower such person as may be
named in the instruments to sign the Agreements and to deposit the
instruments of acceptance as mentioned before.
(2) The Minister is hereby authorised on behalf of the
Government of Trinidad and Tobago to communicate its acceptance
of the amendment and to deposit with the Fund an instrument of
participation in the Special Drawing Account pursuant to Article
XXIII, section 1 of the Fund Agreement.
4. (1) There shall be paid out of the Consolidated Fund, on
the warrant of the Minister, all sums required for the purposes
of making—
(a) all payments required to be made from time to
time to the Fund under the provisions of the
Membership Resolution and the Fund Agreement;
(b) all payments required to be made from time to
time to the Bank under the provisions of the
Membership Resolution and the Bank Agreement;
(c) all payments required to be made from time to
time to the Corporation under the provisions of
the Membership Resolution and the Corporation
Agreement;
(d) all payments required to be made from time to
time to the Association under the Membership
Resolution and the Association Agreement.
(2) The Minister may make all payments resulting from
the participation of Trinidad and Tobago in the Special Drawing
Account of the Fund.
(3) In order to assure payments under subsections (1)(a)
and (2), the Minister may make funds available out of the
Consolidated Fund and, in this connection, may borrow, as
necessary from the public or the Central Bank of Trinidad and
Tobago, and the authority of the Minister to borrow and of the
Central Bank of Trinidad and Tobago to lend under this
Financial
provisions.
[26 of 1969].
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Certain
provisions of
Agreements
given force of
law in Trinidad
and Tobago.
[26 of 1969
36 of 1972].
subsection for the purpose set forth herein shall not be subject
to any general limitations which have been or may be imposed,
whether by law or agreement, upon the power of the Government
of Trinidad and Tobago to borrow and the Central Bank of
Trinidad and Tobago to lend.
(4) The Minister may, if he thinks fit, create and issue to
the Fund, the Bank or the Association non-interest bearing and
non-negotiable notes or other obligations as are provided for by
section 5 of Article III of the Fund Agreement, by section 12 of
Article V of the Bank Agreement and by paragraph (e) of section 2
of Article II of the Association Agreement (which sections relate
to the acceptance by the Fund, the Bank or the Association, as the
case may be, of notes or similar obligations in place of currency),
and the sums payable under such notes or obligations so created
and issued shall be a charge on the Consolidated Fund.
(5) Any sums received by the Government of Trinidad
and Tobago from the Fund (other than sums received by reason of
operations or transactions under sections 1 to 8 of Article V of the
Fund Agreement), any sums received by the Government of
Trinidad and Tobago from the Bank or the Corporation on account
of its subscription to the capital stock thereof and any sums received
by the Government of Trinidad and Tobago from the Association
on account of its subscriptions therein or of supplementary
resources provided by it, shall be paid into the Consolidated Fund.
(6) Any special drawing rights and any sums received by
the Government of Trinidad and Tobago pursuant to, or by reason
of operations or transactions authorised under Articles XXI to
XXXII of the Fund Agreement shall be treated as assets of an
account of the Government of Trinidad and Tobago to be
maintained with the Central Bank of Trinidad and Tobago and be
used consistently with the provisions of the Fund Agreement.
5. The provisions of—
(a) sections 2 to 9 of Article IX and section (b) of
Article XXVII of the Fund Agreement;
(b) sections 2 to 9 of Article VII of the Bank
Agreement;
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FIRST SCHEDULE
ARTICLES OF AGREEMENT OF THE
INTERNATIONAL MONETARY FUND
The Governments on whose behalf the present Agreement is signed agree
as follows:
INTRODUCTORY ARTICLE
(i) The International Monetary Fund is established and shall
operate in accordance with the provisions of this Agreement
as originally adopted and subsequently amended.
(ii) To enable the Fund to conduct its operations and transactions,
the Fund shall maintain a General Department and a Special
Drawing Rights Department. Membership in the Fund shall
give the right to participation in the Special Drawing
Rights Department.
Power of
President to
make Orders.
[37 of 1967
26 of 1969
290/1998].
(c) sections 2 to 9 of Article VI of the Corporation
Agreement;
(d) sections 2 to 9 of Article VIII of the Association
Agreement; and
(e) the first sentence of section 2(b) of Article VIII
of the Fund Agreement,
shall have the force of law in Trinidad and Tobago.
6. The President may by Order make such provisions as are
necessary for carrying into effect any of the provisions of the Fund
Agreement, the Bank Agreement, the Corporation Agreement and
the Association Agreement.
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(iii) Operations and transactions authorised by this Agreement
shall be conducted through the General Department,
consisting in accordance with the provisions of this
Agreement of the General Resources Account, the Special
Disbursement Account, and the Investment Account; except
that operations and transactions involving special drawing
rights shall be conducted through the Special Drawing
Rights Department.
ARTICLE I
PURPOSES
The purposes of the International Monetary Fund are—
(i) To promote international monetary co-operation through a
permanent institution which provides the machinery for
consultation and collaboration on international monetary
problems.
(ii) To facilitate the expansion and balanced growth of
international trade, and to contribute thereby to the
promotion and maintenance of high levels of employment
and real income and to the development of the productive
resources of all members as primary objectives of
economic policy.
(iii) To promote exchange stability, to maintain orderly exchange
arrangements among members, and to avoid competitive
exchange depreciation.
(iv) To assist in the establishment of a multilateral system of
payments in respect of current transactions between
members and in the elimination of foreign exchange
restrictions which hamper the growth of world trade.
(v) To give confidence to members by making the general
resources of the Fund temporarily available to them under
adequate safeguards, thus providing them with opportunity
to correct mal-adjustments in their balance of payments
without resorting to measures destructive of national or
international prosperity.
(vi) In accordance with the above, to shorten the duration and
lessen the degree of disequilibrium in the international
balances of payments of members.
The Fund shall be guided in all policies and decisions by the purposes
set forth in this Article.
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ARTICLE II
MEMBERSHIP
Section 1. Original Members
The original members of the Fund shall be those of the countries
represented at the United Nations Monetary and Financial Conference whose
governments accept membership before 31st December, 1945.
Section 2. Other Members
Membership shall be open to other countries at such times and in
accordance with such terms as may be prescribed by the Board of Governors.
These terms, including the terms for subscriptions, shall be based on principles
consistent with those applied to other countries that are already members.
ARTICLE III
QUOTAS AND SUBSCRIPTIONS
Section 1. Quotas and Payment of Subscriptions
Each member shall be assigned a quota expressed in special drawing
rights. The quotas of the members represented at the United Nations Monetary
and Financial Conference which accept membership before 31st December,
1945 shall be those set forth in Schedule A. The quotas of other members shall
be determined by the Board of Governors. The subscription of each member
shall be equal to its quota and shall be paid in full to the Fund at the appropriate
depository.
Section 2. Adjustment of Quotas
(a) The Board of Governors shall at intervals of not more than
five years conduct a general review, and if it deems it
appropriate propose an adjustment, of the quotas of the
members. It may also, if it thinks fit, consider at any other
time the adjustment of any particular quota at the request of
the member concerned.
(b) The Fund may at any time propose an increase in the
quotas of those members of the Fund that were members
on 31st August, 1975 in proportion to their quotas on that
date in a cumulative amount not in excess of amounts
transferred under Article V, Section 12(f)(i) and (j) from
the Special Disbursement Account to the General
Resources Account.
(c) An eighty-five per cent majority of the total voting power shall
be required for any change in quotas.
(d) The quota of a member shall not be changed until the member
has consented and until payment has been made unless
payment is deemed to have been made in accordance with
Section 3(b) of this Article.
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Section 3. Payments when Quotas are Changed
(a) Each member which consents to an increase in its quota under
Section 2(a) of this Article shall, within a period determined
by the Fund, pay to the Fund twenty-five per cent of the
increase in special drawing rights, but the Board of Governors
may prescribe that this payment may be made, on the same
basis for all members, in whole or in part in the currencies of
other members specified, with their concurrence, by the Fund,
or in the member’s own currency. A non-participant shall pay
in the currencies of other members specified by the Fund, with
their concurrence, a proportion of the increase corresponding
to the proportion to be paid in special drawing rights by
participants. The balance of the increase shall be paid by the
member in its own currency. The Fund’s holdings of a
member’s currency shall not be increased above the level at
which they would be subject to charges under Article V,
Section 8(b)(ii), as a result of payments by other members
under this provision.
(b) Each member which consents to an increase in its quota under
Section 2(b) of this Article shall be deemed to have paid to the
Fund an amount of subscription equal to such increase.
(c) If a member consents to a reduction in its quota, the Fund
shall, within sixty days, pay to the member an amount equal
to the reduction. The payment shall be made in the member’s
currency and in such amount of special drawing rights or the
currencies of other members specified, with their concurrence,
by the Fund as is necessary to prevent the reduction of the
Fund’s holdings of the currency below the new quota, provided
that in exceptional circumstances the Fund may reduce its
holdings of the currency below the new quota by payment to
the member in its own currency.
(d) A seventy per cent majority of the total voting power shall be
required for any decision under (a) above, except for the
determination of a period and the specification of currencies
under that provision.
Section 4. Substitution of Securities for Currency
The Fund shall accept from any member, in place of any part of the
member’s currency in the General Resources Account which in the judgment of
the Fund is not needed for its operations and transactions, notes or similar
obligations issued by the member or the depository designated by the member
under Article XIII, Section 2, which shall be non-negotiable, non-interest bearing
and payable at their face value on demand by crediting the account of the Fund
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in the designated depository. This Section shall apply not only to currency
subscribed by members but also to any currency otherwise due to, or acquired
by, the Fund and to be placed in the General Resources Account.
ARTICLE IV
OBLIGATIONS REGARDING EXCHANGE ARRANGEMENTS
Section 1. General Obligations of Members
Recognising that the essential purpose of the international monetary
system is to provide a framework that facilitates the exchange of goods, services,
and capital among countries, and that sustains sound economic growth, and
that a principal objective is the continuing development of the orderly underlying
conditions that are necessary for financial and economic stability, each member
undertakes to collaborate with the Fund and other members to assure orderly
exchange arrangements and to promote a stable system of exchange rates.
In particular, each member shall—
(i) endeavour to direct its economic and financial policies toward
the objective of fostering orderly economic growth with
reasonable price stability, with due regard to its circumstances;
(ii) seek to promote stability by fostering orderly underlying
economic and financial conditions and a monetary system that
does not tend to produce erratic disruptions;
(iii) avoid manipulating exchange rates or the international
monetary system in order to prevent effective balance of
payments adjustment or to gain an unfair competitive
advantage over other members; and
(iv) follow exchange policies compatible with the undertakings
under this Section.
Section 2. General Exchange Arrangements
(a) Each member shall notify the Fund, within thirty days after
the date of the second amendment of this Agreement, of the
exchange arrangements it intends to apply in fulfillment of its
obligations under Section 1 of this Article, and shall notify the
Fund promptly of any changes in its exchange arrangements.
(b) Under an international monetary system of the kind prevailing
on 1st January, 1976, exchange arrangements may include (i) the
maintenance by a member of a value for its currency in terms of
the special drawing right or another denominator, other than gold,
selected by the member, or (ii) co-operative arrangements by
which members maintain the value of their currencies in relation
to the value of the currency or currencies of other members, or
(iii) other exchange arrangements or a member’s choice.
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(c) To accord with the development of the international monetary
system, the Fund, by an eighty-five per cent majority of the
total voting power, may make provision for general exchange
arrangement without limiting the right of members to have
exchange arrangements of their choice consistent with the
purposes of the Fund and the obligations under Section 1 of
this Article.
Section 3. Surveillance over Exchange Arrangements
(a) The Fund shall oversee the international monetary system in
order to ensure its effective operation, and shall oversee the
compliance of each member with its obligations under
Section 1 of this Article.
(b) In order to fulfil its functions under (a) above, the Fund shall
exercise firm surveillance over the exchange rate policies of
members, and shall adopt specific principles for the guidance
of all members with respect to those Policies. Each member
shall provide the Fund with the information necessary for such
surveillance, and when requested by the Fund, shall consult
with it on the member’s exchange rate policies. The principles
adopted by the Fund shall be consistent with co-operative
arrangements by which members maintain the value of their
currencies in relation to the value of the currency or currencies
of other members, as well as with other exchange arrangements
of a member’s choice consistent with the purposes of the Fund
and Section 1 of this Article. These principles shall respect
the domestic social and political policies of members, and in
applying these principles the Fund shall pay due regard to the
circumstances of members.
Section 4. Par Values
The Fund may determine, by an eighty-five per cent majority or the
total voting power, that international economic conditions permit the introduction
of a widespread system of exchange arrangements based on stable but adjustable
par values. The Fund shall make the determination on the basis of the underlying
stability of the world economy, and for this purpose shall take into account
price movements and rates of expansion in the economies of members. The
determination shall be made in light of the evolution of the international monetary
system, with particular reference to sources of liquidity, and, in order to ensure
the effective operation of a system of par values, to arrangements under which
both members in surplus and members in deficit in their balances of payments
take prompt, effective, and symmetrical action to achieve adjustment, as well
as to arrangements for intervention and the treatment of imbalances. Upon
making such determination, the Fund shall notify members that the provisions
of Schedule C apply.
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Section 5. Separate Currencies within a Member’s Territory
(a) Action by a member with respect to its currency under this
Article shall be deemed to apply to the separate currencies of
all territories in respect of which the member has accepted
this Agreement under Article XXXI, Section 2(g) unless the
member declares that its action relates either to the metropolitan
currency alone, or only to one or more specified separate
currencies, or to the metropolitan currency and one or more
specified separate currencies.
(b) Action by the Fund under this Article shall be deemed to relate
to all currencies of a member referred to in (a) above unless
the Fund declares otherwise.
ARTICLE V
OPERATIONS AND TRANSACTIONS OF THE FUND
Section 1. Agencies Dealing with the Fund
Each member shall deal with the Fund only through its Treasury, Central
Bank, stabilisation fund, or other similar fiscal agency, and the Fund shall deal
only with or through the same agencies.
Section 2. Limitation on the Fund’s Operations and Transactions
(a) Except as otherwise provided in this Agreement,
transactions on the account of the Fund shall be limited to
transactions for the purpose of supplying a member, on the
initiative of such member, with special drawing rights or
the currencies of other members from the general resources
of the Fund, which shall be held in the General Resources
Account, in exchange for the currency of the member
desiring to make the purchase.
(b) If requested, the Fund may decide to perform financial and
technical services, including the administration of resources
contributed by members, that are consistent with the
purposes of the Fund. Operations involved in the
performance of such financial services shall not be on the
account of the Fund. Services under this subsection shall
not impose any obligation on a member without its consent.
Section 3. Conditions governing use of the Fund’s general resources
(a) The Fund shall adopt policies on the use of its general
resources, including policies on stand-by or similar
arrangements, and may adopt special policies for special
balance of payments problems, that will assist members to
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solve their balance of payments problems in a manner
consistent with the provisions of this Agreement and that
will establish adequate safeguards for the temporary use of
the general resources of the Fund.
(b) A member shall be entitled to purchase the currencies of other
members from the Fund in exchange for an equivalent amount
of its own currency subject to the following conditions:
(i) the member’s use of the general resources of the Fund
would be in accordance with the provisions of this
Agreement and the policies adopted under them;
(ii) the member represents that it has a need to make the
purchase because of its balance of payments or its
reserve position or developments in its reserves;
(iii) the proposed purchase would be a reserve tranche
purchase, or would not cause the Fund’s holdings of
the purchasing member’s currency to exceed two
hundred per cent of its quota;
(iv) the Fund has not previously declared under Section 5
of this Article, Article VI, Section 1, or Article XXVI
Section 2(a) that the member desiring to purchase is
ineligible to use the general resources of the Fund.
(c) The Fund shall examine a request for a purchase to determine
whether the proposed purchase would be consistent with the
provisions of this Agreement and the policies adopted under
them, provided that requests for reserve tranche purchases shall
not be subject to challenge.
(d) The Fund shall adopt policies and procedures on the selection
of currencies to be sold that take into account, in consultation
with members, the balance of payments and reserve position
of members and developments in the exchange markets, as
well as the desirability of promoting over time balanced
positions in the Fund, provided that if a member represents
that it is proposing to purchase the currency of another member
because the purchasing member wishes to obtain an equivalent
amount of its own currency offered by the other member, it
shall be entitled to purchase the currency of the other member
unless the Fund has given notice under Article VII, Section 3
that its holdings of the currency have become scarce.
(e) (i) Each member shall ensure that balances of its currency
purchased from the Fund are balances of a freely usable
currency or can be exchanged at the time of purchase
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for a freely usable currency of its choice at an exchange
rate between the two currencies equivalent to the
exchange rate between them on the basis of Article XIX,
Section 7(a).
(ii) Each member whose currency is purchased from the
Fund or is obtained in exchange for currency purchased
from the Fund shall collaborate with the Fund and other
members to enable such balances of its currency to be
exchanged, at the time of purchase, for the freely usable
currencies of other members.
(iii) An exchange under (i) above of a currency that is not
freely usable shall be made by the member whose
currency is purchased unless that member and the
purchasing member agree on another procedure.
(iv) A member purchasing from the Fund the freely usable
currency of another member and wishing to exchange
it at the time of purchase for another freely usable
currency shall make the exchange with the other
member if requested by that member. The exchange
shall be made for a freely usable currency selected by
the other member at the rate of exchange referred to in
(i) above.
(f) Under policies and procedures which it shall adopt, the Fund
may agree to provide a participant making a purchase in
accordance with this Section with special drawing rights
instead of the currencies of other members.
Section 4. Waiver of Conditions
The Fund may in its discretion, and on terms which safeguard its
interests, waive any of the conditions prescribed in Section 3(b) (iii) and (iv) of
this Article, especially in the case of members with a record of avoiding large or
continuous use of the Fund’s general resources. In making a waiver it shall take
into consideration periodic or exceptional requirements of the member requesting
the waiver. The Fund shall also take into consideration a member’s willingness
to pledge as collateral security acceptable assets having a value sufficient in the
opinion of the Fund to protect its interests and may require as a condition of
waiver the pledge of such collateral security.
Section 5. Ineligibility to Use the Fund’s General Resources
Whenever the Fund is of the opinion that any member is using the
general resources of the Fund in a manner contrary to the purposes of the Fund,
it shall present to the member a report setting forth the views of the Fund and
prescribing a suitable time for reply. After presenting such a report to a member,
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the Fund may limit the use of its general resources by the member. If no reply to
the report is received from the member within the prescribed time, or if the
reply received is unsatisfactory, the Fund may continue to limit the member’s
use of the general resources of the Fund or may, after giving reasonable notice
to the member, declare it ineligible to use the general resources of the Fund.
Section 6. Other Purchase and Sales of Special Drawing Rights by the Fund
(a) The Fund may accept special drawing rights offered by a
participant in exchange for an equivalent amount of the
currencies of other members.
(b) The Fund may provide a participant, at its request, with special
drawing rights for an equivalent amount or the currencies of
other members. The Fund’s holdings of a member’s currency
shall not be increased as a result of these transactions above
the level at which the holdings would be subject to charges
under Section 8(b)(ii) of this Article.
(c) The currencies provided or accepted by the Fund under this
Section shall be selected in accordance with policies that take
into account the principles of Section 3(d) or 7(i) of this Article.
The Fund may enter into transactions under this Section only
if a member whose currency is provided or accepted by the
Fund concurs in that use of its currency.
Section 7. Repurchase by a Member of its Currency Held by the Fund
(a) A member shall be entitled to repurchase at any time the Fund’s
holdings of its currency that are subject to charges under
Section 8(b) of this Article.
(b) A member that has made a purchase under Section 3 of this
Article will be expected normally, as its balance of payments
and reserve position improves, to repurchase the Fund’s
holdings of its currency that result from the purchase and are
subject to charges under Section 8(b) of this Article. A member
shall repurchase these holdings if, in accordance with policies
on repurchase that the Fund shall adopt and after consultation
with the member, the Fund represents to the member that it
should repurchase because of an improvement in its balance
of payments and reserve position.
(c) A member that has made a purchase under Section 3 of this
Article shall repurchase the Fund’s holdings of its currency
that result from the purchase and are subject to charges under
Section 8(b) of this Article not later than five years after the
date on which the purchase was made. The Fund may prescribe
that repurchase shall be made by a member in installments
during the period beginning three years and ending five years
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after the date of a purchase. The Fund, by an eighty-five
per cent majority of the total voting power, may change the
periods for repurchase under this subsection, and any period
so adopted shall apply to all members.
(d) The Fund, by an eighty-five per cent majority of the total voting
power, may adopt periods other than those that apply in accordance
with (c) above, which shall be the same for all members, for the
repurchase of holdings of currency acquired by the Fund pursuant
to a special policy on the use of its general resources.
(e) A member shall repurchase, in accordance with policies that
the Fund shall adopt by a seventy per cent majority of the total
voting power, the Fund’s holdings of its currency that are not
acquired as a result of purchases and are subject to charges
under Section 8(b)(ii) of this Article.
(f) A decision prescribing that under a policy on the use of the
general resources of the Fund the period for repurchase under
(c) or (d) above shall be shorter than the one in effect under
the policy shall apply only to holdings acquired by the Fund
subsequent to the effective date of the decision.
(g) The Fund, on the request of a member, may postpone the date
of discharge of a repurchase obligation, but not beyond the
maximum period under (c) or (d) above or under policies
adopted by the Fund under (e) above, unless the Fund
determines, by a seventy per cent majority of the total voting
power, that a longer period for repurchase which is consistent
with the temporary use of the general resources of the Fund is
justified because discharge on the due date would result in
exceptional hardship for the member.
(h) The Fund’s policies under Section 3(d) of this Article may be
supplemented by policies under which the Fund may decide
after consultation with a member to sell under Section 3(b) of
this Article its holdings of the member’s currency that have
not been repurchased in accordance with this Section 7, without
prejudice to any action that the Fund may be authorised to
take under any other provision of this Agreement.
(i) All repurchases under this Section shall be made with special
drawing rights or with the currencies of other members
specified by the Fund. The Fund shall adopt policies and
procedures with regard to the currencies to be used by members
in making repurchases that take into account the principles in
Section 3(d) of this Article. The Fund’s holding of a member’s
currency that is used in repurchase shall not be increased by
the repurchase above the level at which they would be subject
to change under Section 8(b)(ii) of this Article.
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(j) (i) If a member’s currency specified by the Fund under (i)
above is not a freely usable currency, the member shall
ensure that the repurchasing member can obtain it at
the time of the repurchase in exchange for a freely usable
currency selected by the member whose currency has
been specified. An exchange of currency under this
provision shall take place at an exchange rate between
the two currencies equivalent to the exchange rate
between them on the basis of Article XIX, Section 7(a).
(ii) Each member whose currency is specified by the Fund
for repurchase shall collaborate with the Fund and
other members to enable repurchasing members, at
the time of the repurchase, to obtain the specified
currency in exchange for the freely usable currencies
of other members.
(iii) An exchange under (j)(i) above shall be made with
the member whose currency is specified unless that
member and the repurchasing member agree on
another procedure.
(iv) If a repurchasing member wishes to obtain, at the time
of the repurchase, the freely usable currency of another
member specified by the Fund under (i) above, it shall,
if requested by the other member, obtain the currency
from the other member in exchange for a freely usable
currency at the rate of exchange referred to in (j)(i)
above. The Fund may adopt regulations on the freely
usable currency to be provided in an exchange.
Section 8. Charges
(a) (i) The Fund shall levy a service charge on the purchase
by a member or special drawing rights or the currency
of another member held in the General Resources
Account in exchange for its own currency, provided
that the Fund may levy a lower service charge on reserve
tranche purchases than on other purchases. The service
charge on reserve tranche purchases shall not exceed
one-half of one per cent.
(ii) The Fund may levy a charge for stand-by or similar
arrangements. The Fund may decide that the charge
for an arrangement shall be offset against the service
charge levied under (i) above on purchases under
the arrangement.
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(b) The Fund shall levy charges on its average daily balances or a
member’s currency held in the General Resources Account to
the extent that they—
(i) have been acquired under a policy that has been the
subject of an exclusion under Article XXX (c); or
(ii) exceed the amount of the member’s quota after
excluding any balances referred to in (i) above.
The rates of charge normally shall rise at intervals during the
period in which balances are held.
(c) If a member fails to make a repurchase required under
Section 7 of this Article, the Fund, after consultation with the
member on the reduction of the Fund’s holdings of its
currency, may impose such charges as the Fund deems
appropriate on its holdings of the member’s currency that
should have been repurchased.
(d) A seventy per cent majority of the total voting power shall be
required for the determination of the rates of charge under (a)
and (b) above, which shall be uniform for all members, and
under (c) above.
(e) A member shall pay all charges in special drawing rights,
provided that in exceptional circumstances the Fund may
permit a member to pay charges in the currencies of other
members specified by the Fund, after consultation with them,
or in its own currency. The Fund’s holdings of a member’s
currency shall not be increased as a result of payments by other
members under this provision above the level at which they
would be subject to charges under (b)(ii) above.
Section 9. Remuneration
(a) The Fund shall pay remuneration on the amount by which the
percentage of quota prescribed under (b) or (c) below exceeds
the Fund’s average daily balances of a member’s currency held
in the General Resources Account other than balances acquired
under a policy that has been the subject of an exclusion under
Article XXX (c). The rate of remuneration, which shall be
determined by the Fund by a seventy per cent majority of the
total voting power, shall be the same for all members and shall
be not more than, nor less than four-fifths of, the rate of interest
under Article XX, Section 3. In establishing the rate of
remuneration, the Fund shall take into account the rates of
charge under Article V, Section 8(b).
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(b) The percentage of quota applying for the purposes of (a) above
shall be:
(i) for each member that became a member before the
second amendment of this Agreement, a percentage of
quota corresponding to seventy-five per cent of its quota
on the date of the second amendment of this Agreement,
and for each member that became a member after the
date of the second amendment of this Agreement, a
percentage of quota calculated by dividing the total of
the amounts corresponding to the percentages of quota
that apply to the other members on the date on which
the member became a member by the total of the quotas
of the other members on the same date; plus
(ii) the amounts it has paid to the Fund in currency or special
drawing rights under Article III, Section 3(a) since the
date applicable under (b)(i) above; and minus
(iii) the amounts it has received from the Fund in currency
or special drawing rights under Article III, Section 3(c)
since the date applicable under (b)(i) above.
(c) The Fund, by a seventy per cent majority of the total voting
power, may raise the latest percentage of quota applying for
the purposes of (a) above to each member to—
(i) a percentage, not in excess of one hundred per cent,
that shall be determined for each member on the basis
of the same criteria for all members; or
(ii) one hundred per cent for all members.
(d) Remuneration shall be paid in special drawing rights, provided
that either the Fund or the member may decide that the payment
to the member shall be made in its own currency.
Section 10. Computations
(a) The value of the Fund’s assets held in the accounts of the
General Department shall be expressed in terms of the special
drawing right.
(b) All computations relating to currencies of members for the
purpose of applying the provisions of this Agreement, except
Article IV and Schedule C, shall be at the rates at which the
Fund accounts for these currencies in accordance with
Section 11 of this Article.
(c) Computations for the determination of amounts of currency
in relation to quota for the purpose of applying the provisions
of this Agreement shall not include currency held in the Special
Disbursement Account or in the Investment Account.
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Section 11. Maintenance of Value
(a) The value of the currencies of members held in the General
Resources Account shall be maintained in terms of the
special drawing right in accordance with exchange rates under
Article XIX, Section 7(a).
(b) An adjustment in the Fund’s holdings of a member’s currency
pursuant to this Section shall be made on the occasion of the
use of that currency in an operation or transaction between
the Fund and another member and at such other times as the
Fund may decide or the member may request. Payments to or
by the Fund in respect of an adjustment shall be made within
a reasonable time, as determined by the Fund, after the date
of adjustment, and at any other time requested by the member.
Section 12. Other Operations and Transactions
(a) The Fund shall be guided in all its policies and decisions
under this Section by the objectives set forth in Article VIII,
Section 7 and by the objective of avoiding the management
of the price, or the establishment of a fixed price, in the
gold market.
(b) Decisions of the Fund to engage in operations or transactions
under (c), (d), and (e) below shall be made by an eighty-five
per cent majority of the total voting power.
(c) The Fund may sell gold for the currency of any member
after consulting the member for whose currency the gold is
sold, provided that the Fund’s holdings of a member’s
currency held in the General Resources Account shall not
be increased by the sale above the level at which they would
be subject to charges under Section 8(b)(ii) of this Article
without the concurrence of the member, and provided that,
at the request of the member, the Fund at the time of sale
shall exchange for the currency of another member such part
of the currency received as would prevent such an increase.
The exchange of a currency for the currency of another
member shall be made after consultation with that member,
and shall not increase the Fund’s holdings of that member’s
currency above the level at which they would be subject to
charges under Section 8(b)(ii) of this Article. The Fund shall
adopt policies and procedures with regard to exchanges that
take into account the principles applied under Section 7(i)
or this Article. Sales under this provision to a member shall
be at a price agreed for each transaction on the basis of prices
in the market.
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(d) The Fund may accept payments from a member in gold
instead of special drawing rights or currency in any operations
or transactions under this Agreement. Payments to the Fund
under this provision shall be at a price agreed for each
operation or transaction on the basis of prices in the market.
(e) The Fund may sell gold held by it on the date of the second
amendment of this Agreement to those members that were
members on 31st August, 1975 and that agreed to buy it, in
proportion to their quotas on that date. If the Fund intends to
sell gold under (c) above for the purpose of (f)(ii) below, it
may sell to each developing member that agrees to buy it
that portion of the gold which, if sold under (c) above, would
have produced the excess that could have been distributed to
it under (f)(iii) below. The gold that would be sold under this
provision to a member that has been declared ineligible to
use the general resources of the Fund under section 5 of this
Article shall be sold to it when the ineligibility ceases, unless
the Fund decides to make the sale sooner. The sale of gold to
a member under this subsection (e) shall be made in exchange
for its currency and at a price equivalent at the time of sale
to one special drawing right per 0.888 671 gram of fine gold.
(f) Whenever under (c) above the Fund sells gold held by it on
the date of the second amendment of this Agreement, an
amount of the proceeds equivalent at the time of sale to one
special drawing right per 0.888 671 gram of fine gold shall
be placed in the General Resources Account and, except as
the Fund may decide otherwise under (g) below, any excess
shall be held in the Special Disbursement Account. The assets
held in the Special Disbursement Account shall be held
separately from the other accounts of the General Department,
and may be used at any time—
(i) to make transfers to the General Resources Account for
immediate use in operations and transactions authorised
by provisions of this Agreement other than this Section;
(ii) for operations and transactions that are not authorised
by other provisions of this Agreement but are consistent
with the purposes of the Fund. Under this subsection
(f)(ii) balance of payments assistance may be made
available on special terms to developing members in
difficult circumstances, and for this purpose the Fund
shall take into account the level of per capita income;
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(iii) for distribution to those developing members that were
members on 31st August, 1975, in proportion to their
quotas on that date, of such part of the assets that the
Fund decides to use for the purposes of (ii) above as
corresponds to the proportion of the quotas of these
members on the date of distribution to the total of the
quotas of all the members on the same date, provided
that the distribution under this provision to a member
that has been declared ineligible to use the general
resources of the Fund under Section 5 of this Article
shall be made when the ineligibility ceases, unless the
Fund decides to make the distribution sooner.
Decisions to use assets pursuant to (i) above shall be taken by a seventy
per cent majority of the total voting power, and decisions pursuant to (ii) and (iii)
above shall be taken by an eighty-five per cent majority of the total voting power.
(g) The Fund may decide, by an eighty-five per cent majority of
the total voting power, to transfer a part of the excess referred
to in (f) above to the Investment Account for use pursuant to
the provisions of Article XII, Section 6(f).
(h) Pending uses specified under (f) above, the Fund may invest a
member’s currency held in the Special Disbursement Account
in marketable obligations of that member or in marketable
obligations of international financial organisations. The income
of investment and interest received under (f)(ii) above shall
be placed in the Special Disbursement Account. No investment
shall be made without the concurrence of the member whose
currency is used to make the investment. The Fund shall invest
only in obligations denominated in special drawing rights or
in the currency used for investment.
(i) The General Resources Account shall be reimbursed from
time to time in respect of the expenses of administration of
the Special Disbursement Account paid from the General
Resources Account by transfers from the Special
Disbursement Account on the basis of a reasonable estimate
of such expenses.
(j) The Special Disbursement Account shall be terminated in
the event of the liquidation of the Fund and may be terminated
prior to liquidation of the Fund by a seventy per cent majority
of the total voting power. Upon termination of the account
because of the liquidation of the Fund, any assets in this
account shall be distributed in accordance with the provisions
of Schedule K. Upon termination prior to liquidation of the
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Fund, any assets in this account shall be transferred to the
General Resources Account for immediate use in operations
and transactions. The Fund, by a seventy per cent majority
of the total voting power, shall adopt rules and regulations
for the administration of the Special Disbursement Account.
ARTICLE VI
CAPITAL TRANSFERS
Section 1. Use of the Fund’s General Resources for Capital Transfers
(a) A member may not use the Fund’s general resources to meet a
large or sustained outflow of capital except as provided in
Section 2 of this Article, and the Fund may request a member
to exercise controls to prevent such use of the general resources
of the Fund. If, after receiving such a request, a member fails
to exercise appropriate controls, the Fund may declare the
member ineligible to use the general resources of the Fund.
(b) Nothing in this Section shall be deemed—
(i) to prevent the use of the general resources of the Fund
for capital transactions of reasonable amount required
for the expansion of exports or in the ordinary course
of trade, banking, or other business; or
(ii) to affect capital movements which are met out of a
member’s own resources, but members undertake that
such capital movements will be in accordance with the
purposes of the Fund.
Section 2. Special Provisions for Capital Transfers
A member shall be entitled to make reserve tranche purchases to meet
capital transfers.
Section 3. Controls of Capital Transfers
Members may exercise such controls as are necessary to regulate
international capital movements, but no member may exercise these controls
in a manner which will restrict payments for current transactions or which
will unduly delay transfers of funds in settlement of commitments, except as
provided in Article VII, Section 3(b) and in Article XIV, Section 2.
ARTICLE VII
REPLENISHMENT AND SCARCE CURRENCIES
Section 1. Measures to Replenish the Fund’s Holdings of Currencies
The Fund may, if it deems such action appropriate to replenish its
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holdings of any member’s currency in the General Resources Account needed
in connection with its transactions, take either or both of the following steps:
(i) propose to the member that, on terms and conditions agreed
between the Fund and the member, the latter lend its currency
to the Fund or that, with the concurrence of the member, the
Fund borrow such currency from some other source either
within or outside the territories of the member but no member
shall be under any obligation to make such loans to the Fund
or to concur in the borrowing of its currency by the Fund from
any other source;
(ii) require the member, if it is a participant, to sell its currency to
the Fund for special drawing rights held in the General
Resources Account, subject to Article XIX, Section 4. In
replenishing with special drawing rights, the Fund shall pay
due regard to the principles of designation under Article XIX,
Section 5.
Section 2. General Scarcity of Currency
If the Fund finds that a general scarcity of a particular currency is
developing, the Fund may so inform members and may issue a report setting
forth the causes of the scarcity and containing recommendations designed to
bring it to an end. A representative of the member whose currency is involved
shall participate in the preparation of the report.
Section 3. Scarcity of the Fund’s Holdings
(a) If it becomes evident to the Fund that the demand for a
member’s currency seriously threatens the Fund’s ability to
supply that currency, the Fund, whether or not it has issued a
report under Section 2 of this Article, shall formally declare
such currency scarce and shall thenceforth apportion its
existing and accruing supply of the scarce currency with due
regard to the relative needs of members, the general
international economic situation, any other pertinent
considerations. The Fund shall also issue a report concerning
its action.
(b) A formal declaration under (a) above shall operate as an
authorisation to any member, after consultation with the Fund,
temporarily to impose limitations on the freedom of exchange
operations in the scarce currency. Subject to the provisions of
Article IV and Schedule C, the member shall have complete
jurisdiction in determining the nature of such limitations, but
they shall be no more restrictive than is necessary to limit the
demand for the scarce currency to the supply held by, or
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accruing to, the member in question, and they shall be relaxed
and removed as rapidly as conditions permit.
(c) The authorisation under (b) above shall expire whenever the
Fund formally declares the currency in question to be no longer
scarce.
Section 4. Administration of Restrictions
Any member imposing restrictions in respect of the currency of any
other member pursuant to the provisions of section 3(b) of this Article shall
give sympathetic consideration to any representations by the other member
regarding the administration of such restrictions.
Section 5. Effect of other International Agreements on Restrictions
Members agree not to invoke the obligations of any engagements
entered into with other members prior to this Agreement in such a manner as
will prevent the operation of the provisions of this Article.
ARTICLE VIII
GENERAL OBLIGATIONS OF MEMBERS
Section 1. Introduction
In addition to the obligations assumed under other articles or this
Agreement, each member undertakes the obligations set out in this Article.
Section 2. Avoidance of Restrictions on Current Payments
(a) Subject to the provisions of Article VII, Section 3(b) and Article
XIV, Section 2, no member shall, without the approval of the
Fund, impose restrictions on the making of payments and
transfers for current international transactions.
(b) Exchange contracts which involve the currency of any
member and which are contrary to the exchange control
regulations of that member maintained or imposed
consistently with this Agreement shall be unenforceable in
the territories of any member. In addition, members may, by
mutual accord, co-operate in measures for the purpose of
making the exchange control regulations of either member
more effective, provided that such measures and regulations
are consistent with this Agreement.
Section 3. Avoidance of Discriminatory Currency Practices
No member shall engage in, or permit any of its fiscal agencies
referred to in Article V, Section 1 to engage in, any discriminatory currency
arrangements or multiple currency practices, whether within or outside margins
under Article IV or prescribed by or under Schedule C, except as authorised
under this Agreement or approved by the Fund. If such arrangements and
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practices are engaged in at the date when this Agreement enters into force, the
member concerned shall consult with the Fund as to their progressive removal
unless they are maintained or imposed under Article XIV, Section 2, in which
case the provisions of Section 3 of that Article shall apply.
Section 4. Convertibility of Foreign-held Balances
(a) Each member shall buy balances of its currency held by another
member if the latter, in requesting the purchase, represents—
(i) that the balances to be bought have been recently
accquired as a result of current transactions; or
(ii) that their conversion is needed for making payments
for current transactions.
The buying member shall have the option to pay either in special drawing
rights, subject to Article XIX, Section 4, or in the currency of the member
making the request.
(b) The obligation in (a) above shall not apply when—
(i) the convertibility of the balances has been restricted
consistently with Section 2 of this Article or Article VI,
Section 3;
(ii) the balances have accumulated as a result of transactions
effected before the removal by a member of restrictions
maintained or imposed under Article XIV, Section 2;
(iii) the balances have been acquired contrary to the
exchange regulations of the member which is asked to
buy them;
(iv) the currency of the member requesting the purchase has
been declared scarce under Article VII, Section 3(a); or
(v) the member requested to make the purchase is for any
reason not entitled to buy currencies of other members
from the Fund for its own currency.
Section 5. Furnishing of Information
(a) The Fund may require members to furnish it with such
information as it deems necessary for its activities, including,
as the minimum necessary for the effective discharge of the
Fund’s duties, national data on the following matters:
(i) official holdings at home and abroad of (1) gold, (2)
foreign exchange;
(ii) holdings at home and abroad by banking and financial
agencies, other than of official agencies, of (1) gold,
(2) foreign exchange;
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(iii) production of gold;
(iv) gold exports and imports according to countries of
destination and origin;
(v) total exports and imports of merchandise, in terms of
local currency values, according to countries of
destination and origin;
(vi) international balance of payments, including (1) trade
in goods and services, (2) gold transactions, (3) known
capital transactions, and (4) other items;
(vii) international investment position, i.e., investments
within the territories of the member owned abroad and
investments abroad owned by persons in its territories
so far as it is possible to furnish this information;
(viii) national income;
(ix) price indices, i.e., indices of commodity prices in wholesale
and retail markets and of export and import prices;
(x) buying and selling rates for foreign currencies;
(xi) exchange controls, i.e., a comprehensive statement of
exchange controls in effect at the time of assuming
membership in the Fund and details of subsequent
changes as they occur; and
(xii) where official clearing arrangements exist, details of
amounts awaiting clearance in respect of commercial
and financial transactions, and of the length of time
during which such arrears have been outstanding.
(b) In requesting information the Fund shall take into consideration
the varying ability of members to furnish the data requested.
Members shall be under no obligation to furnish information
in such detail that the affairs of individuals or corporations
are disclosed. Members undertake, however, to furnish the
desired information in as detailed and accurate a manner as is
practicable and, so far as possible, to avoid mere estimates.
(c) The Fund may arrange to obtain further information by
agreement with members. It shall act as a centre for the
collection and exchange of information on monetary and
financial problems, thus facilitating the preparation of studies
designed to assist members in developing policies which
further the purposes of the Fund.
Section 6. Consultation between Members Regarding Existing International
Agreements
Where under this Agreement a member is authorised in the special or
temporary circumstances specified in the Agreement to maintain or establish
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restrictions on exchange transactions, and there are other engagements between
members entered into prior to this Agreement which conflict with the application
of such restrictions, the parties to such engagements shall consult with one
another with a view to making such mutually acceptable adjustments as may be
necessary. The provisions of this Article shall be without prejudice to the
operation of Article VII, Section 5.
Section 7. Obligation to Collaborate Regarding Policies on Reserve Assets
Each member undertakes to collaborate with the Fund and with other
members in order to ensure that the policies of the member with respect to
reserve assets shall be consistent with the objectives of promoting better
international surveillance of international liquidity and making the special
drawing right the principal reserve asset in the international monetary system.
ARTICLE IX
STATUS, IMMUNITIES, AND PRIVILEGES
Section 1. Purposes of Article
To enable the Fund to fulfil the functions with which it is entrusted,
the status, immunities, and privileges set forth in this Article shall be accorded
to the Fund in the territories of each member.
Section 2. Status of the Fund
The Fund shall possess full juridical personality, and in particular,
the capacity—
(i) to contract;
(ii) to acquire and dispose of immovable and movable
property; and
(iii) to institute legal proceedings.
Section 3. Immunity from Judicial Process
The Fund, its property and its assets, wherever located and by
whosoever held, shall enjoy immunity from every form of judicial process except
to the extent that it expressly waives its immunity for the purpose of any
proceedings or by the terms of any contract.
Section 4. Immunity from other Action
Property and assets of the Fund, wherever located and by whosoever
held, shall be immune from search, requisition, confiscation, expropriation, or
any other form of seizure by executive or legislative action.
Section 5. Immunity of Archives
The archives of the Fund shall be inviolable.
Section 6. Freedom of Assets from Restrictions
To the extent necessary to carry out the activities provided for in this
Agreement, all property and assets of the Fund shall be free from restriction,
regulations, controls and moratoria of any nature.
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Section 7. Privilege for Communications
The official communications of the Fund shall be accorded by members
the same treatment as the official communications of other members.
Section 8. Immunities and Privileges of Officers and Employees
All Governors, Executive Directors, Alternates, members of
committees, representatives appointed under Article XII, Section 3(j), advisors
of any of the foregoing persons, officers, and employees of the Fund—
(i) shall be immune from legal process with respect to acts
performed by them in their official capacity except when
the Fund waives this immunity;
(ii) not being local nationals, shall be granted the same
immunities from immigration restrictions, alien
registration requirements, and national service obligations
and the same facilities as regards exchange restrictions as
are accorded by members to the representatives, officials,
and employees of comparable rank of other members; and
(iii) shall be granted the same treatment in respect of
travelling facilities as is accorded by members to
representatives, officials, and employees of comparable
rank of other members.
Section 9. Immunities from Taxation
(a) The Fund, its assets, property, income, and its operations and
transactions authorised by this Agreement shall be immune
from all taxation and from all Customs duties. The Fund shall
also be immune from liability for the collection or payment of
any tax or duty.
(b) No tax shall be levied on or in respect of salaries and
emoluments paid by the Fund to Executive Directors,
Alternates, officers, or employees of the Fund who are not
local citizens, local subjects, or other local nationals.
(c) No taxation of any kind shall be levied on any obligation or
security issued by the Fund, including any dividend or interest
thereon, by whosoever held—
(i) which discriminates against such obligation or security
solely because of its origin; or
(ii) if the sole jurisdictional basis for such taxation is the
place or currency in which it is issued, made payable
or paid, or the location of any office or place of business
maintained by the Fund.
Section 10. Application of Article
Each member shall take such action as is necessary in its own territories
for the purpose of making effective in terms of its own law the principles set forth
in this Article and shall inform the Fund of the detailed action which it has taken.
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ARTICLE X
RELATIONS WITH OTHER INTERNATIONAL ORGANISATIONS
The Fund shall co-operate within the terms of this Agreement with
any general international organisation and with public international organisations
having specialised responsibilities in related fields. Any arrangements for such
co-operation which would involve a modification of any provision of this
Agreement may be effected only after amendment to this Agreement under
Article XXVIII.
ARTICLE XI
RELATIONS WITH NON-MEMBER COUNTRIES
Section 1. Undertakings Regarding Relations with Non-member Countries
Each member undertakes:
(i) not to engage in, nor to permit any of its fiscal agencies referred
to in Article V, Section 1 to engage in, any transactions with a
non-member or with persons in a non-member’s territories
which would be contrary to the provisions of this Agreement
or the purposes of the Fund;
(ii) not to co-operate with a non-member or with persons in a non-
member’s territories in practices which would be contrary to
the provisions of this Agreement or the purposes of
the Fund; and
(iii) to co-operate with the Fund with a view to the application in
its territories of appropriate measures to prevent transactions
with non-members or with persons in their territories which
would be contrary to the provisions of this Agreement or the
purposes of the Fund.
Section 2. Restrictions on Transactions with Non-member Countries
Nothing in this Agreement shall affect the right of any member to
impose restrictions on exchange transactions with non-members or with persons
in their territories unless the Fund finds that such restrictions prejudice the
interests of members and are contrary to the purposes of the Fund.
ARTICLE XII
ORGANISATION AND MANAGEMENT
Section 1. Structure of the Fund
The Fund shall have a Board of Governors, an Executive Board, a
Managing Director, and a staff, and a Council if the Board of Governors decides,
by an eighty-five per cent majority of the total voting power, that the provisions
of Schedule D shall be applied.
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Section 2. Board of Governors
(a) All powers under this Agreement not conferred directly on
the Board of Governors, the Executive Board, or the Managing
Director shall be vested in the Board of Governors. The Board
of Governors shall consist of one Governor and one Alternate
appointed by each member in such manner as it may determine.
Each Governor and each Alternate shall serve until a new
appointment is made. No Alternate may vote except in the
absence of his principal. The Board of Governors shall select
one of the Governors as chairman.
(b) The Board of Governors may delegate to the Executive Board
authority to exercise any powers of the Board of Governors,
except the powers conferred directly by this Agreement on
the Board of Governors.
(c) The Board of Governors shall hold such meetings as may be
provided for by the Board of Governors or called by the
Executive Board. Meetings of the Board of Governors shall
be called whenever requested by fifteen members or by
members having one-quarter of the total voting power.
(d) A quorum for any meeting of the Board of Governors shall be
a majority of the Governors having not less than two-thirds of
the total voting power.
(e) Each Governor shall be entitled to cast the number of votes
allotted under Section 5 of this Article to the member
appointing him.
(f) The Board of Governors may by regulation establish a
procedure whereby the Executive Board, when it deems such
action to be in the best interests of the Fund, may obtain a vote
of the Governors on a specific question without calling a
meeting of the Board of Governors.
(g) The Board of Governors, and the Executive Board to the extent
authorised, may adopt such rules and regulations as may be
necessary or appropriate to conduct the business of the Fund.
(h) Governors and Alternates shall serve as such without
compensation from the Fund, but the Fund may pay them
reasonable expenses incurred in attending meetings.
(i) The Board of Governors shall determine the remuneration to
be paid to the Executive Directors and their Alternates and the
salary and terms of the contract of service of the
Managing Director.
(j) The Board of Governors and the Executive Board may appoint
such committees as they deem advisable. Membership of
committees need not be limited to Governors or Executive
Directors or their Alternates.
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Section 3. Executive Board
(a) The Executive Board shall be responsible for conducting the
business of the Fund, and for this purpose shall exercise all
the powers delegated to it by the Board of Governors.
(b) The Executive Board shall consist of Executive Directors with
the Managing Director as chairman of the Executive Board
of Directors—
(i) five shall be appointed by the five members having the
largest quotas; and
(ii) fifteen shall be elected by the other members.
For the purpose of each regular election of Executive Directors, the
Board of Governors, by an eighty-five per cent majority of the total voting
power, may increase or decrease the number of Executive Directors in (ii) above.
The number of Executive Directors in (ii) above shall be reduced by one or two,
as the case may be, if Executive Directors are appointed under (c) below, unless
the Board of Governors decides, by an eighty-five per cent majority of the total
voting power, that this reduction would hinder the effective discharge of the
functions of the Executive Board or of Executive Directors or would threaten to
upset a desirable balance in the Executive Board.
(c) If, at the second regular election of Executive Directors and
thereafter, the members entitled to appoint Executive Directors
under (b) (i) above do not include the two members, the
holdings of whose currencies by the Fund in the General
Resources Account have been, on the average over the
preceding two years, reduced below their quotas by the largest
absolute amounts in terms of the special drawing right, either
one or both of such members, as the case may be, may appoint
an Executive Director.
(d) Elections of elective Executive Directors shall be conducted
at intervals of two years in accordance with the provisions of
Schedule E, supplemented by such regulations as the Fund
deems appropriate. For each regular election of Executive
Directors, the Board of Governors may issue regulations
making changes in the proportion of votes required to elect
Executive Directors under the provisions of Schedule E.
(e) Each Executive Director shall appoint an Alternate with full
power to act for him when he is not present. When the
Executive Directors appointing them are present, Alternates
may participate in meetings but may not vote.
(f) Executive Directors shall continue in office until their
successors are appointed or elected. If the office of an elected
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Executive Director becomes vacant more than ninety days
before the end of his term, another Executive Director shall
be elected for the remainder of the term by the members that
elected the former Executive Director. A majority of the votes
cast shall be required for election. While the office remains
vacant, the Alternate of the former Executive Director shall
exercise his powers, except that of appointing an Alternate.
(g) The Executive Board shall function in continuous session at
the principal office of the Fund and shall meet as often as the
business of the Fund may require.
(h) A quorum for any meeting of the Executive Board shall be
a majority of the Executive Directors having not less than
one-half of the total voting power.
(i) (i) Each appointed Executive Director shall be entitled to
cast the number of votes allotted under Section 5 of
this Article to the member appointing him.
(ii) If the votes allotted to a member that appoints an
Executive Director under (c) above were cast by an
Executive Director together with the votes allotted to
other members as a result of the last regular election of
Executive Directors, the member may agree with each
of the other members that the number of votes allotted
to it shall be cast by the appointed Executive Director.
A member making such an agreement shall not
participate in the election of Executive Directors.
(iii) Each elected Executive Director shall be entitled to cast
the number of votes which counted towards his election.
(iv) When the provisions of Section 5(b) of this Article
are applicable, the votes of which an Executive
Director would otherwise be entitled to cast shall be
increased or decreased correspondingly. All the votes
which an Executive Director is entitled to cast shall
be cast as a unit.
(v) When the suspension of the voting rights of a member
is terminated under Article XXVI, Section 2(b), and
the member is not entitled to appoint an Executive
Director, the member may agree with all the members
that have elected an Executive Director that the number
of votes allotted to that member shall be cast by such
Executive Director, provided that, if no regular election
of Executive Directors has been conducted during the
period of the suspension, the Executive Director in
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whose election the member had participated prior to
the suspension, or his successor elected in accordance
with paragraph 3(c)(i) of Schedule L or with (f) above,
shall be entitled to cast the number of votes allotted to
the member. The member shall be deemed to have
participated in the election of the Executive Director
entitled to cast the number of votes allotted
to the member.
(j) The Board of Governors shall adopt regulations under which
a member not entitled to appoint an Executive Director under
(b) above may send a representative to attend any meeting of
the Executive Board when a request made by, or a matter
particularly affecting, that member is under consideration.
Section 4. Managing Director and Staff
(a) The Executive Board shall select a Managing Director who
shall not be a Governor or an Executive Director. The
Managing Director shall be chairman of the Executive Board,
but shall have no vote except a deciding vote in case of an
equal division. He may participate in meetings of the Board
of Governors, but shall not vote at such meetings. The
Managing Director shall cease to hold office when the
Executive Board so decides.
(b) The Managing Director shall be chief of the operating staff of
the Fund and shall conduct, under the direction of the Executive
Board, the ordinary business of the Fund. Subject to the general
control of the Executive Board, he shall be responsible for the
organisation, appointment, and dismissal of the staff of the Fund.
(c) The Managing Director and the staff of the Fund, in the
discharge of their functions, shall owe their duty entirely to
the Fund and to no other authority. Each member of the Fund
shall respect the international character of this duty and shall
refrain from all attempts to influence any of the staff in the
discharge of these functions.
(d) In appointing the staff the Managing Director shall, subject to
the paramount importance of securing the highest standards
of efficiency and of technical competence, pay due regard to
the importance of recruiting personnel on as wide a
geographical basis as possible.
Section 5. Voting
(a) Each member shall have two hundred and fifty votes plus one
additional vote for each part of its quota equivalent to one
hundred thousand special drawing rights.
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(b) Whenever voting is required under Article V, Section 4 or 5,
each member shall have the number of votes to which it is
entitled under (a) above adjusted—
(i) by the addition of one vote for the equivalent of each
four hundred thousand special drawing rights of net
sales of its currency from the general resources of the
Fund up to the date when the vote is taken; or
(ii) by the subtraction of one vote for the equivalent of each
four hundred thousand special drawing rights of its net
Purchases under Article V, Section 3(b) and (f) up to
the date when the vote is taken,
provided that neither net purchases nor net sales shall be deemed at any time to
exceed an amount equal to the quota of the member involved.
(c) Except as otherwise specifically provided, all decisions of the
Fund shall be made by a majority of the votes cast.
Section 6. Reserves, Distribution of Net Income, and Investment
(a) The Fund shall determine annually what part of its net income
shall be placed to general reserve or special reserve, and what
part, if any, shall be distributed.
(b) The Fund may use the special reserve for any purpose for which
it may use the general reserve, except distribution.
(c) If any distribution is made of the net income of any year, it
shall be made to all members in proportion to their quotas.
(d) The Fund, by a seventy per cent majority of the total voting
power, may decide at any time to distribute any part of the
general reserve. Any such distribution shall be made to all
members in proportion to their quotas.
(e) Payments under (c) and (d) above shall be made in special
drawing rights, provided that either the Fund or the member
may decide that the payment to the member shall be made in
its own currency.
(f) (i) The Fund may establish an Investment Account for the
purposes of this subsection (f). The assets of the
Investment Account shall be held separately from the
other accounts of the General Department.
(ii) The Fund may decide to transfer to the Investment
Account a part of the proceeds of the sale of gold in
accordance with Article V, Section 12(g) and, by a
seventy per cent majority of the total voting power, may
decide to transfer to the Investment Account, for
immediate investment, currencies held in the General
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Resources Account. The amount of these transfers shall
not exceed the total amount of the general reserve and
the special reserve at the time of the decision.
(iii) The Fund may invest a member’s currency held in the
Investment Account in marketable obligations of that
member or in marketable obligations of international
financial organisations. No investment shall be made
without the concurrence of the member whose currency
is used to make the investment. The Fund shall invest
only in obligations denominated in special drawing
rights or in the currency used for investment.
(iv) The income of investment may be invested in
accordance with the provisions of this subsection (f).
Income not invested shall be held in the Investment
Account or may be used for meeting the expenses of
conducting the business of the Fund.
(v) The Fund may use a member’s currency held in the
Investment Account to obtain the currencies needed to
meet the expenses of conducting the business
of the Fund.
(vi) The Investment Account shall be terminated in the event
of liquidation of the Fund and may be terminated, or
the amount of the investment may be reduced, prior to
liquidation of the Fund by a seventy per cent majority
of the total voting power. The Fund, by a seventy
per cent majority of the total voting power, shall adopt
rules and regulations regarding administration or the
Investment Account, which shall be consistent with
(vii), (viii) and (ix) below.
(vii) Upon termination of the Investment Account because
of liquidation of the Fund, any assets in this account
shall be distributed in accordance with the provisions
of Schedule K, provided that a portion of these assets
corresponding to the proportion of the assets transferred
to this account under Article V, Section 12(g) to the
total of the assets transferred to this account shall be
deemed to be assets held in the Special Disbursement
Account and shall be distributed in accordance with
Schedule K, paragraph 2(a)(ii).
(viii) Upon termination of the Investment Account prior to
liquidation of the Fund, a portion of the assets held in
this account corresponding to the proportion or the
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assets transferred to this account under Article V, Section
12(g) to the total of the assets transferred to the account
shall be transferred to the Special Disbursement
Account if it has not been terminated and the balance
of the assets held in the Investment Account shall be
transferred to the General Resources Account for
immediate use in operations and transactions.
(ix) On a reduction of the amount of the investment by the
Fund, a portion of the reduction corresponding to the
proportion of the assets transferred to the Investment
Account under Article V, Section 12(g) to the total of
the assets transferred to this account shall be transferred
to the Special Disbursement Account if it has not been
terminated, and the balance of the reduction shall be
transferred to the General Resources Account for
immediate use in operations and transactions.
Section 7. Publication of Reports
(a) The Fund shall publish an annual report containing an audited
statement of its accounts, and shall issue, at intervals of three
months or less, a summary statement of its operations and
transactions and its holdings of special drawing rights, gold,
and currencies of members.
(b) The Fund may publish such other reports as it deems desirable
for carrying out its purposes.
Section 8. Communication of Views to Members
The Fund shall at all times have the right to communicate its views
informally to any member on any matter arising under this Agreement. The Fund
may, by a seventy per cent majority of the total voting power, decide to publish a
report made to a member regarding its monetary or economic conditions and
developments which directly tend to produce a serious disequilibrium in the
international balance of payments of members. If the member is not entitled to
appoint an Executive Director, it shall be entitled to representation in accordance
with Section 3(j) of this Article. The Fund shall not publish a report involving
changes in the fundamental structure of the economic organisation of members.
ARTICLE XIII
OFFICES AND DEPOSITORIES
Section 1. Location of Offices
The principal office of the Fund shall be located in the territory of the
member having the largest quota, and agencies or branch offices may be
established in the territories of other members.
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Section 2. Depositories
(a) Each member shall designate its central bank as a depository
for all the Fund’s holdings of its currency, or if it has no central
bank it shall designate such other institution as may be
acceptable to the Fund.
(b) The Fund may hold other assets, including gold, in the
depositories designated by the five members having the largest
quotas and in such other designated depositories as the Fund
may select. Initially, at least one-half of the holdings of the
Fund shall be held in the depository designated by the member
in whose territories the Fund has its principal office and at
least forty per cent shall be held in the depositories designated
by the remaining four members referred to above. However,
all transfers of gold by the Fund shall be made with due regard
to the costs of transport and anticipated requirements of the
Fund. In an emergency the Executive Board may transfer all
or any part of the Fund’s gold holdings to any place where
they can be adequately protected.
Section 3. Guarantee of the Fund’s Assets
Each member guarantees all assets of the Fund against loss resulting
from failure or default on the part of the depository designated by it.
ARTICLE XIV
TRANSITIONAL ARRANGEMENTS
Section 1. Notification to the Fund
Each member shall notify the Fund whether it intends to avail itself of
the transitional arrangements in Section 2 of this Article, or whether it is prepared
to accept the obligations of Article VIII, Sections 2, 3, and 4. A member availing
itself of the transitional arrangements shall notify the Fund as soon thereafter as
it is prepared to accept these obligations.
Section 2. Exchange Restrictions
A member that has notified the Fund that it intends to avail itself of
transitional arrangements under this provision may, notwithstanding the
provisions of any other articles of this Agreement, maintain and adapt to changing
circumstances the restrictions on payments and transfers for current international
transactions that were in effect on the date on which it became a member.
Members shall, however, have continuous regard in their foreign exchange
policies to the purposes of the Fund, and, as soon as conditions permit, they
shall take all possible measures to develop such commercial and financial
arrangements with other members as will facilitate international payments and
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the promotion of a stable system of exchange rates. In particular, members shall
withdraw restrictions maintained under this section as soon as they are satisfied
that they will be able, in the absence of such restrictions, to settle their balance
of payments in a manner which will not unduly encumber their access to the
general resources of the Fund.
Section 3. Action of the Fund Relating to Restrictions
The Fund shall make annual reports on the restrictions in force under
Section 2 of this Article. Any member retaining any restrictions inconsistent
with Article VIII, Section 2, 3 or 4 shall consult the Fund annually as to their
further retention. The Fund may, if it deems such action necessary in exceptional
circumstances, make representations to any member that conditions are
favourable for the withdrawal of any particular restriction, or for the general
abandonment of restrictions, inconsistent with the provisions of any other articles
of this Agreement. The member shall be given a suitable time to reply to such
representations. If the Fund finds that the member persists in maintaining
restrictions which are inconsistent with the purposes of the Fund, the member
shall be subject to Article XXVI, Section 2(a).
ARTICLE XV
SPECIAL DRAWING RIGHTS
Section 1. Authority to Allocate Special Drawing Rights
(a) To meet the need, as and when it arises, for a supplement to
existing reserve assets, the Fund is authorised to allocate
special drawing rights in accordance with the provisions of
Article XVIII to members that are participants in the Special
Drawing Rights Department.
(b) In addition, the Fund shall allocate special drawing rights to
members that are participants in the Special Drawing Rights
Department in accordance with the provisions of Schedule M.
Section 2. Valuation of the Special Drawing Right
The method of valuation of the special drawing right shall be determined
by the Fund by a seventy per cent majority of the total voting power, provided,
however, that an eighty-five per cent majority of the total voting power shall be
required for a change in the principle of valuation or a fundamental change in
the application of the principle in effect.
ARTICLE XVI
GENERAL DEPARTMENT AND SPECIAL
DRAWING RIGHTS DEPARTMENT
Section 1. Separation of Operations and Transactions
All operations and transactions involving special drawing rights shall
be conducted through the Special Drawing Rights Department all other
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operations and transactions on the account of the Fund authorised by or under
this Agreement shall be conducted through the General Department. Operations
and transactions pursuant to Article XVII, Section 2 shall be conducted through
the General Department as well as the Special Drawing Rights Department.
Section 2. Separation of Assets and Property
All assets and property of the Fund, except resources administered under
Article V, Section 2(b), shall be held in the General Department, provided that
assets and property acquired under Article XX, Section 2 and Articles XXIV and
XXV and Schedules H and I shall be held in the Special Drawing Rights
Department. Any assets or property held in one Department shall not be available
to discharge or meet the liabilities, obligations, or losses of the Fund incurred in
the conduct of the operations and transactions of the other Department, except
that the expenses of conducting the business of the Special Drawing Rights
Department shall be paid by the Fund from the General Department which shall
be reimbursed in special drawing rights from time to time by assessments under
Article XX, Section 4 made on the basis of a reasonable estimate of such expenses.
Section 3. Recording and Information
All changes in holdings of special drawing rights shall take effect only
when recorded by the Fund in the Special Drawing Rights Department.
Participants shall notify the Fund of the provisions of this Agreement under
which special drawing rights are used. The Fund may require participants to
furnish it with such other information as it deems necessary for its functions.
ARTICLE XVII
PARTICIPANTS AND OTHER
HOLDERS OF SPECIAL DRAWING RIGHTS
Section 1. Participants
Each member of the Fund that deposits with the Fund an instrument
setting forth that it undertakes all the obligations of a participant in the Special
Drawing Rights Department in accordance with its law and that it has taken all
steps necessary to enable it to carry out all of these obligations shall become a
participant in the Special Drawing Rights Department as of the date the
instrument is deposited, except that no member shall become a participant before
the provisions of this agreement pertaining exclusively to the Special Drawing
Rights Department have entered into force and instruments have been deposited
under this Section by members that have at least seventy-five per cent of the
total of quotas.
Section 2. Fund as a Holder
The Fund may hold special drawing rights in the General Resources
Account and may accept and use them in operations and transactions conducted
through the General Resources Account with participants in accordance with
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the provisions of this Agreement or with prescribed holders in accordance with
the terms and conditions prescribed under Section 3 of this Article.
Section 3. Other Holders
The Fund may prescribe—
(i) as holders, non-members, members that are non-participants,
institutions that perform functions of a central bank for more
than one member, and other official entities;
(ii) the terms and conditions on which prescribed holders may be
permitted to hold special drawing rights and may accept and
use them in operations and transactions with participants and
other prescribed holders; and
(iii) the terms and conditions on which participants and the Fund
through the General Resources Account may enter into
operations and transactions in special drawing rights with
prescribed holders.
An eighty-five per cent majority of the total voting power shall be
required for prescriptions under (i) above. The terms and conditions prescribed
by the Fund shall be consistent with the provisions of this Agreement and the
effective functioning of the Special Drawing Rights Department.
ARTICLE XVIII
ALLOCATION AND CANCELLATION
OF SPECIAL DRAWING RIGHTS
Section 1. Principles and Considerations Governing Allocation and Cancellation
(a) In all its decisions with respect to the allocation and
cancellation of special drawing rights the Fund shall seek to
meet the long-term global need, as and when it arises, to
supplement existing reserve assets in such manner as will
promote the attainment of its purposes and will avoid economic
stagnation and deflation as well as excess demand and inflation
in the world.
(b) The first decision to allocate special drawing rights shall take
into account, as special considerations, a collective judgment
that there is a global need to supplement reserves, and the
attainment of a better balance of payments equilibrium, as well
as the likelihood of a better working of the adjustment process
in the future.
Section 2. Allocation and Cancellation
(a) Decisions of the Fund to allocate or cancel special drawing
rights shall be made for basic periods which shall run
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consecutively and shall be five years in duration. The first
basic period shall begin on the date of the first decision to
allocate special drawing rights or such later date as may be
specified in that decision. Any allocations or cancellations shall
take place at yearly intervals.
(b) The rates at which allocations are to be made shall be expressed
as percentages of quotas on the date of each decision to allocate.
The rates at which special drawing rights are to be cancelled
shall be expressed as percentages of net cumulative allocations
of special drawing rights on the date of each decision to cancel.
The percentages shall be the same for all participants.
(c) In its decision for any basic period the Fund may provide,
notwithstanding (a) and (b) above, that—
(i) the duration of the basic period shall be other than
five years;
(ii) the allocations or cancellations shall take place at other
than yearly intervals; or
(iii) the basis for allocations or cancellations shall be the
quotas or net cumulative allocations on dates other than
the dates of decisions to allocate or cancel.
(d) A member that becomes a participant after a basic period starts
shall receive allocations beginning with the next basic period
in which allocations are made after it becomes a participant
unless the Fund decides that the new participant shall start to
receive allocations beginning with the next allocation after it
becomes a participant. If the Fund decides that a member that
becomes a participant during a basic period shall receive
allocations during the remainder of that basic period and the
participant was not a member on the dates established under
(b) or (c) above, the Fund shall determine the basis on which
these allocations to the participant shall be made.
(e) A participant shall receive allocations of special drawing rights
made pursuant to any decision to allocate unless—
(i) the Governor for the participant did not vote in favour
of the decision; and
(ii) the participant has notified the Fund in writing prior to
the first allocation of special drawing rights under that
decision that it does not wish special drawing rights to
be allocated to it under the decision. On the request of
a participant, the Fund may decide to terminate the effect
of the notice with respect to allocations of special
drawing rights subsequent to the termination.
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(f) If on the effective date of any cancellation the amount of special
drawing rights held by a participant is less than its share of the
special drawing rights that are to be cancelled, the participant
shall eliminate its negative balance as promptly as its gross
reserve position permits and shall remain in consultation with
the Fund for this purpose. Special drawing rights acquired by
the participant after the effective date of the cancellation shall
be applied against its negative balance and cancelled.
Section 3. Unexpected Major Developments
The Fund may change the rates or intervals of allocation or cancellation
during the rest of a basic period or change the length of a basic period or start a
new basic period, if at any time the Fund finds it desirable to do so because of
unexpected major developments.
Section 4. Decisions on Allocations and Cancellations
(a) Decisions under Section 2(a), (b), and (c) or Section 3 of this
Article shall be made by the Board of Governors on the basis
of proposals of the Managing Director concurred in by the
Executive Board.
(b) Before making any proposal, the Managing Director, after
having satisfied himself that it will be consistent with the
provisions of Section 1(a) of this Article, shall conduct such
consultations as will enable him to ascertain that there is broad
support among participants for the proposal. In addition, before
making a proposal for the first allocation, the Managing
Director shall satisfy himself that the provisions of Section
1(b) of this Article have been met and that there is broad support
among participants to begin allocations; he shall make a
proposal for the first allocation as soon after the establishment
of the Special Drawing Rights Department as he is so satisfied.
(c) The Managing Director shall make proposals—
(i) not later than six months before the end of each
basic period;
(ii) if no decision has been taken with respect to allocation
or cancellation for a basic period, whenever he is
satisfied that the provisions of (b) above have been met;
(iii) when, in accordance with Section 3 of this Article, he
considers that it would be desirable to change the rate
or intervals of allocation or cancellation or change the
length of a basic period or start a new basic period; or
(iv) within six months of a request by the Board of
Governors or the Executive Board,
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provided that, if under (i), (iii) or (iv) above the Managing Director ascertains
that there is no proposal which he considers to be consistent with the provisions
of Section 1 of this Article that has broad support among participants in
accordance with (b) above, he shall report to the Board of Governors and to the
Executive Board.
(d) An eighty-five per cent majority of the total voting power shall
be required for decisions under Section 2(a), (b) and (c) or
Section 3 of this Article except for decisions under Section 3
with respect to a decrease in the rates of allocation.
ARTICLE XIX
OPERATIONS AND TRANSACTIONS IN SPECIAL DRAWING RIGHTS
Section 1. Use of Special Drawing Rights
Special drawing rights may be used in the operations and transactions
authorised by or under this Agreement.
Section 2. Operations and Transactions between Participants
(a) A participant shall be entitled to use its special drawing rights
to obtain an equivalent amount of currency from a participant
designated under Section 5 of this Article.
(b) A participant, in agreement with another participant, may use
its special drawing rights to obtain an equivalent amount of
currency from the other participant.
(c) The Fund, by a seventy per cent majority of the total voting
power, may prescribe operations in which a participant is
authorised to engage in agreement with another participant on
such terms and conditions as the Fund deems appropriate. The
terms and conditions shall be consistent with the effective
functioning of the Special Drawing Rights Department and
the proper use of special drawing rights in accordance with
this Agreement.
(d) The Fund may make representations to a participant that enters
into any operation or transaction under (b) or (c) above that in
the judgment of the Fund may be prejudicial to the process of
designation according to the principles of Section 5 of this
Article or is otherwise inconsistent with Article XXII. A
participant that persists in entering into such operations or
transactions shall be subject to Article XXIII, Section 2(b).
Section 3. Requirement of Need
(a) In transactions under Section 2(a) of this Article, except as
otherwise provided in (c) below, a participant will be expected
to use its special drawing rights only if it has a need because
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of its balance of payments or its reserve position or
developments in its reserves, and not for the sole purpose of
changing the composition of its reserves.
(b) The use of special drawing rights shall not be subject to
challenge on the basis of the expectation in (a) above, but
the Fund may make representations to a participant that fails
to fulfil this expectation. A participant that persists in failing
to fulfil this expectation shall be subject to Article XXIII,
Section 2(b).
(c) The Fund may waive the expectation in (a) above in any
transactions in which a participant uses special drawing rights
to obtain an equivalent amount of currency from a participant
designated under Section 5 of this Article that would promote
reconstitution by the other participant under Section 6(a) of
this Article; prevent or reduce a negative balance of the other
participant; or offset the effect of a failure by the other
participant to fulfil the expectation in (a) above.
Section 4. Obligation to Provide Currency
(a) A participant designated by the Fund under Section 5 of this
Article shall provide on demand a freely usable currency to a
participant using special drawing rights under Section 2(a) of
this Article. A participant’s obligation to provide currency shall
not extend beyond the point at which its holdings of special
drawing rights in excess of its net cumulative allocation are
equal to twice its net cumulative allocation or such higher limit
as may be agreed between a participant and the Fund.
(b) A participant may provide currency in excess of the obligatory
limit or any agreed higher limit.
Section 5. Designation of Participants to Provide Currency
(a) The Fund shall ensure that a participant will be able to use its
special drawing rights by designating participants to provide
currency for specified amounts of special drawing rights for
the purposes of Sections 2(a) and 4 of this Article. Designations
shall be made in accordance with the following general
principles supplemented by such other principles as the Fund
may adopt from time to time:
(i) a participant shall be subject to designation if its balance
of payment and gross reserve position is sufficiently
strong, but this will not preclude the possibility that a
participant with a strong reserve position will be
designated even though it has a moderate balance of
payments deficit. Participants shall be designated in
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such manner as will promote over time a balanced
distribution of holdings of special drawing rights
among them;
(ii) participants shall be subject to designation in order to
promote reconstitution under Section 6(a) of this
Article, to reduce negative balances in holdings of
special drawing rights, or to offset the effect of failures
to fulfil the expectation in Section 3(a) of this Article;
(iii) in designating participants the Fund normally shall give
priority to those that need to acquire special drawing
rights to meet the objectives of designation
under (ii) above.
(b) In order to promote over time a balanced distribution of
holdings of special drawing rights under (a)(i) above, the Fund
shall apply the rules for designation in Schedule F or such
rules as may be adopted under (c) below.
(c) The rules for designation may be reviewed at any time and
new rules shall be adopted if necessary. Unless new rules are
adopted, the rules in force at the time of the review shall
continue to apply.
Section 6. Reconstitution
(a) Participants that use their special drawing rights shall
reconstitute their holdings of them in accordance with the rules
for reconstitution in Schedule G or such rules as may be
adopted under (b) below.
(b) The rules for reconstitution may be reviewed at any time and
new rules shall be adopted if necessary. Unless new rules are
adopted or a decision is made to abrogate rules for
reconstitution, the rules in force at the time of review shall
continue to apply. A seventy per cent majority of the total voting
power shall be required for decisions to adopt, modify or
abrogate the rules for reconstitution.
Section 7. Exchange Rates
(a) Except as otherwise provided in (b) below, the exchange rates
for transactions between participants under Section 2(a) and (b)
of this Article shall be such that participants using special
drawing rights shall receive the same value whatever currencies
might be provided and whichever participants provide those
currencies, and the Fund shall adopt regulations to give effect
to this principle.
(b) The Fund, by an eighty-five per cent majority of the total
voting power, may adopt policies under which in
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exceptional circumstances the Fund, by a seventy per cent
majority of the total voting power, may authorise
participants entering into transactions under Section 2(b)
of this Article to agree on exchange rates other than those
applicable under (a) above.
(c) The Fund shall consult a participant on the procedure for
determining rates of exchange for its currency.
(d) For the purpose of this provision the term participant includes
a terminating participant.
ARTICLE XX
SPECIAL DRAWING RIGHTS DEPARTMENT
INTEREST AND CHARGES
Section 1. Interest
Interest at the same rate for all holders shall be paid by the Fund to
each holder on the amount or its holdings of special drawing rights. The Fund
shall pay the amount due to each holder whether or not sufficient charges are
received to meet the payment of interest.
Section 2. Charges
Charges at the same rate for all participants shall be paid to the
Fund by each participant on the amount of its net cumulative allocation of
special drawing rights plus any negative balance of the participant or
unpaid charges.
Section 3. Rate of Interest and Charges
The Fund shall determine the rate of interest by a seventy per cent
majority of the total voting power. The rate of charges shall be equal to the rate
of interest.
Section 4. Assessments
When it is decided under Article XVI, Section 2 that reimbursement
shall be made, the Fund shall levy assessments for this purpose at the same rate
for all participants on their net cumulative allocations.
Section 5. Payment of Interest, Charges and Assessments
Interest, charges and assessments shall be paid in special drawing rights.
A participant that needs special drawing rights to pay any charge or assessment
shall be obligated and entitled to obtain them, for currency acceptable to the
Fund, in a transaction with the Fund conducted through the General Resources
Account. If sufficient special drawing rights cannot be obtained in this way, the
participant shall be obligated and entitled to obtain them with a freely usable
currency from a participant which the Fund shall specify. Special drawing rights
acquired by a participant after the date for payment shall be applied against its
unpaid charges and cancelled.
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ARTICLE XXI
ADMINISTRATION OF THE GENERAL DEPARTMENT
AND THE SPECIAL DRAWING RIGHTS DEPARTMENT
(a) The General Department and the Special Drawing Rights
Department shall be administered in accordance with the
provisions of Article XII, subject to the following provisions:
(i) For meetings of or decisions by the Board of Governors
on matters pertaining exclusively to the Special
Drawing Rights Department only requests by, or the
presence and the votes of, Governors appointed by
members that are participants shall be counted for the
purpose of calling meetings and determining whether a
quorum exists or whether a decision is made by the
required majority.
(ii) For decisions by the Executive Board on matters pertaining
exclusively to the Special Drawing Rights Department only
Executive Directors appointed or elected by at least one
member that is a participant shall be entitled to vote. Each
of these Executive Directors shall be entitled to cast the
number of votes allotted to the member which is a
participant that appointed him or to the members that are
participants whose votes counted towards his election.
Only the presence of Executive Directors appointed or
elected by members that are participants and the votes
allotted to members that are participants shall be counted
for the purpose of determining whether a quorum exists
or whether a decision is made by the required majority.
For the purposes of this provision, an agreement under
Article XII, Section 3(i), (ii) by a member that is a
participant shall entitle an appointed Executive Director
to vote and cast the number of votes allotted to the member.
(iii) Questions of the general administration of the Fund,
including reimbursement under Article XVI, Section 2,
and any question whether a matter pertains to both
Departments or exclusively to the Special Drawing
Rights Department shall be decided as if they pertained
exclusively to the General Department. Decisions with
respect to the method of valuation of the special
drawing rights, the acceptance and holding of special
drawing rights in the General Resources Account of
the General Department and the use of them, and other
decisions affecting the operations and transactions
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conducted through both the General Resources
Account of the General Department and the Special
Drawing Rights Department shall be made by the
majorities required for decisions on matters pertaining
exclusively to each Department. A decision on a matter
pertaining to the Special Drawing Rights Department
shall so indicate.
(b) In addition to the privileges and immunities that are accorded
under Article IX of this Agreement, no tax of any kind shall
be levied on special drawing rights or on operations or
transactions in special drawing rights.
(c) A question of interpretation of the provisions of this Agreement
on matters pertaining exclusively to the Special Drawing
Rights Department shall be submitted to the Executive Board
pursuant to Article XXIX(a) only on the request of a
participant. In any case where the Executive Board has given
a decision on a question of interpretation pertaining exclusively
to the Special Drawing Rights Department only a participant
may require that the question be referred to the Board of
Governors under Article XXIX(b). The Board of Governors
shall decide whether a Governor appointed by a member that
is not a participant shall be entitled to vote in the Committee
on interpretation on questions pertaining exclusively to the
Special Drawing Rights Department.
(d) Whenever a disagreement arises between the Fund and a
participant that has terminated its participation in the Special
Drawing Rights Department or between the Fund and any
participant during the liquidation of the Special Drawing Rights
Department with respect to any matter arising exclusively from
participation in the Special Drawing Rights Department, the
disagreement shall be submitted to arbitration in accordance
with the procedures in Article XXIX(c).
ARTICLE XXII
GENERAL OBLIGATIONS OF PARTICIPANTS
In addition to the obligations assumed with respect to special drawing
rights under other articles of this Agreement, each participant undertakes to
collaborate with the Fund and with other participants in order to facilitate the
effective functioning of the Special Drawing Rights Department and the proper
use of special drawing rights in accordance with this Agreement and with the
objective of making the special drawing rights the principal reserve asset in the
international monetary system.
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ARTICLE XXIII
SUSPENSION OF OPERATIONS AND TRANSACTIONS
IN SPECIAL DRAWING RIGHTS
Section 1. Emergency Provisions
In the event of an emergency or the development of unforeseen
circumstances threatening the activities of the Fund with respect to the Special
Drawing Rights Department, the Executive Board, by an eighty-five per cent
majority of the total voting power, may suspend for a period of not more than
one year the operation of any of the provisions relating to operations and
transactions in special drawing rights, and the provisions of Article XXVII,
Section 1(b), (c), and (d) shall then apply.
Section 2. Failure to Fulfil Obligations
(a) If the Fund finds that a participant has failed to fulfil its
obligations under Article XIX, Section 4, the right of the
participant to use its special drawing rights shall be suspended
unless the Fund otherwise decides.
(b) If the Fund finds that a participant has failed to fulfil any other
obligation with respect to special drawing rights, the Fund
may suspend the right of the participant to use special drawing
rights it acquires after the suspension.
(c) Regulations shall be adopted to ensure that before action is taken
against any participant under (a) or (b) above, the participant
shall be informed immediately of the complaint against it and
given an adequate opportunity for stating its case, both orally
and in writing. Whenever the participant is thus informed of a
complaint relating to (a) above, it shall not use special drawing
rights pending the disposition of the complaint.
(d) Suspension under (a) or (b) above or limitation under (c) above
shall not affect a participant’s obligation to provide currency
in accordance with Article XIX, Section 4.
(e) The Fund may at any time terminate a suspension under (a) or (b)
above, provided that a suspension imposed on a participant under
(b) above for failure to fulfil the obligations under Article XIX,
Section 6(a) shall not be terminated until one hundred and eighty
days after the end of the first calendar quarter during which the
participant complies with the rules for reconstitution.
(f) The right of a participant to use its special drawing rights shall
not be suspended because it has become ineligible to use the
Fund’s general resources under Article V, Section 5, Article VI,
Section 1, or Article XXVI, Section 2(a). Article XXVI,
Section 2 shall not apply because a participant has failed to
fulfil any obligations with respect to special drawing rights.
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ARTICLE XXIV
TERMINATION OF PARTICIPATION
Section 1. Right to Terminate Participation
(a) Any participant may terminate its participation in the Special
Drawing Rights Department at any time by transmitting a
notice in writing to the Fund at its principal office. Termination
shall become effective on the date the notice is received.
(b) A participant that withdraws from membership in the Fund
shall be deemed to have simultaneously terminated its
participation in the Special Drawing Rights Department.
Section 2. Settlement on Termination
(a) When a participant terminates its participation in the Special
Drawing Rights Department, all operations and transactions by
the terminating participant in Special Drawing Rights shall cease
except as otherwise permitted under an agreement made pursuant
to (c) below in order to facilitate a settlement or as provided in
sections 3, 5, and 6 of this Article or in Schedule H. Interest and
charges that accrued to the date of termination and assessments
levied before that date but not paid shall be paid in special
drawing rights.
(b) The Fund shall be obligated to redeem all special drawing
rights held by the terminating participant, and the terminating
participant shall be obligated to pay to the Fund an amount
equal to its net cumulative allocation and any other amounts
that may be due and payable because of its participation in
the Special Drawing Rights Department. These obligations
shall be set off against each other and the amount of Special
Drawing Rights held by the terminating participant that is
used in the set off to extinguish its obligation to the Fund
shall be cancelled.
(c) A settlement shall be made with reasonable despatch by
agreement between the terminating participant and the Fund
with respect to any obligation of the terminating participant
or the Fund after the set off in (b) above. If agreement on a
settlement is not reached promptly the provisions of
Schedule H shall apply.
Section 3. Interest and Charges
After the date of termination the Fund shall pay interest on any
outstanding balance of special drawing rights held by a terminating
participant and the terminating participant shall pay charges on any
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outstanding obligation owed to the Fund at the times and rates prescribed
under Article XX. Payment shall be made in special drawing rights. A
terminating participant shall be entitled to obtain special drawing rights with
a freely usable currency to pay charges or assessments in a transaction with
a participant specified by the Fund or by agreement from any other holder,
or to dispose of special drawing rights received as interest in a transaction
with any participant designated under Article XIX, Section 5 or by agreement
with any other holder.
Section 4. Settlement of Obligation to the Fund
Currency received by the Fund from a terminating participant shall be
used by the Fund to redeem special drawing rights held by participants in proportion
to the amount by which each participant’s holdings of special drawing rights
exceed its net cumulative allocation at the time the currency is received by the
Fund. Special drawing rights so redeemed and special drawing rights obtained by
a terminating participant under the provisions of this Agreement to meet any
installment due under an agreement on settlement or under Schedule H and set
off against that installment shall be cancelled.
Section 5. Settlement of Obligation to a Terminating Participant
Whenever the Fund is required to redeem Special Drawing Rights held
by a terminating participant, redemption shall be made with currency provided
by participants specified by the Fund. These participants shall be specified in
accordance with the principles in Article XIX, Section 5. Each specified
participant shall provide at its option the currency of the terminating participant
or a freely usable currency to the Fund and shall receive an equivalent amount
of special drawing rights. However, a terminating participant may use its special
drawing rights to obtain its own currency, a freely usable currency, or any other
asset from any holder, if the Fund so permits.
Section 6. General Resource Account Transaction
In order to facilitate settlement with a terminating participant, the Fund
may decide that a terminating participant shall—
(i) use any special drawing rights held by it after the set off in
Section 2(b) of this Article, when they are to be redeemed, in
a transaction with the Fund conducted through the General
Resources Account to obtain its own currency or a freely usable
currency at the option of the Fund; or
(ii) obtain special drawing rights in a transaction with the Fund
conducted through the General Resources Account for a
currency acceptable to the Fund to meet any charges or
installment due under an agreement or the provisions of
Schedule H.
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ARTICLE XXV
LIQUIDATION OF THE SPECIAL DRAWING RIGHTS DEPARTMENT
(a) The Special Drawing Rights Department may not be liquidated
except by decision of the Board of Governors. In an emergency, if
the Executive Board decides that liquidation of the Special Drawing
Rights Department may be necessary, it may temporarily suspend
allocations or cancellations and all operations and transactions in
special drawing rights pending decision by the Board of Governors.
A decision by the Board of Governors to liquidate the Fund shall
be a decision to liquidate both the General Department and the
Special Drawing Rights Department.
(b) If the Board of Governors decides to liquidate the Special
Drawing Rights Department, all allocations or cancellations and
all operations and transactions in special drawing rights and the
activities of the Fund with respect to the Special Drawing Rights
Department shall cease except those incidental to the orderly
discharge of the obligations of participants and of the Fund with
respect to special drawing rights, and all obligations of the Fund
and of participants under this Agreement with respect to special
drawing rights shall cease except those set out in this Article,
Article XX, Article XXI (d), Article XXIV, Article XXIX (c),
and Schedule H, or any agreement reached under Article XXIV
subject to paragraph 4 of Schedule H, and Schedule I.
(c) Upon liquidation of the Special Drawing Rights Department,
interest and charges that accrued to the date of liquidation and
assessments levied before that date but not paid shall be paid
in special drawing rights. The Fund shall be obligated to redeem
all special drawing rights held by holders, and each participant
shall be obligated to pay the Fund an amount equal to its net
cumulative allocation of special drawing rights and such other
amounts as may be due and payable because of its participation
in the Special Drawing Rights Department.
(d) Liquidation of the Special Drawing Rights Department shall
be administered in accordance with the provisions of
Schedule I.
ARTICLE XXVI
WITHDRAWAL FROM MEMBERSHIP
Section 1. Right of Members to Withdraw
Any member may withdraw from the Fund at any time by transmitting
a notice in writing to the Fund at its principal office. Withdrawal shall become
effective on the date such notice is received.
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Section 2. Compulsory Withdrawal
(a) If a member fails to fulfil any of its obligations under this
Agreement, the Fund may declare the member ineligible to
use the general resources of the Fund. Nothing in this section
shall be deemed to limit the provisions of Article V, Section 5
or Article VI, Section 1.
(b) If, after the expiration of a reasonable period following a
declaration of ineligibility under (a) above, the member persists
in its failure to fulfil any of its obligations under this Agreement,
the Fund may, by a seventy per cent majority of the total voting
power, suspend the voting rights of the member. During the
period of the suspension, the provisions of Schedule L shall
apply. The Fund may, by a seventy per cent majority of the total
voting power, terminate the suspension at any time.
(c) If, after the expiration of a reasonable period following a
decision of suspension under (b) above, the member persists
in its failure to fulfil any of its obligations under this
Agreement, that member may be required to withdraw from
membership in the Fund by a decision of the Board of
Governors carried by a majority of the Governors having
eighty-five per cent of the total voting power.
(d) Regulations shall be adopted to ensure that before action is
taken against any member under (a), (b) or (c) above, the
member shall be informed in reasonable time of the complaint
against it and given an adequate opportunity for stating its
case, both orally and in writing.
Section 3. Settlement of Accounts with Members Withdrawing
When a member withdraws from the Fund, normal operations and
transactions of the Fund in its currency shall cease and settlement of all accounts
between it and the Fund shall be made with reasonable despatch by agreement
between it and the Fund. If agreement is not reached promptly, the provisions
of Schedule J shall apply to the settlement of accounts.
ARTICLE XXVII
EMERGENCY PROVISIONS
Section 1. Temporary Suspension
(a) In the event of an emergency or the development of
unforeseen circumstances threatening the activities of the
Fund, the Executive Board, by an eighty-five per cent
majority of the total voting power, may suspend for a period
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of not more than one year the operation of any of the
following provisions:
(i) Article V, Sections 2, 3, 7, 8(a)(i) and (e);
(ii) Article VI, Section 2;
(iii) Article XI, Section 1;
(iv) Schedule C, paragraph 5.
(b) A suspension of the Operation of a provision under (a) above
may not be extended beyond one year except by the Board of
Governors which, by an eighty-five per cent majority of the
total voting power, may extend a suspension for an additional
period of not more than two years if it finds that the emergency
or unforeseen circumstances referred to in (a) above continue
to exist.
(c) The Executive Board may, by a majority of the total voting
power, terminate such suspension at any time.
(d) The Fund may adopt rules with respect to the subject
matter of a provision during the period in which its
operation is suspended.
Section 2. Liquidation of the Fund
(a) The Fund may not be liquidated except by decision of the
Board of Governors. In an emergency, if the Executive Board
decides that liquidation of the Fund may be necessary, it may
temporarily suspend all operations and transactions, pending
decision by the Board of Governors.
(b) If the Board of Governors decides to liquidate the Fund, the
Fund shall forthwith cease to engage in any activities except
those incidental to the orderly collection and liquidation of
its assets and the settlement of its liabilities, and all
obligations of members under this Agreement shall cease
except those set out in this Article, in Article XXIX(c), in
Schedule J, paragraph 7, and in Schedule K.
(c) Liquidation shall be administered in accordance with the
provisions of Schedule K.
ARTICLE XXVIII
AMENDMENTS
(a) Any proposal to introduce modifications in this Agreement,
whether emanating from a member, a Governor, or the
Executive Board, shall be communicated to the Chairman
of the Board of Governors who shall bring the proposal
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before the Board of Governors. If the proposed amendment
is approved by the Board of Governors, the Fund shall, by
circular letter or telegram, ask all members whether they
accept the proposed amendment. When three-fifths of the
members, having eighty-five per cent of the total voting
power, have accepted the proposed amendment, the Fund
shall certify the fact by a formal communication addressed
to all members.
(b) Notwithstanding (a) above, acceptance by all members is
required in the case of any amendment modifying—
(i) the right to withdraw from the Fund (Article XXVI,
Section 1);
(ii) the provision that no change in a member’s quota
shall be made without its consent [Article III,
Section 2(d)]; and
(iii) the provision that no change may be made in the par
value of a member’s currency except on the proposal
of that member (Schedule C, paragraph 6).
(c) Amendments shall enter into force for all members three
months after the date of the formal communication unless a
shorter period is specified in the circular letter or telegram.
ARTICLE XXIX
INTERPRETATION
(a) Any question of interpretation of the provisions of this
Agreement arising between any member and the Fund or
between any members of the Fund shall be submitted to the
Executive Board for its decision. If the question particularly
affects any member not entitled to appoint an Executive
Director, it shall be entitled to representation in accordance
with Article XII, Section 3(j).
(b) In any case where the Executive Board has given a decision
under (a) above, any member may require, within three months
from the date of the decision, that the question be referred to
the Board of Governors, whose decision shall be final. Any
question referred to the Board of Governors shall be considered
by a Committee on Interpretation of the Board of Governors.
Each Committee member shall have one vote. The Board of
Governors shall establish the membership, procedures, and
voting majorities of the Committee. A decision of the
Committee shall be the decision of the Board of Governors
unless the Board of Governors, by an eighty-five per cent
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majority of the total voting power, decides otherwise. Pending
the result of the reference to the Board of Governors the Fund
may, so far as it deems necessary, act on the basis of the decision
of the Executive Board.
(c) Whenever a disagreement arises between the Fund and a
member which has withdrawn, or between the Fund and any
member during liquidation of the Fund, such disagreement
shall be submitted to arbitration by a tribunal or three
arbitrators, one appointed by the Fund, another by the member
or withdrawing member, and an umpire who, unless the
parties otherwise agree, shall be appointed by the President
of the International Court of Justice or such other authority
as may have been prescribed by regulation adopted by the
Fund. The umpire shall have full power to settle all questions
of procedure in any case where the parties are in disagreement
with respect thereto.
ARTICLE XXX
EXPLANATION OF TERMS
In interpreting the provisions of this Agreement the Fund and its
members shall be guided by the following provisions:
(a) The Fund’s holdings of a member’s currency in the General
Resources Account shall include any securities accepted by
the Fund under Article III, Section 4.
(b) Stand-by arrangement means a decision of the Fund by which
a member is assured that it will be able to make purchases
from the General Resources Account in accordance with the
terms of the decision during a specified period and up to a
specified amount.
(c) Reserve tranche purchase means a purchase by a member of
special drawing rights or the currency of another member in
exchange for its own currency which does not cause the
Fund’s holdings or the member’s currency in the General
Resources Account to exceed its quota, provided that for the
purposes of this definition the Fund may exclude purchases
and holdings under—
(i) policies on the use of its general resources for
compensatory financing of export fluctuations;
(ii) policies on the use of its general resources in connection
with the financing of contributions to international
buffer stocks of primary products; and
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(iii) other policies on the use of its general resources in
respect of which the Fund decides, by an eighty-five
per cent majority of the total voting power, that an
exclusion shall be made.
(d) Payments for current transactions means payments which are
not for the purpose of transferring capital, and includes, without
limitation—
(i) all payments due in connection with foreign trade, other
current business, including services, and normal short-
term banking and credit facilities;
(ii) payments due as interest on loans and as net income
from other investments;
(iii) payments of moderate amount for amortisation of loans
or for depreciation of direct investments; and
(iv) moderate remittances for family living expenses.
The Fund may, after consultation with the members concerned,
determine whether certain specific transactions are to be considered current
transactions or capital transactions.
(e) Net cumulative allocation of special drawing rights means the
total amount of special drawing rights allocated to a participant
less its share of special drawing rights that have been cancelled
under Article XVIII, Section 2(a).
(f) A freely usable currency means a member’s currency that the
Fund determines (i) is, in fact, widely used to make payments
for international transactions, and (ii) is widely traded in the
principal exchange markets.
(g) Members that were members on August 31, 1975 shall be
deemed to include a member that accepted membership after
that date pursuant to a resolution of the Board of Governors
adopted before that date.
(h) Transactions of the Fund means exchanges of monetary assets
by the Fund for other monetary assets. Operations of the Fund
means other uses or receipts of monetary assets by the Fund.
(i) Transactions in special drawing rights means exchanges of special
drawing rights for other monetary assets. Operations in special
drawing rights means other uses of special drawing rights.
ARTICLE XXXI
FINAL PROVISIONS
Section 1. Entry into Force
This Agreement shall enter into force when it has been signed on behalf
of governments having sixty-five per cent of the total of the quotas set forth in
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Schedule A and when the instruments referred to in section 2(a) of this Article
have been deposited on their behalf, but in no event shall this Agreement enter
into force before May 1, 1945.
Section 2. Signature
(a) Each government on whose behalf this Agreement is signed
shall deposit with the Government of the United States of
America an instrument setting forth that it has accepted this
Agreement in accordance with its law and has taken all steps
necessary to enable it to carry out all or its obligations under
this Agreement.
(b) Each country shall become a member of the Fund as from the
date of the deposit on its behalf of the instrument referred to
in (a) above, except that no country shall become a member
before this Agreement enters into force under Section 1
of this Article.
(c) The Government of the United States of America shall inform
the governments of all countries whose names are set forth in
Schedule A, and the governments of all countries whose
membership is approved in accordance with Article II,
Section 2, of all, signatures of this Agreement and of the deposit
of all instruments referred to in (a) above.
(d) At the time this Agreement is signed on its behalf, each
government shall transmit to the Government of the United
States of America one-hundredth of one per cent of its total
subscription in gold or United States dollars for the purpose
of meeting administrative expenses of the Fund, The
Government of the United States of America shall hold such
funds in a special deposit account and shall transmit them to
the Board of Governors of the Fund when the initial meeting
has been called. If this Agreement has not come into force by
December 31, 1945, the Government of the United States of
America shall return such funds to the governments that
transmitted them.
(e) This Agreement shall remain open for signature at Washington
on behalf of the governments of the countries whose names
are set forth in Schedule A until December 31, 1945.
(f) After December 31, 1945, this Agreement shall be open for
signature on behalf of the government of any country whose
membership has been approved in accordance with Article II,
Section 2.
(g) By their signature of this Agreement, all governments accept
it both on their own behalf and in respect of all colonies,
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overseas territories, all territories under their protection,
suzerainty, or authority, and all territories in respect of which
they exercise a mandate.
(h) Subsection (d) above shall come into force with regard to each
signatory government as from the date of its signature.
[The signature and depository clause reproduced below followed the
text of Article XX in the original Articles of Agreement].
Done at Washington, in a single copy which shall remain deposited in
the archives of the Government of the United States of America, which shall
transmit certified copies to all governments whose names are set forth in
Schedule A and to all governments whose membership is approved in accordance
with Article II, Section 2.
SCHEDULE A
QUOTAS
(In millions of United States dollars)
Australia … … 200 Iran … … 25
Belgium … … 225 Iraq … … 8
Bolivia … … 10 Liberia … … 05
Brazil … … 150 Luxembourg … … 10
Canada … … 300 Mexico … … 90
Chile … … 50 Netherlands … … 275
China … … 550 New Zealand … … 50
Colombia … … 50 Nicaragua … … 2
Costa Rica … … 5 Norway … … 50
Cuba … … 50 Panama … … .5
Czechoslovakia … 125 Paraguay … … 2
Denmark* … … * Peru … … 25
Dominican Republic … 5 Philippine
Ecuador … … 5 Commonwealth … 15
Egypt … … 45 Poland … … 125
El Salvador … … 2.5 Union of South Africa … 100
Ethiopia … … 6 Union of Soviet Socialist
France … … 450 Republics … … 1200
Greece … … 40 United Kingdom … 1300
Guatemala … … 5 United States … 2750
Haiti … … 5 Uruguay … … 15
Honduras … … 2.5 Venezuela … … 15
Iceland … … 1 Yugoslavia … … 60
India … … 400
*The quota of Denmark shall be determined by the Fund after the
Danish Government has declared its readiness to sign this Agreement but before
signature takes place.
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SCHEDULE B
TRANSITIONAL PROVISIONS WITH RESPECT
TO REPURCHASE, PAYMENT OF ADDITIONAL SUBSCRIPTIONS,
GOLD, AND CERTAIN OPERATIONAL MATTERS
1. Repurchase obligations that have accrued pursuant to Article V,
Section 7(b) before the date of the second amendment of this Agreement and
that remain undischarged at that date shall be discharged not later than the
date or dates at which the obligations had to be discharged in accordance with
the provisions of this agreement before the second amendment.
2. A member shall discharge with special drawing rights any obligation
to pay gold to the Fund in repurchase or as a subscription that is outstanding at
the date of the second amendment of this Agreement, but the Fund may prescribe
that these payments may be made in whole or in part in the currencies of other
members specified by the Fund. A non-participant shall discharge an obligation
that must be paid in special drawing rights pursuant to this provision with the
currencies of other members specified by the Fund.
3. For the purposes of 2 above 0.888 671 gram of fine gold shall be
equivalent to one special drawing right, and the amount of currency payable
under 2 above shall be determined on that basis and on the basis of the
value of the currency in terms of the special drawing right at the date
of discharge.
4. A member’s currency held by the Fund in excess of seventy-five
per cent of the member’s quota at the date of the second amendment of this
Agreement and not subject to repurchase under 1 above shall be repurchased in
accordance with the following rules:
(i) Holdings that resulted from a purchase shall be repurchased
in accordance with the policy on the use of the Fund’s general
resources under which the purchase was made.
(ii) Other holdings shall be repurchased not later than four years
after the date of the second amendment of this Agreement.
5. Repurchases under 1 above that are not subject to 2 above, repurchases
under 4 above, and any specification of currencies under 2 above shall be in
accordance with Article V, Section 7(i).
6. All rules and regulations, rates, procedures, and decisions in effect at
the date of the second amendment of this Agreement shall remain in effect until
they are changed in accordance with the provisions of this Agreement.
7. To the extent that arrangements equivalent in effect to (a) and (b) below
have not been completed before the date of the second amendment of this
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Agreement, the Fund shall—
(a) sell up to 25 million ounces of fine gold held by it on August 31,
1975 to those members that were members on that date and
that agree to buy it, in proportion to their quotas on that date.
The sale to a member under this subparagraph (a) shall be
made in exchange for its currency and at a price equivalent at
the time of sale to one special drawing right per 0.888 671
gram of fine gold; and
(b) sell up to 25 million ounces of fine gold held by it on August 31,
1975 for the benefit of developing members that were members
on that date provided, however, that the part of any profits or
surplus value of the gold that corresponds to the proportion of
such a member’s quota on August 31, 1975 to the total of the
quotas of all members on that date shall be transferred directly
to each such member. The requirements under Article V,
Section 12(c) that the Fund consult a member, obtain a
member’s concurrence, or exchange a member’s currency for
the currencies of other members in certain circumstances shall
apply with respect to currency received by the Fund as a result
of sales of gold under this provision, other than sales to a
member in return for its own currency and placed in the General
Resources Account.
Upon the sale of gold under this paragraph 7, an amount of the proceeds
in the currencies received equivalent at the time of sale to one special drawing
right per 0.888 671 gram of fine gold shall be placed in the General Resources
Account and other assets held by the Fund under arrangements pursuant to (b)
above shall be held separately from the general resources of the Fund. Assets
that remain subject to disposition by the Fund upon termination of arrangements
pursuant to (b) above shall be transferred to the Special Disbursement Account.
SCHEDULE C
PAR VALUES
1. The Fund shall notify members that par values may be established for
the purposes of this Agreement, in accordance with Article IV, Section 1, 3, 4,
and 5 and this Schedule, in terms of the special drawing right, or in terms of
such other common denominator as is prescribed by the Fund. The common
denominator shall not be gold or a currency.
2. A member that intends to establish a par value for its currency shall
propose a par value to the Fund within a reasonable time after notice is given
under 1 above.
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3. Any member that does not intend to establish a par value for its currency
under 1 above shall consult with the Fund and ensure that its exchange
arrangements are consistent with the purposes of the Fund and are adequate to
fulfil its obligations under Article IV, Section 1.
4. The Fund shall concur in or object to a proposed par value within a
reasonable period after receipt of the proposal. A proposed par value shall not
take effect for the purposes of this Agreement if the Fund objects to it, and the
member shall be subject to 3 above. The Fund shall not object because of the
domestic social or political policies of the member proposing the par value.
5. Each member that has a par value for its currency undertakes to apply
appropriate measures consistent with this Agreement in order to ensure that
the maximum and the minimum rates for spot exchange transactions taking
place within its territories between its currency and the currencies of other
members maintaining par values shall not differ from parity by more than
four and one-half per cent or by such other margin or margins as the Fund
may adopt by an eighty-five per cent majority of the total voting power.
6. A member shall not propose a change in the par value of its currency
except to correct, or prevent the emergence of, a fundamental disequilibrium. A
change may be made only on the proposal of the member and only after
consultation with the Fund.
7. When a change is proposed, the Fund shall concur in or object to the
proposed par value within a reasonable period after receipt of the proposal. The
Fund shall concur if it is satisfied that the change is necessary to correct, or
prevent the emergence of, a fundamental disequilibrium. The Fund shall not
object because of the domestic social or political policies of the member
proposing the change. A proposed change in par value shall not take effect for
the purposes of this Agreement if the Fund objects to it. If a member changes
the par value of its currency despite the objection of the Fund, the member shall
be subject to Article XXVI, Section 2. Maintenance of an unrealistic par value
by a member shall be discouraged by the Fund.
8. The par value of a member’s currency established under this Agreement
shall cease to exist for the purposes of this Agreement if the member informs
the Fund that it intends to terminate the par value. The Fund may object to the
termination of a par value by a decision taken by an eighty-five per cent majority
of the total voting power. If a member terminates a par value for its currency
despite the objection of the Fund, the member shall be subject to Article XXVI,
Section 2. A par value established under this Agreement shall cease to exist for
the purposes of this Agreement if the member terminates the par value despite
the objection of the Fund, or if the Fund finds that the member does not maintain
rates for a substantial volume of exchange transactions in accordance with 5
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above, provided that the Fund may not make such finding unless it has consulted
the member and given it sixty days notice of the Fund’s intention to consider
whether to make a finding.
9. If the par value of the currency of a member has ceased to exist under 8
above, the member shall consult with the Fund and ensure that its exchange
arrangements are consistent with the purposes of the Fund and are adequate to
fulfil its obligations under Article IV, Section 1.
10. A member for whose currency the par value has ceased to exist under 8
above may, at any time, propose a new par value for its currency.
11. Notwithstanding 6 above, the Fund, by a seventy per cent majority of
the total voting power, may make uniform proportionate changes in all par values
if the special drawing right is the common denominator and the changes will
not affect the value of the special drawing right. The par value of a member’s
currency shall, however, not be changed under this provision if, within seven
days after the Fund’s action, the member informs the Fund that it does not wish
the par value of its currency to be changed by such action.
SCHEDULE D
COUNCIL
1. (a) Each member that appoints an Executive Director and each group
of members that has the number of votes allotted to them cast by an elected
Executive Director shall appoint to the Council one Councillor, who shall be
a Governor, Minister in the government of a member, or person of comparable
rank, and may appoint not more than seven Associates. The Board of Governors
may change, by an eighty-five per cent majority of the total voting power, the
number of Associates who may be appointed. A Councillor or Associate shall
serve until a new appointment is made or until the next regular election of
Executive Directors, whichever shall occur sooner.
(b) Executive Directors, or in their absence their Alternates, and
Associates shall be entitled to attend meetings of the Council, unless the
Council decides to hold a restricted session. Each member and each group of
members that appoints a Councillor shall appoint an Alternate who shall be
entitled to attend a meeting of the Council when the Councillor is not present,
and shall have full power to act for the Councillor.
2. (a) The Council shall supervise the management and adaptation of the
international monetary system, including the continuing operation of the adjustment
process and developments in global liquidity, and in this connection shall review
developments in the transfer of real resources to developing countries.
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(b) The Council shall consider proposals pursuant to Article
XXVIII (a) to amend the Articles of Agreement.
3. (a) The Board of Governors may delegate to the Council authority
to exercise any powers of the Board of Governors except the powers conferred
directly by this Agreement on the Board of Governors.
(b) Each Councillor shall be entitled to cast the number of votes
allotted under Article XII, Section 5 to the member or group of members
appointing him. A Councillor appointed by a group of members may cast
separately the votes allotted to each member in the group. If the number of
votes allotted to a member cannot be cast by an Executive Director, the member
may make arrangements with a Councillor for casting the number of votes
allotted to the member.
(c) The Council shall not take any action pursuant to powers delegated
by the Board or Governors that is inconsistent with any action taken by the
Board of Governors and the Executive Board shall not take any action pursuant
to powers delegated by the Board of Governors that is inconsistent with any
action taken by either the Board of Governors or the Council.
4. The Council shall select a Councillor as Chairman, shall adopt
regulations as may be necessary or appropriate to perform its functions, and
shall determine any aspect of its procedure. The Council shall hold such meetings
as may be provided for by the Council or called by the Executive Board.
5. (a) The Council shall have powers corresponding to those of the
Executive Board under the following provisions: Article XII, Section 2(c),
(f), (g), and (j); Article XVIII, Section 4(a) and Section 4(c)(iv); Article XXIII,
Section 1; and Article XXVII, Section 1(a).
(b) For decisions by the Council on matters pertaining exclusively
to the Special Drawing Rights Department only Councillors appointed by a
member that is a participant or a group of members at least one member of
which is a participant shall be entitled to vote. Each of these Councillors shall
be entitled to cast the number of votes allotted to the member which is a
participant that appointed him or to the members that are participants in the
group of members that appointed him, and may cast the votes allotted to a
participant with which arrangements have been made pursuant to the last
sentence of 3(b) above.
(c) The Council may by regulation establish a procedure whereby the
Executive Board may obtain a vote of the Councillors on a specific question
without a meeting of the Council when in the judgment of the Executive Board an
action must be taken by the Council which should not be postponed until the next
meeting of the Council and which does not warrant the calling of a special meeting.
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(d) Article IX, Section 8 shall apply to Councillors, their Alternates,
and Associates, and to any other person entitled to attend a meeting of
the Council.
(e) For the purposes of (b) and 3(b) above, an agreement under
Article XII, Section 3(i), (ii) by a member, or by a member that is a participant,
shall entitle a Councillor to vote and cast the number of votes allotted to
the member.
(f) When an Executive Director is entitled to cast the number of
votes allotted to a member pursuant to Article XII, Section 3(i)(v), the
Councillor appointed by the group whose members elected such Executive
Director shall be entitled to vote and cast the number of votes allotted to
such member. The member shall be deemed to have participated in the
appointment of the Councillor entitled to vote and cast the number of votes
allotted to the member.
6. The first sentence of Article XII, Section 2(a), shall be deemed to
include a reference to the Council.
SCHEDULE E
ELECTION OF EXECUTIVE DIRECTORS
1. The Election of the elective Executive Directors shall be by ballot of
the Governors eligible to vote.
2. In balloting for the Executive Directors to be elected, each of the
Governors eligible to vote shall cast for one person all of the votes to which he
is entitled under Article XII, Section 5(a). The fifteen persons receiving the
greatest number of votes shall be Executive Directors, provided that no person
who received less than four per cent of the total number of votes that can be cast
(eligible votes) shall be considered elected.
3. When fifteen persons are not elected in the first ballot, a second ballot
shall be held in which there shall vote only (a) those Governors who voted in
the first ballot for a person not elected, and (b) those Governors whose votes
for a person elected are deemed under 4 below to have raised the votes cast
for that person above nine per cent of the eligible votes. If in the second ballot
there are more candidates than the number of Executive Directors to be elected,
the person who received the lowest number of votes in the first ballot shall be
ineligible for election.
4. In determining whether the votes cast by a Governor are to be
deemed to have raised the total of any person above nine per cent of the
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eligible votes the nine per cent shall be deemed to include, first, the votes of
the Governor casting the largest number of votes for such person, then the
votes of the Governor casting the next largest number, and so on until nine
per cent is reached.
5. Any Governor part of whose votes must be counted in order to raise
the total of any person above four per cent shall be considered as casting all of
his votes for such person even if the total votes for such person thereby exceed
nine per cent.
6. If, after the second ballot, fifteen persons have not been elected, further
ballots shall be held on the same principles until fifteen persons have been
elected, provided that after fourteen persons are elected, the fifteenth may be
elected by a simple majority of the remaining votes and shall be deemed to
have been elected by all such votes.
SCHEDULE F
DESIGNATION
During the first basic period the rules for designation shall be as follows:
(a) Participants subject to designation under Article XIX,
Section 5(a)(i) shall be designated for such amounts as will
promote over time equality in the ratios of the participants’
holdings of special drawing rights in excess of their net
cumulative allocations to their official holdings of gold and
foreign exchange.
(b) The formula to give effect to (a) above shall be such that
participants subject to designation shall be designated—
(i) in proportion to their official holdings of gold and
foreign exchange when the ratios described in (a) above
are equal; and
(ii) in such manner as gradually to reduce the difference
between the ratios described in (a) above that are low
and the ratios that are high.
SCHEDULE G
RECONSTITUTION
1. During the first basic period the rules for reconstitution shall be as follows:
(a) (i) A participant shall so use and reconstitute its holdings
of special drawing rights that, five years after the first
allocation and at the end of each calendar quarter
thereafter, the average of its total daily holdings of
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special drawing rights over the most recent five-year
period will be not less than thirty per cent of the
average of its daily net cumulative allocation of
special drawing rights over the same period.
(ii) Two years after the first allocation and at the end of
each calendar month thereafter the Fund shall make
calculations for each participant so as to ascertain
whether and to what extent the participant would need
to acquire special drawing rights between the date
of the calculation and the end of any five-year period
in order to comply with the requirement in (a)(i)
above. The Fund shall adopt regulations with respect
to the bases on which these calculations shall be made
and with respect to the timing of the designation of
participants under Article XIX, Section 5(a)(ii), in
order to assist them to comply with the requirement
in (a)(i) above.
(iii) The Fund shall give special notice to a participant
when the calculations under (a)(ii) above indicate
that it is unlikely that the participant will be able to
comply with the requirement in (a)(i) above unless
it ceases to use special drawing rights for the rest of
the period for which the calculation was made under
(a)(ii) above.
(iv) A participant that needs to acquire special drawing
rights to fulfil this obligation shall be obligated and
entitled to obtain them, for currency acceptable to
the Fund, in a transaction with the Fund conducted
through the General Resources Account. If sufficient
special drawing right, to fulfil this obligation cannot
be obtained in this way, the participant shall be
obligated and entitled to obtain them with a freely
usable currency from a participant which the Fund
shall specify.
(b) Participants shall also pay due regard to the desirability of
pursuing over time a balanced relationship between their
holdings of special drawing rights and their other reserves.
2. If a participant fails to comply with the rules for reconstitution, the
Fund shall determine whether or not the circumstances justify suspension under
Article XXIII, Section 2(b).
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SCHEDULE H
TERMINATION OF PARTICIPATION
1. If the obligation remaining after the set off under Article XXIV,
Section 2(b) is to the terminating participant and agreement on settlement between
the Fund and the terminating participant is not reached within six months of the
date of termination, the Fund shall redeem this balance of special drawing rights
in equal half-yearly installments within a maximum of five years of the date of
termination. The Fund shall redeem this balance as it may determine, either (a)
by the payment to the terminating participant of the amounts provided by the
remaining participants to the Fund in accordance with Article XXIV, Section 5, or
(b) by permitting the terminating participant to use its special drawing rights to
obtain its own currency or a freely usable currency from a participant specified
by the Fund, the General Resources Account, or any other holder.
2. If the obligation remaining after the set off under Article XXIV,
Section 2(b) is to the Fund and agreement on settlement is not reached within
six months of the date of termination, the terminating participant shall discharge
this obligation in equal half-yearly installments within three years of the date
of termination or within such longer period as may be fixed by the Fund. The
terminating participant shall discharge this obligation, as the Fund may
determine, either (a) by the payment to the Fund of a freely usable currency,
or (b) by obtaining special drawing rights, in accordance with Article XXIV,
Section 6, from the General Resources Account or in agreement with a
participant specified by the Fund or from any other holder, and the set off of
these special drawing rights against the installment due.
3. Installments under either 1 or 2 above shall fall due six months after
the date of termination and at intervals of six months thereafter.
4. In the event of the Special Drawing Rights Department going into
liquidation under Article XXV within six months of the date a participant
terminates its participation, the settlement between the Fund and that government
shall be made in accordance with Article XXV and Schedule I.
SCHEDULE I
ADMINISTRATION OF LIQUIDATION OF THE
SPECIAL DRAWING RIGHTS DEPARTMENT
1. In the event of liquidation of the Special Drawing Rights Department,
participants shall discharge their obligations to the Fund in ten half-yearly
installments, or in such longer period as the Fund may decide is needed, in a
freely usable currency and the currencies of participants holding special drawing
rights to be redeemed in any installment to the extent of such redemption, as
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determined by the Fund. The first half-yearly payment shall be made six months
after the decision to liquidate the Special Drawing Rights Department.
2. If it is decided to liquidate the Fund within six months of the date
of the decision to liquidate the Special Drawing Rights Department, the
liquidation of the Special Drawing Rights Department shall not proceed
until special drawing rights held in the General Resources Account have
been distributed in accordance with the following rule:
After the distributions made under 2(a) and (b) of Schedule K,
the Fund shall apportion its special drawing rights held in the
General Resources Account among all members that are
participants in proportion to the amounts due to each participant
after the distribution under 2(b). To determine the amount due
to each member for the purpose of apportioning the remainder
of its holdings of each currency under 2(d) of Schedule K, the
Fund shall deduct the distribution of special drawing rights made
under this rule.
3. With the amounts received under 1 above, the Fund shall redeem
special drawing rights held by holders in the following manner and order:
(a) Special drawing rights held by governments that have
terminated their participation more than six months before
the date the Board of Governors decides to liquidate the
Special Drawing Rights Department shall be redeemed in
accordance with the terms of any agreement under Article
XXIV or Schedule H.
(b) Special drawing rights held by holders that are not
participants shall be redeemed before those held by
participants, and shall be redeemed in proportion to the
amount held by each holder.
(c) The Fund shall determine the proportion of special drawing
rights held by each participant in relation to its net
cumulative allocation. The Fund shall first redeem special
drawing rights from the participants with the highest
proportion until this proportion is reduced to that of the
second highest proportion; the Fund shall then redeem the
special drawing rights held by these participants in
accordance with their net cumulative allocations until the
proportions are reduced to that of the third highest
proportion; and this process shall be continued until the
amount available for redemption is exhausted.
4. Any amount that a participant will be entitled to receive in
redemption under 3 above shall be set off against any amount to be paid
under 1 above.
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5. During liquidation the Fund shall pay interest on the amount of
special drawing rights held by holders, and each participant shall pay charges
on the net cumulative allocation of special drawing rights to it less the amount
of any payments made in accordance with 1 above. The rates of interest and
charges and the time of payment shall be determined by the Fund. Payments
of interest and charges shall be made in special drawing rights to the extent
possible. A participant that does not hold sufficient special drawing rights
to meet any charges shall make the payment with a currency specified by
the Fund. Special drawing rights received as charges in amounts needed for
administrative expenses shall not be used for the payment of interest, but
shall be transferred to the Fund and shall be redeemed first and with the
currencies used by the Fund to meet its expenses.
6. While a participant is in default with respect to any payment required
by 1 or 5 above, no amounts shall be paid to it in accordance with 3 or 5
above.
7. If after the final payments have been made to participants each
participant not in default does not hold special drawing rights in the same
proportion to its net cumulative allocation, those participants holding a lower
proportion shall purchase from those holding a higher proportion such amounts
in accordance with arrangements made by the Fund as will make the proportion
of their holdings of special drawing rights the same. Each participant in default
shall pay to the Fund its own currency in an amount equal to its default. The
Fund shall apportion this currency and any residual claims among participants
in proportion to the amount of special drawing rights held by each and these
special drawing rights shall be cancelled. The Fund shall then close the books
of the Special Drawing Rights Department and all of the Fund’s liabilities
arising from the allocations of special drawing rights and the administration
of the Special Drawing Rights Department shall cease.
8. Each participant whose currency is distributed to other participants
under this Schedule guarantees the unrestricted use of such currency at all
times for the purchase of goods or for payments of sums due to it or to
persons in its territories. Each participant so obligated agrees to compensate
other participants for any loss resulting from the difference between the
value at which the Fund distributed its currency under this Schedule and the
value realised by such participants on disposal of its currency.
SCHEDULE J
SETTLEMENT OF ACCOUNTS WITH MEMBERS WITHDRAWING
1. The settlement of accounts with respect to the General Resources
Account shall be made according to 1 to 6 of this Schedule. The Fund shall be
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obligated to pay to a member withdrawing an amount equal to its quota, plus
any other amounts due to it from the Fund, less any amounts due to the Fund,
including charges accruing after the date of its withdrawal; but no payment
shall be made until six months after the date of withdrawal. Payments shall be
made in the currency of the withdrawing member, and for this purpose the
Fund may transfer to the General Resources Account holdings of the
member’s currency in the Special Disbursement Account or in the Investment
Account in exchange for an equivalent amount of the currencies of other
members in the General Resources Account selected by the Fund with
their concurrence.
2. If the Fund’s holdings of the currency of the withdrawing member
are not sufficient to pay the net amount due from the Fund, the balance shall
be paid in a freely usable currency, or in such other manner as may be agreed.
If the Fund and the withdrawing member do not reach agreement within six
months of the date of withdrawal, the currency in question held by the Fund
shall be paid forthwith to the withdrawing member. Any balance due shall
be paid in ten half-yearly installments during the ensuing five years. Each
such installment shall be paid, at the option of the Fund, either in the currency
of the withdrawing member acquired after its withdrawal or in a freely
usable currency.
3. If the Fund fails to meet any installment which is due in accordance
with the preceding paragraphs, the withdrawing member shall be entitled to
require the Fund to pay the installment in any currency held by the Fund
with the exception of any currency which has been declared scarce under
Article VII, Section 3.
4. If the Fund’s holdings of the currency of a withdrawing member
exceed the amount due to it, and if agreement on the method of settling
accounts is not reached within six months of the date of withdrawal, the
former member shall be obligated to redeem such excess currency in a freely
usable currency. Redemption shall be made at the rates at which the Fund
would sell such currencies at the time of withdrawal from the Fund. The
Withdrawing member shall complete redemption within five years of the
date of withdrawal, or within such longer period as may be fixed by the
Fund, but shall not be required to redeem in any half-yearly period more
than one-tenth of the Fund’s excess holdings of its currency at the date of
withdrawal plus further acquisitions of the currency during such half-yearly
period. If the withdrawing member does not fulfil this obligation, the Fund
may in an orderly manner liquidate in any market the amount of currency
which should have been redeemed.
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5. Any member desiring to obtain the currency of a member which
has withdrawn shall acquire it by purchase from the Fund, to the extent that
such member has access to the general resources of the Fund and that such
currency is available under 4 above.
6. The withdrawing member guarantees the unrestricted use at all times
of the currency disposed of under 4 and 5 above for the purchase of goods
or for payment of sums due to it or to persons within its territories. It shall
compensate the Fund for any loss resulting from the difference between the
value of its currency in terms of the special drawing right on the date of
withdrawal and the value realised in terms of the special drawing right by
the Fund on disposal under 4 and 5 above.
7. If the withdrawing member is indebted to the Fund as the result of
transactions conducted through the Special Disbursement Account under
Article V, section 12(f)(ii), the indebtedness shall be discharged in accordance
with the terms of the indebtedness.
8. If the Fund holds the withdrawing member’s currency in the Special
Disbursement Account or in the Investment Account, the Fund may in an
orderly manner exchange in; any market for the currencies of members the
amount of the currency of the withdrawing member remaining in each
account after use under 1 above, and the proceeds of the exchange of the
amount in each account shall be kept in that account. Paragraph 5 above
and the first sentence of 6 above shall apply to the withdrawing
member’s currency.
9. If the Fund holds obligations of the withdrawing member in the
Special Disbursement Account pursuant to Article V, Section 12(h), or in
the Investment Account, the Fund may hold them until the date of maturity
or dispose of them sooner. Paragraph 8 above shall apply to the proceeds of
such disinvestment.
10. In the event of the Fund going into liquidation under Article XXVII,
Section 2 within six months of the date on which the member withdraws,
the accounts between the Fund and that government shall be settled in
accordance with Article XXVII, Section 2 and Schedule K.
SCHEDULE K
ADMINISTRATION OF LIQUIDATION
1. In the event of liquidation the liabilities of the Fund other than the
repayment of subscriptions shall have priority in the distribution of the assets of
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the Fund. In meeting each such liability the Fund shall use its assets in the
following order:
(a) the currency in which the liability is payable;
(b) gold;
(c) all other currencies in proportion so far as may be practicable,
to the quotas of the members.
2. After the discharge of the Fund’s liabilities in accordance with 1 above,
the balance of the Fund’s assets shall be distributed and apportioned as follows:
(a) (i) The Fund shall calculate the value of gold held on
August 31, 1975 that it continues to hold on the date
of the decision to liquidate. The calculation shall be
made in accordance with 9 below and also on the basis
of one special drawing right per 0.888 671 gram of
fine gold on the date of liquidation. Gold equivalent
to the excess of the former value over the latter shall
be distributed to those members that were members
on August 31, 1975 in proportion to their quotas on
that date.
(ii) The Fund shall distribute any assets held in the Special
Disbursement Account on the date of the decision to
liquidate to those members that were members on
August 31, 1975 in proportion to their quotas on that
date. Each type of asset shall be distributed
proportionately to members.
(b) The Fund shall distribute its remaining holdings of gold among
the members whose currencies are held by the Fund in amounts
less than their quotas in the proportions, but not in excess of,
the amounts by which their quotas exceed the Fund’s holdings
of their currencies.
(c) The Fund shall distribute to each member, one-half the Fund’s
holdings of its currency but such distribution shall not exceed
fifty per cent of its quota.
(d) The Fund shall apportion the remainder of its holdings of gold
and each currency (i) among all the members in proportion to,
but not in excess; of, the amounts due to each member after
the distributions under (b) and (c) above, provided that
distribution under 2(a) above shall not be taken into account
for determining the amounts due, and (ii) any excess holdings
of gold and currency among all the members in proportion to
their quotas.
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3. Each member shall redeem the holdings of its currency apportioned
to other members under 2(d) above, and shall agree with the Fund within
three months after a decision to liquidate upon an orderly procedure for
such redemption.
4. If a member has not reached agreement with the Fund within the three-
month period referred to in 3 above, the Fund shall use the currencies of other
members apportioned to that member under 2(d) above to redeem the currency
of that member apportioned to other members. Each currency apportioned to a
member which has not reached agreement shall be used, so far as possible, to
redeem its currency apportioned to the members which have made agreements
with the Fund under 3 above.
5. If a member has reached agreement with the Fund in accordance with 3
above, the Fund shall use the currencies of other members apportioned to that
member under 2(d) above to redeem the currency of that member apportioned to
other members which have made agreements with the Fund under 3 above. Each
amount so redeemed shall be redeemed in the currency of the member to which it
was apportioned.
6. After carrying out the steps in the preceding paragraphs, the Fund shall
pay to each member the remaining currencies held for its account.
7. Each member whose currency has been distributed to other members
under 6 above shall redeem such currency in the currency of the member
requesting redemption, or in such other manner as may be agreed between them.
If the members involved do not otherwise agree, the member obligated to redeem
shall complete redemption within five years of the date of distribution, but shall
not be required to redeem in any half-yearly period more than one-tenth of the
amount distributed to each other member. If the member does not fulfil this
obligation, the amount of currency which should have been redeemed may be
liquidated in an orderly manner in any market.
8. Each member whose currency has been distributed to other members
under 6 above guarantees the unrestricted use of such currency at all times for
the purchase of goods or for payment of sums due to it or to persons in its
territories. Each member so obligated agrees to compensate other members for
any loss resulting from the difference between the value of its currency in terms
of the special drawing right on the date of the decision to liquidate the Fund and
the value in terms of the special drawing right realised by such members on
disposal of its currency.
9. The Fund shall determine the value of gold under this Schedule on the
basis of prices in the market.
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10. For the purposes of this Schedule, quotas shall be deemed to have
been increased to the full extent to which they could have been increased in
accordance with Article III, Section 2(b) of this Agreement.
SCHEDULE L
SUSPENSION OF VOTING RIGHTS
In the case of a suspension of voting rights of a member under
Article XXVI, Section 2(b), the following provisions shall apply:
1. The member shall not—
(a) participate in the adoption of a proposed amendment
of this Agreement, or be counted in the total number of
members for that purpose, except in the case of an
amendment requiring acceptance by all members
under Article XXVIII (b) or pertaining exclusively
to the Special Drawing Rights Department;
(b) appoint a Governor or Alternate Governor, appoint
or participate in the appointment of a Councillor or
Alternate Councillor, or appoint, elect, or participate
in the election of an Executive Director.
2. The number of votes allotted to the member shall not be
cast in any organ of the Fund. They shall not be included in
the calculation of the total voting power, except for purposes
of the acceptance of a proposed amendment pertaining
exclusively to the Special Drawing Rights Department.
3. (a) The Governor and Alternate Governor appointed
by the member shall cease to hold office.
(b) The Councillor and Alternate Councillor
appointed by the member, or in whose appointment the
member has participated, shall cease to hold office,
provided that, if such Councillor was entitled to cast the
number of votes allotted to other members whose voting
rights have not been suspended, another Councillor and
Alternate Councillor shall be appointed by such other
members under Schedule D, and, pending such
appointment, the Councillor and Alternate Councillor shall
continue to hold office, but for a maximum of thirty days
from the date of the suspension.
(c) The Executive Director appointed or elected by
the member, or in whose election the member has
participated, shall cease to hold office, unless such
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Executive Director was entitled to cast the number of votes
allotted to other members whose voting rights have not been
suspended. In the latter case—
(i) if more than ninety days remain before the next
regular election of Executive Directors, another
Executive Director shall be elected for the
remainder of the term by such other members
by a majority of the votes cast; pending such
election, the Executive Director shall continue
to hold office, but for a maximum of thirty days
from the date of suspension;
(ii) if not more than ninety days remain before the
next regular election of Executive Directors, the
Executive Director shall continue to hold office
for the remainder of the term.
4. The member shall be entitled to send a representative to
attend any meeting of the Board of Governors, the Council,
or the Executive Board, but not any meeting of their
committees, when a request made by, or a matter particularly
affecting, the member is under consideration.
SCHEDULE M
SPECIAL ONE-TIME ALLOCATION OF SPECIAL
DRAWING RIGHTS
1. Subject to 4 below, each member that, as of September 19, 1997, is
a participant in the Special Drawing Rights Department shall, on the 30th
day following the effective date of the fourth amendment of this Agreement,
receive an allocation of special drawing rights in an amount that will result
in its net cumulative allocation of special drawing rights being equal to
29.315788813 per cent of its quota as of September 19, 1997, provided that
for participants whose quotas have not been adjusted as proposed in
Resolution No.45-2 of the Board of Governors, calculations shall be made
on the basis of the quotas proposed in that resolution.
2. (a) Subject to 4 below, each country that becomes a participant in
the Special Drawing Rights Department after September 19, 1997 but within
three months of the date of its membership in the Fund shall receive an
allocation of special drawing rights in an amount calculated in accordance
with (b) and (c) below on the 30th day following the later of: (i) the date on
which the new member becomes a participant in the Special Drawing Rights
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Department, or (ii) the effective date of the fourth amendment of
this Agreement.
(b) For the purposes of (a) above, each participant shall receive an
amount of special drawing rights that will result in such participant’s net
cumulative allocation being equal to 29.315788813 per cent of its quota as
of the date on which the member becomes a participant in the Special
Drawing Rights Department, as adjusted:
(i) first, by multiplying 29.315788813 per cent by the
ratio of the total of quotas, as calculated under 1
above, of the participants described in (c) below to
the total of quotas of such participants as of the date
on which the member became a participant in the
Special Drawing Rights Department, and
(ii) second, by multiplying the product of (i) above by
the ratio of the total of the sum of the net cumulative
allocations of special drawing rights received under
Article XVIII of the participants described in (c)
below as of the date on which the member became a
participant in the Special Drawing Rights Department
and the allocations received by such participants
under 1 above to the total of the sum of the net
cumulative allocations of special drawing rights
received under Article XVIII of such participants as
of September 19, 1997 and the allocations received
by such participants under 1 above.
(c) For the purposes of the adjustments to be made under (b) above,
the participants in the Special Drawing Rights Department shall be members
that are participants as of September 19, 1997 and (i) continue to be participants
in the Special Drawing Rights Department as of the date on which the member
became a participant in the Special Drawing Rights Department, and (ii) have
received all allocations made by the Fund after September 19, 1997.
3. (a) Subject to 4 below, if the Federal Republic of Yugoslavia (Serbia/
Montenegro) succeeds to the membership in the Fund and the participation in
the Special Drawing Rights Department of the former Socialist Federal
Republic of Yugoslavia in accordance with the terms and conditions of
Executive Board Decision No. 10237-(92/150), adopted December 14, 1992,
it shall receive an allocation of special drawing rights in an amount calculated
in accordance with (b) below on the 30th day following the later of: (i) the
date on which the Federal Republic of Yugoslavia (Serbia/Montenegro)
succeeds to membership in the Fund and participation in the Special Drawing
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Rights Department in accordance with the terms and conditions of Executive
Board Decision No. 10237-(92/150), or (ii) the effective date of the fourth
amendment of this Agreement.
(b) For the purposes of (a) above, the Federal Republic of
Yugoslavia (Serbia/Montenegro) shall receive an amount of special drawing
rights that will result in its net cumulative allocation being equal to
29.315788813 per cent of the quota proposed to it under paragraph 3(c) of
Executive Board Decision No. 10237-(92/150), as adjusted in accordance
with 2(b)(ii) and (c) above as of the date on which the Federal Republic of
Yugoslavia (Serbia/Montenegro) qualifies for an allocation under (a) above.
4. The Fund shall not allocate special drawing rights under this Schedule
to those participants that have notified the Fund in writing prior to the date of
the allocation of their desire not to receive the allocation.
5. (a) If, at the time an allocation is made to a participant under 1, 2, or
3 above, the participant has overdue obligations to the Fund, the special drawing
rights so allocated shall be deposited and held in an escrow account within the
Special Drawing Rights Department and shall be released to the participant
upon discharge of all its overdue obligations to the Fund.
(b) Special drawing rights being held in an escrow account shall not
be available for any use and shall not be included in any calculations of
allocations or holdings of special drawing rights for the purposes of the Articles,
except for calculations under this Schedule. If special drawing rights allocated
to a participant are held in an escrow account when the participant terminates
its participation in the Special Drawing Rights Department or when it is decided
to liquidate the Special Drawing Rights Department, such special drawing rights
shall be cancelled.
(c) For purposes of this paragraph, overdue obligations to the Fund
consist of overdue repurchases and charges in the General Resources Account,
overdue principal and interest on loans in the Special Disbursement Account,
overdue charges and assessments in the Special Drawing Rights Department,
and overdue liabilities to the Fund as trustee.
(d) Except for the provisions of this paragraph, the principle of
separation between the General Department and the Special Drawing Rights
Department and the unconditional character of special drawing rights as reserve
assets shall be maintained.
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SECOND SCHEDULE
TEXT OF ARTICLES OF AGREEMENT OF THE
INTERNATIONAL BANK FOR
RECONSTRUCTION AND DEVELOPMENT
The Governments on whose behalf the present Agreement is signed
agree as follows:
INTRODUCTORY ARTICLE
The International Bank for Reconstruction and Development is
established and shall operate in accordance with the following provisions:
ARTICLE I
PURPOSES
The purposes of the Bank are—
(i) to assist in the reconstruction and development of territories
of members by facilitating the Investment of capital for
productive purposes, including the restoration of economies
destroyed or disrupted by war, the reconversion of productive
facilities to peacetime needs and the encouragement of the
development of productive facilities and resources in less
developed countries;
(ii) to promote private foreign investment by means of guarantees
or participations in loans and other investments made by private
investors; and when private capital is not available on reasonable
terms, to supplement private investment by providing, on
suitable conditions, finance for productive purposes out of its
own capital, funds raised by it and its other resources;
(iii) to promote the long-range balanced growth of international
trade and the maintenance of equilibrium in balances of
payments by encouraging international investment for the
development of the productive resources of members, thereby
assisting in raising productivity, the standard of living and
conditions of labour in their territories;
(iv) to arrange the loans made or guaranteed by it in relation to
international loans through other channels so that the more
useful and urgent projects, large and small alike, will be dealt
with first;
(v) to conduct its operations with due regard to the effect of
international investment on business conditions in the
territories of members and, in the immediate post-war years,
[37 of 1967].
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to assist in bringing about a smooth transition from a wartime
to a peacetime economy.
The Bank shall be guided in all its decisions by the purposes set forth above.
ARTICLE II
MEMBERSHIP IN AND CAPITAL OF THE BANK
Section 1. Membership
(a) The original members of the Bank shall be those members of
the International Monetary Fund which accept membership in
the Bank before the date specified in Article IX, Section 2 (e).
(b) Membership shall be open to other members of the Fund, at
such times and in accordance with such terms as may be
prescribed by the Bank.
Section 2. Authorised Capital
(a) The authorised capital stock of the Bank shall be
$10,000,000,000, in terms of United States dollars of the
weight and fineness in effect on the 1st July 1944. The capital
stock shall be divided into 100,000 shares having a par value
of $100,000 each, which shall be available for subscription
only by members.
(b) The capital stock may be increased when the Bank deems it
advisable by a three-fourths majority of the total voting power.
Section 3. Subscription of Shares
(a) Each member shall subscribe shares of the capital stock of the
Bank. The minimum number of shares to be subscribed by the
original members shall be those set forth in Schedule A. The
minimum number of shares to be subscribed by other members
shall be determined by the Bank, which shall reserve a sufficient
portion of its capital stock for subscription by such members.
(b) The Bank shall prescribe rules laying down the conditions
under which members may subscribe shares of the authorised
capital stock of the Bank in addition to their minimum
subscriptions.
(c) If the authorised capital stock of the Bank is increased, each
member shall have a reasonable opportunity to subscribe, under
such conditions as the Bank shall decide, a proportion of the
increase of stock equivalent to the proportion which its stock
theretofore subscribed bears to the total capital stock of the
Bank, but no member shall be obligated to subscribe any part
of the increased capital.
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Section 4. Issue Price of Shares
Shares included in the minimum subscriptions of original members
shall be issued at par. Other shares shall be issued at par unless the Bank by a
majority of the total voting power decides in special circumstances to issue
them on other terms.
Section 5. Division and Calls of Subscribed Capital
The subscription of each member shall be divided into two parts
as follows:
(i) twenty per cent shall be paid or subject to call under Section 7(i)
of this Article as needed by the Bank for its operations;
(ii) the remaining eighty per cent shall be subject to call by the
Bank only when required to meet obligations of the Bank
created under Article IV, Sections 1(a)(ii) and (iii).
Calls on unpaid subscriptions shall be uniform on all shares.
Section 6. Limitation on Liability
Liability on shares shall be limited to the unpaid portion of the issue
price of the shares.
Section 7. Method of Payment of Subscriptions for Shares
Payment of subscriptions for shares shall be made in gold or United
States dollars and in the currencies of the members as follows:
(i) under Section 5(i) of this Article, two per cent of the price of
each share shall be payable in gold or United States dollars,
and, when calls are made, the remaining eighteen per cent
shall be paid in the currency of the member;
(ii) when a call is made under Section 5(ii) of this Article, payment
may be made at the option of the member either in gold, in
United States dollars or in the currency required to discharge
the obligations of the Bank for the purpose for which the call
is made;
(iii) when a member makes payments in any currency under (i)
and (ii) above, such payments shall be made in amounts equal
in value to the member’s liability under the call. This liability
shall be a proportionate part of the subscribed capital stock of
the Bank as authorised and defined in Section 2 of this Article.
Section 8. Time of Payment of Subscriptions
(a) The two per cent payable on each share in gold or United States
dollars under Section 7 (i) of this Article, shall be paid within
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sixty days of the date on which the Bank begins operations,
provided that—
(i) any original member of the Bank whose metropolitan
territory has suffered from enemy occupation or
hostilities during the present war shall be granted the
right to postpone payment of one-half per cent until
five years after that date;
(ii) an original member who cannot make such a payment
because it has not recovered possession of its gold
reserves which are still seized or immobilised as a result
of the war may postpone all payment until such date as
the Bank shall decide.
(b) The remainder of the price of each share payable under
Section 7(i) of this Article shall be paid as and when called
by the Bank, provided that—
(i) the Bank shall, within one year of its beginning
operations, call not less than eight per cent of the price
of the share in addition to the payment of two per cent
referred to in (a) above;
(ii) not more than five per cent of the price of the share
shall be called in any period of three months.
Section 9. Maintenance of Value of Certain Currency Holdings of the Bank
(a) Whenever (i) the par value of a member’s currency is reduced,
or (ii) the foreign exchange value of a member’s currency has,
in the opinion of the Bank, depreciated to a significant extent
within that member’s territories, the member shall pay to the
Bank within a reasonable time an additional amount of its own
currency sufficient to maintain the value, as of the time of initial
subscription, of the amount of the currency of such member
which is held by the Bank and derived from currency originally
paid in to the Bank by the Member under Article II, Section 7(i),
from currency referred to in Article IV, Section 2(b), or from
any additional currency furnished under the provisions of the
present paragraph, and which has not been repurchased by the
member for gold or for the currency of any member which is
acceptable to the Bank.
(b) Whenever the par value of a member’s currency is
increased, the Bank shall return to such member within a
reasonable time an amount of that member’s currency equal
to the increase in the value of the amount of such currency
described in (a) above.
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(c) The provisions of the preceding paragraphs may be waived
by the Bank when a uniform proportionate change in the par
values of the currencies of all its members is made by the
International Monetary Fund.
Section 10. Restriction on Disposal of Shares
Shares shall not be pledged or encumbered in any manner whatever
and they shall be transferable only to the Bank.
ARTICLE III
GENERAL PROVISIONS RELATING
TO LOANS AND GUARANTEES
Section 1. Use of Resources
(a) The resources and the facilities of the Bank shall be used
exclusively for the benefit of members with equitable
consideration to projects for development and projects for
reconstruction alike.
(b) For the purpose of facilitating the restoration and reconstruction
of the economy of members whose metropolitan territories
have suffered great devastation from enemy occupation or
hostilities, the Bank, in determining the conditions and terms
of loans made to such members, shall pay special regard to
lightening the financial burden and expediting the completion
of such restoration and reconstruction.
Section 2. Dealings between Members and the Bank
Each member shall deal with the Bank only through its Treasury, central
bank, stabilisation fund or other similar fiscal agency, and the Bank shall deal
with members only by or through the same agencies.
Section 3. Limitations on Guarantees and Borrowings of the Bank
The total amount outstanding of guarantees, participations in loans
and direct loans made by the Bank shall not be increased at any time, if by such
increase the total would exceed one hundred per cent of the unimpaired
subscribed capital, reserves and surplus of the Bank.
Section 4. Conditions on which the Bank may Guarantee or Make Loans
The Bank may guarantee, participate in, or make loans to any member
or any political sub-division thereof and any business, industrial, and agricultural
enterprise in the territories of a member, subject to the following conditions:
(i) when the member in whose territories the project is located is
not itself the borrower, the member or the central bank or some
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comparable agency of the member which is acceptable to the
Bank, fully guarantees the repayment of the principal and the
payment of interest and other charges on the loan;
(ii) the Bank is satisfied that in the prevailing market conditions
the borrower would be unable otherwise to obtain the loan
under conditions which in the opinion of the Bank are
reasonable for the borrower;
(iii) a competent committee, as provided for in Article V, Section 7,
has submitted a written report recommending the project after a
careful study of the merits of the proposal;
(iv) in the opinion of the Bank the rate of interest and other charges
are reasonable and such rate, charges and the schedule for
repayment of principal are appropriate to the project;
(v) in making or guaranteeing a loan, the Bank shall pay due regard
to the prospects that the borrower, and, if the borrower is not a
member, that the guarantor, will be in position to meet its
obligations under the loan; and the Bank shall act prudently in
the interests both of the particular member in whose territories
the project is located and of the members as a whole;
(vi) in guaranteeing a loan made by other investors, the Bank
receives suitable compensation for its risk;
(vii) loans made or guaranteed by the Bank shall, except in special
circumstances, be for the purpose of specific projects of
reconstruction or development.
Section 5. Use of Loans Guaranteed, Participated in or Made by the Bank
(a) The Bank shall impose no conditions that the proceeds of a
loan shall be spent in the territories of any particular member
or members.
(b) The Bank shall make arrangements to ensure that the proceeds
of any loan are used only for the purposes for which the loan
was granted, with due attention to considerations of economy
and efficiency and without regard to political or other non-
economic influences or considerations.
(c) In the case of loans made by the Bank, it shall open an account
in the name of the borrower and the amount of the loan shall
be credited to this account in the currency or currencies in
which the loan is made. The borrower shall be permitted by
the Bank to draw on this account only to meet expenses in
connection with the project as they are actually incurred.
Section 6. Loans to the International Finance Corporation
(a) The Bank may make, participate in, or guarantee loans to the
International Finance Corporation, an affiliate of the Bank,
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for use in its lending operations. The total amount outstanding
of such loans, participations and guarantees shall not be
increased if, at the time or as a result thereof, the aggregate
amount of debt (including the guarantee of any debt) incurred
by the said Corporation from any source and then outstanding
shall exceed an amount equal to four times its unimpaired
subscribed capital and surplus.
(b) The provisions of Article III, Sections 4 and 5(c) and of
Article IV, Section 3 shall not apply to loans, participations
and guarantees authorised by this Section.
ARTICLE IV
OPERATIONS
Section 1. Methods of Making or Facilitating Loans
(a) The Bank may make or facilitate loans which satisfy the general
conditions of Article III in any of the following ways:
(i) by making or participating in direct loans out of its own
funds corresponding to its unimpaired paid-up capital
and surplus and, subject to Section 6 of this Article, to
its reserves;
(ii) by making or participating in direct loans out of funds
raised in the market of a member, or otherwise borrowed
by the Bank;
(iii) by guaranteeing in whole or in part loans made by
private investors through the usual investment channels.
(b) The Bank may borrow funds under (a)(ii) above or guarantee
loans under (a)(iii) above only with the approval of the member
in whose markets the funds are raised and the member in whose
currency the loan is denominated, and only if those members
agree that the proceeds may be exchanged for the currency of
any other member without restriction.
Section 2. Availability and Transferability of Currencies
(a) Currencies paid into the Bank under Article II, Section 7(i),
shall be loaned only with the approval in each case of the
member whose currency is involved; provided, however,
that if necessary, after the Bank’s subscribed capital has
been entirely called, such currencies shall, without
restriction by the members whose currencies are offered,
be used or exchanged for the currencies required to meet
contractual payments of interest, other charges or
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amortisation on the Bank’s own borrowings, or to meet the
Bank’s liabilities with respect to such contractual payments
on loans guaranteed by the Bank.
(b) Currencies received by the Bank from borrowers or guarantors
in payment on account of principal of direct loans made with
currencies referred to in (a) above shall be exchanged for the
currencies of other members or reloaned only with the approval
in each case of the members whose currencies are involved;
provided, however, that if necessary, after the Bank’s
subscribed capital has been entirely called, such currencies
shall, without restriction by the members whose currencies
are offered, be used or exchanged for the currencies required
to meet contractual payments of interest, other charges or
amortisation on the Bank’s own borrowings, or to meet the
Bank’s liabilities with respect to such contractual payments
on loans guaranteed by the Bank.
(c) Currencies received by the Bank from borrowers or guarantors
in payment on account of principal of direct loans made by
the Bank under Section 1(a)(ii) of this Article, shall be held
and used, without restriction by the members, to make
amortisation payments, or to anticipate payment of or
repurchase part or all of the Bank’s own obligations.
(d) All other currrencies available to the Bank, including those
raised in the market or otherwise borrowed under Section
1(a)(ii) of this Article, those obtained by the sale of gold, those
received as payments of interest and other charges for direct
loans made under Section 1(a)(i) and (ii), and those received
as payments of commissions and other charges under Section
1(a)(iii), shall be used or exchanged for other currencies or
gold required in the operations of the Bank without restriction
by the members whose currencies are offered.
(e) Currencies raised in the markets of members by borrowers on
loans guaranteed by the Bank under Section 1(a)(iii) of this
Article, shall also be used or exchanged for other currencies
without restriction by such members.
Section 3. Provisions of Currencies for Direct Loans
The following provisions shall apply to direct loans under Section 1
(a)(i) and (ii) of this Article:
(a) the Bank shall furnish the borrower with such currencies of
members, other than the member in whose territories the
project is located, as are needed by the borrower for
expenditures to be made in the territories of such other
members to carry out the purposes of the loan;
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(b) the Bank may, in exceptional circumstances when local
currency required for the purposes of the loan cannot be
raised by the borrower on reasonable terms, provide the
borrower as part of the loan with an appropriate amount of
that currency;
(c) the Bank, if the project gives rise indirectly to an increased
need for foreign exchange by the member in whose territories
the project is located, may in exceptional circumstances
provide the borrower as part of the loan with an appropriate
amount of gold or foreign exchange not in excess of the
borrower’s local expenditure in connection with the purposes
of the loan;
(d) the Bank may, in exceptional circumstances, at the request of
a member in whose territories a portion of the loan is spent,
repurchase with gold or foreign exchange a part of that
member’s currency thus spent but in no case shall the part so
repurchased exceed the amount by which the expenditure of
the loan in those territories gives rise to an increased need for
foreign exchange.
Section 4. Payment Provisions for Direct Loans
Loan contracts under Section 1(a)(i) or (ii) of this Article shall be made
in accordance with the following payment provisions:
(a) The terms and conditions of interest and amortisation
payments, maturity and dates of payment of each loan shall
be determined by the Bank. The Bank shall also determine the
rate and any other terms and conditions of commission to be
charged in connection with such loan.
In the case of loans made under Section 1(a)(ii) of this
Article during the first ten years of the Bank’s operations,
this rate of commission shall be not less than one per cent
per annum and not greater than one and one-half per cent
per annum, and shall be charged on the outstanding portion
of any such loan. At the end of this period of ten years, the
rate of commission may be reduced by the Bank with respect
both to the outstanding portions of loans already made and
to future loans, if the reserves accumulated by the Bank under
Section 6 of this Article and out of other earnings are considered
by it sufficient to justify a reduction. In the case of future
loans the Bank shall also have discretion to increase the
rate of commission beyond the above limit, if experience
indicates that an increase is advisable.
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(b) All loan contracts shall stipulate the currency or currencies in
which payments under the contract shall be made to the Bank.
At the option of the borrower, however, such payments may
be made in gold, or subject to the agreement of the Bank, in
the currency of a member other than that prescribed in the
contract—
(i) in the case of loans made under Section 1(a)(i) of this
Article, the loan contracts shall provide that payments
to the Bank of interest, other charges and amortisation
shall be made in the currency loaned, unless the member
whose currency is loaned agrees that such payments
shall be made in some other specified currency or
currencies. These payments, subject to the provisions
of Article II, Section 9(c), shall be equivalent to the
value of such contractual payments at the time the loans
were made, in terms of a currency specified for the
purpose by the Bank by a three-fourths majority of the
total voting power;
(ii) in the case of loans made under Section 1(a)(ii) of this
Article, the total amount outstanding and payable to
the Bank in any one currency shall at no time exceed
the total amount of the outstanding borrowings made
by the Bank under Section 1(a)(ii) and payable in the
same currency.
(c) If a member suffers from an acute exchange stringency, so
that the service of any loan contracted by that member or
guaranteed by it or by one of its agencies cannot be provided
in the stipulated manner, the member concerned may apply to
the Bank for a relaxation of the conditions of payment. If the
Bank is satisfied that some relaxation is in the interests of the
particular member and of the operations of the Bank and of its
members as a whole, it may take action under either, or both,
of the following paragraphs with respect to the whole, or part,
of the annual service:
(i) the Bank may, in its discretion, make arrangements with
the member concerned to accept service payments on
the loan in the member’s currency for periods not to
exceed three years upon appropriate terms regarding
the use of such currency and the maintenance of its
foreign exchange value; and for the repurchase of such
currency on appropriate terms;
(ii) the Bank may modify the terms of amortisation or
extend the life of the loan, or both.
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Section 5. Guarantees
(a) In guaranteeing a loan placed through the usual investment
channels, the Bank shall charge a guarantee commission payable
periodically on the amount of the loan outstanding at a rate
determined by the Bank. During the first ten years of the Bank’s
operations, this rate shall be not less than one per cent per annum
and not greater than one and one-half per cent per annum. At
the end of this period of ten years, the rate of commission may
be reduced by the Bank with respect both to the outstanding
portions of loans already guaranteed and to future loans if the
reserves accumulated by the Bank under Section 6 of this Article
and out of other earnings are considered by it sufficient to justify
a reduction. In the case of future loans the Bank shall also have
discretion to increase the rate of commission beyond the above
limit, if experience indicates that an increase is advisable.
(b) Guarantee commissions shall be paid directly to the Bank by
the borrower.
(c) Guarantee by the Bank shall provide that the Bank may
terminate its liability with respect to interest if, upon default
by the borrower and by the guarantor, if any, the Bank offers
to purchase, at par and interest accrued to a date designated in
the offer, the bonds or other obligations guaranteed.
(d) The Bank shall have power to determine any other terms and
conditions of the guarantee.
Section 6. Special Reserve
The amount of commissions received by the Bank under Sections 4
and 5 of this Article shall be set aside as a special reserve, which shall be kept
available for meeting liabilities of the Bank in accordance with Section 7 of this
Article. The special reserve shall be held in such liquid form, permitted under
this Agreement, as the Executive Directors may decide.
Section 7. Methods of Meeting Liabilities of the Bank in case of Defaults
In cases of default on loans made, participated in, or guaranteed by
the Bank—
(a) the Bank shall make such arrangements as may be feasible to
adjust the obligations under the loans, including arrangements
under or analogous to those provided in Section 4(c) of
this Article;
(b) the payments in discharge of the Bank’s liabilities on borrowing
or guarantees under Section 1(a)(ii) and (iii) of this Article
shall be charged—
(i) first, against the special reserve provided in Section 6
of this Article;
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(ii) then, to the extent necessary and at the discretion of the
Bank, against the other reserves, surplus and capital
available to the Bank;
(c) whenever necessary to meet contractual payments of interest,
other charges or amortisation on the Bank’s own borrowings,
or to meet the Bank’s liabilities with respect to similar
payments on loans guaranteed by it, the Bank may call an
appropriate amount of the unpaid subscriptions of members
in accordance with Article II, Sections 5 and 7. Moreover, if it
believes that a default may be of long duration, the Bank may
call an additional amount of such unpaid subscriptions not to
exceed in any one year one per cent of the total subscriptions
of the members for the following purposes:
(i) to redeem prior to maturity, or otherwise discharge its
liability on, all or part of the outstanding principal of
any loan guaranteed by it in respect of which the debtor
is in default;
(ii) to repurchase, or otherwise discharge its liability on,
all or part of its own outstanding borrowings.
Section 8. Miscellaneous Operations
In addition to the operations specified elsewhere in this Agreement,
the Bank shall have the power—
(i) to buy and sell securities it has issued and to buy and sell
securities which it has guaranteed or in which it has invested,
provided that the Bank shall obtain the approval of the member
in whose territories the securities are to be bought or sold;
(ii) to guarantee securities in which it has invested for the purpose
of facilitating their sale;
(iii) to borrow the currency of any member with the approval of
that member;
(iv) to buy and sell such other securities as the Directors by a three-
fourths majority of the total voting power may deem proper
for the investment of all or part of the special reserve under
Section 6 of this Article.
In exercising the powers conferred by this Section, the Bank may deal with any
person, partnership, association, corporation or other legal entity in the territories
of any member.
Section 9. Warning to be placed on Securities
Every security guaranteed or issued by the Bank shall bear on its face
a conspicuous statement to the effect that it is not an obligation of any government
unless expressly stated on the security.
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Section 10. Political Activity Prohibited
The Bank and its officers shall not interfere in the political affairs of
any member; nor shall they be influenced in their decisions by the political
character of the member or members concerned. Only economic considerations
shall be relevant to their decisions, and these considerations shall be weighed
impartially in order to achieve the purposes stated in Article I.
ARTICLE V
ORGANISATION AND MANAGEMENT
Section 1. Structure of the Bank
The Bank shall have a Board of Governors, Executive Directors, a
President and such other officers and staff to perform such duties as the Bank
may determine.
Section 2. Board of Governors
(a) All the powers of the Bank shall be vested in the Board of
Governors consisting of one governor and one alternate appointed
by each member in such manner as it may determine. Each
governor and each alternate shall serve for five years, subject to
the pleasure of the member appointing him, and may be
reappointed. No alternate may vote except in the absence of his
principal. The Board shall select one of the governors as Chairman.
(b) The Board of Governors may delegate to the Executive
Directors authority to exercise any powers of the Board, except
the power to—
(i) admit new members and determine the conditions of
their admission;
(ii) increase or decrease the capital stock;
(iii) suspend a member;
(iv) decide appeals from interpretations of this Agreement
given by the Executive Directors;
(v) make arrangements to co-operate with other
international organisations (other than informal
arrangements of a temporary and administrative
character);
(vi) decide to suspend permanently the operations of the
Bank and to distribute its assets;
(vii) determine the distribution of the net income of the Bank.
(c) The Board of Governors shall hold an annual meeting and
such other meetings as may be provided for by the Board or
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called by the Executive Directors. Meetings of the Board shall
be called by the Directors whenever requested by five members
or by members having one-quarter of the total voting power.
(d) 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.
(e) The Board of Governors may by regulation establish a
procedure whereby the Executive Directors, when they deem
such action to be in the best interests of the Bank, may obtain
a vote of the Governors on a specific question without calling
a meeting of the Board.
(f) The Board of Governors, and the Executive Directors to the
extent authorised, may adopt such Rules and Regulations as
may be necessary or appropriate to conduct the business of
the Bank.
(g) Governors and alternates shall serve as such without
compensation from the Bank, but the Bank shall pay them
reasonable expenses incurred in attending meetings.
(h) The Board of Governors shall determine the remuneration to
be paid to the Executive Directors and the salary and terms of
the contract of service of the President.
Section 3. Voting
(a) Each member shall have two hundred and fifty votes plus one
additional vote for each share of stock held.
(b) Except as otherwise specifically provided, all matters before
the Bank shall be decided by a majority of the votes cast.
Section 4. Executive Directors
(a) The Executive Directors shall be responsible for the conduct
of the general operations of the Bank, and for this purpose,
shall exercise all the powers delegated to them by the Board
of Governors.
(b) There shall be twelve Executive Directors, who need not be
Governors, and of whom—
(i) five shall be appointed, one by each of the five members
having the largest number of shares;
(ii) seven shall be elected according to Schedule B by all
the Governors other than those appointed by the five
members referred to in (i) above.
For the purpose of this paragraph, “members” means
Governments of countries whose names are set forth in
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Schedule A, whether they are original members or become
members in accordance with Article II, Section 1(b). When
Governments of other countries become members, the Board
of Governors may, by a four-fifths majority of the total voting
power, increase the total number of Directors by increasing
the number of Directors to be elected.
Executive directors shall be appointed or elected every
two years.
(c) Each Executive Director shall appoint an alternate with full
power to act for him when he is not present. When the
Executive Directors appointing them are present, alternates
may participate in meetings but shall not vote.
(d) Directors shall continue in office until their successors are
appointed or elected. If the office of an elected Director
becomes vacant more than ninety days before the end of his
term, another Director shall be elected for the remainder of
the term by the Governors who elected the former Director.
A majority of the votes cast shall be required for election.
While the office remains vacant, the alternate of the former
Director shall exercise his powers, except that of appointing
an alternate.
(e) The Executive Directors shall function in continuous session
at the principal office of the Bank and shall meet as often as
the business of the Bank may require.
(f) A quorum for any meeting of the Executive Directors shall be
a majority of the Directors, exercising not less than one-half
of the total voting power.
(g) Each appointed Director shall be entitled to cast the number
of votes allotted under Section 3 of this Article to the member
appointing him. Each elected Director shall be entitled to
cast the number of votes which counted toward his election.
All the votes which a Director is entitled to cast shall be cast
as a unit.
(h) The Board of Governors shall adopt regulations under which
a member not entitled to appoint a Director under (b) above
may 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.
(i) The Executive Directors may appoint such committees as they
deem advisable. Membership of such committees need not be
limited to Governors or Directors or their alternates.
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Section 5. President and Staff
(a) The Executive Directors shall select a President who shall not
be a Governor or an Executive Director or an alternate for
either. The President shall be Chairman of the Executive
Directors, but shall have no vote except a deciding vote in
case of an equal division. He may participate in meetings of
the Board of Governors, but shall not vote at such meetings.
The President shall cease to hold office when the Executive
Directors so decide.
(b) The President shall be chief of the operating staff of the Bank
and shall conduct, under the direction of the Executive
Directors, the ordinary business of the Bank. Subject to the
general control of the Executive Directors, he shall be
responsible for the organisation, appointment and dismissal
of the officers and staff.
(c) The President, officers and staff of the Bank, in the
discharge of their offices, owe their duty entirely to the Bank
and to no other authority. Each member of the Bank shall
respect the international character of this duty and shall
refrain from all attempts to influence any of them in the
discharge of their duties.
(d) In appointing the officers and staff the President shall, subject
to the paramount importance of securing the highest standards
of efficiency and of technical competence, pay due regard to
the importance of recruiting personnel on as wide a
geographical basis as possible.
Section 6. Advisory Council
(a) There shall be an Advisory Council of not less than seven
persons selected by the Board of Governors including
representatives of banking, commercial, industrial, labour, and
agricultural interests, and with as wide a national representation
as possible. In those fields where specialised international
organisations exist, the members of the Council representative
of those fields shall be selected in agreement with such
organisations. The Council shall advise the Bank on matters
of general policy. The Council shall meet annually and on such
other occasions as the Bank may request.
(b) Councillors shall serve for two years and may be reappointed.
They shall be paid their reasonable expenses incurred on behalf
of the Bank.
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Section 7. Loan Committees
The committees required to report on loans under Article III, Section 4,
shall be appointed by the Bank. Each such committee shall include an expert
selected by the Governor representing the member in whose territories the project
is located and one or more members of the technical staff of the Bank.
Section 8. Relationship to other International Organisations
(a) The Bank, within the terms of this Agreement, shall co-operate
with any general international organisation and with public
international organisations having specialised responsibilities
in related fields. Any arrangements for such co-operation which
would involve a modification of any provision of this
Agreement may be affected only after amendment to this
Agreement under Article VIII.
(b) In making decisions on applications for loans or guarantees
relating to matters directly within the competence of any
international organisation of the types specified in the
preceding paragraph and participated in primarily by members
of the Bank, the Bank shall give consideration to the views
and recommendations of such organisation.
Section 9. Location of Offices
(a) The principal office of the Bank shall be located in the territory
of the member holding the greatest number of shares.
(b) The Bank may establish agencies or branch offices in the
territories of any member of the Bank.
Section 10. Regional Offices and Councils
(a) The Bank may establish regional offices and determine the
location of, and the areas to be covered by, each regional office.
(b) Each regional office shall be advised by a regional council
representative of the entire area and selected in such manner
as the Bank may decide.
Section 11. Depositories
(a) Each member shall designate its central bank as a depository
for all the Bank’s holdings of its currency or, if it has no central
bank, it shall designate such other institution as may be
acceptable to the Bank.
(b) The Bank may hold other assets, including gold, in depositories
designated by the five members having the largest number of
shares and in such other designated depositories as the Bank
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may select. Initially, at least one-half of the gold holdings of
the Bank shall be held in the depository designated by the
member in whose territory the Bank has its principal office,
and at least forty per cent shall be held in the depositories
designated by the remaining four members referred to above,
each of such depositories to hold, initially, not less than the
amount of gold paid on the shares of the member designating
it. However, all transfers of gold by the Bank shall be made
with due regard to the costs of transport and anticipated
requirements of the Bank. In an emergency the Executive
Directors may transfer all or any part of the Bank’s gold
holdings to any place where they can be adequately protected.
Section 12. Form of Holdings of Currency
The Bank shall accept from any member, in place of any part of the
member’s currency, paid into the Bank under Article II, Section 7(i), or to meet
amortisation payments on loans made with such currency, and not needed by
the Bank in its operations, notes or similar obligations issued by the Government
of the member or the depository designated by such member, which shall be
non-negotiable, non-interest-bearing and payable at their par value on demand
by credit to the account of the Bank in the designated depository.
Section 13. Publication of Reports and Provision of Information
(a) The Bank shall publish an annual report containing an audited
statement of its accounts and shall circulate to members at
intervals of three months or less a summary statement of its
financial position and a profit and loss statement showing the
results of its operations.
(b) The Bank may publish such other reports as it deems desirable
to carry out its purposes.
(c) Copies of all reports, statements and publications made under
this section shall be distributed to members.
Section 14. Allocation of Net Income
(a) The Board of Governors shall determine annually what part
of the Bank’s net income, after making provision for reserves,
shall be allocated to surplus and what part, if any, shall be
distributed.
(b) If any part is distributed, up to two per cent non-cumulative
shall be paid, as a first charge against the distribution for any
year, to each member on the basis of the average amount of
the loans outstanding during the year made under Article IV,
Section 1(a)(i), out of currency corresponding to its
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subscription. If two per cent is paid as a first charge, any
balance remaining to be distributed shall be paid to all members
in proportion to their shares. Payments to each member shall
be made in its own currency, or if that currency is not available
in other currency acceptable to the member. If such payments
are made in currencies other than the member’s own currency,
the transfer of the currency and its use by the receiving member
after payment shall be without restriction by the members.
ARTICLE VI
WITHDRAWAL AND SUSPENSION OF MEMBERSHIP:
SUSPENSION OF OPERATIONS
Section 1. Right of Members to Withdraw
Any member may withdraw from the Bank at any time by transmitting
a notice in writing to the Bank at its principal office.
Withdrawal shall become effective on the date such notice is received.
Section 2. Suspension of Membership
If a member fails to fulfil any of its obligations to the Bank, the Bank
may suspend its membership by decision of a majority of the Governors,
exercising a majority of the total voting power. The member so suspended
shall automatically cease to be a member one year from the date of its
suspension unless a decision is taken by the same majority to restore the
member to good standing.
While under suspension, a member shall not be entitled to exercise any rights
under this Agreement, except the right of withdrawal, but shall remain subject
to all obligations.
Section 3. Cessation of Membership in International Monetary Fund
Any member which ceases to be a member of the International
Monetary Fund shall automatically cease after three months to be a member of
the Bank unless the Bank by three-fourths of the total voting power has agreed
to allow it to remain a member.
Section 4. Settlement of Accounts with Governments Ceasing to be Members
(a) When a Government ceases to be a member, it shall remain
liable for its direct obligations to the Bank and for its contingent
liabilities to the Bank so long as any part of the loans or
guarantees contracted before it ceased to be a member are
outstanding; but it shall cease to incur liabilities with respect
to loans and guarantees entered into thereafter by the Bank
and to share either in the income or the expenses of the Bank.
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(b) At the time a Government ceases to be a member, the Bank shall
arrange for the repurchase of its shares as a part of the settlement
of accounts with such Government in accordance with the
provisions of (c) and (d) below. For this purpose the repurchase
price of the shares shall be the value shown by the books of
the Bank on the day the Government ceases to be a member.
(c) The payment for shares repurchased by the Bank under this
Section shall be governed by the following conditions:
(i) any amount due to the Government for its shares shall
be withheld so long as the Government, its central bank
or any of its agencies remains liable, as borrower or
guarantor, to the Bank and such amount may, at the
option of the Bank, be applied on any such liability as
it matures. No amount shall be withheld on account of
the liability of the Government resulting from its
subscription for shares under Article II, Section 5(ii).
In any event, no amount due to a member for its shares
shall be paid until six months after the date upon which
the Government ceases to be a member;
(ii) payments for shares may be made from time to time,
upon their surrender by the Government, to the extent
by which the amount due as the repurchase price in (b)
above exceeds the aggregate of liabilities on loans and
guarantees in (c)(i) above until the former member has
received the full repurchase price;
(iii) payments shall be made in the currency of the country
receiving payment or at the option of the Bank in gold;
(iv) if losses are sustained by the Bank on any guarantees,
participations in loans, or loans which were outstanding
on the date when the Government ceased to be a
member, and the amount of such losses exceeds the
amount of the reserve provided against losses on the
date when the Government ceased to be a member, such
Government shall be obligated to repay upon demand
the amount by which the repurchase price of its shares
would have been reduced, if the losses had been taken
into account when the repurchase price was determined.
In addition, the former member Government shall
remain liable on any call for unpaid subscriptions under
Article II, Section 5(ii), to the extent that it would have
been required to respond if the impairment of capital
had occurred and the call had been made at the time the
repurchase price of its shares was determined.
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(d) If the Bank suspends permanently its operations under
Section 5(b) of this Article, within six months of the date
upon which any Government ceases to be a member, all rights
of such Government shall be determined by the provisions
of Section 5 of this Article.
Section 5. Suspension of Operations and Settlement of Obligations
(a) In an emergency the Executive Directors may suspend
temporarily operations in respect of new loans and guarantees
pending an opportunity for further consideration and action
by the Board of Governors.
(b) The Bank may suspend permanently its operations in respect
of new loans and guarantees by vote of a majority of the
Governors, exercising a majority of the total voting power.
After such suspension of operations the Bank shall forthwith
cease all activities, except those incident to the orderly
realisation, conservation, and preservation of its assets and
settlement of its obligations.
(c) The liability of all members for uncalled subscriptions to the
capital stock of the Bank and in respect of the depreciation of
their own currencies shall continue until all claims of creditors,
including all contingent claims, shall have been discharged.
(d) All creditors holding direct claims shall be paid out of the
assets of the Bank, and then out of payments to the Bank on
calls on unpaid subscriptions. Before making any payments
to creditors holding direct claims, the Executive Directors shall
make such arrangements as are necessary, in their judgment,
to insure a distribution to holders of contingent claims rateably
with creditors holding direct claims.
(e) No distribution shall be made to members on account of their
subscriptions to the capital stock of the Bank until—
(i) all liabilities to creditors have been discharged or
provided for; and
(ii) a majority of the Governors, exercising a majority of
the total voting power, have decided to make a
distribution.
(f) After a decision to make a distribution has been taken under
(e) above, the Executive Directors may by a two-thirds majority
vote make successive distributions of the assets of the Bank
to members until all of the assets have been distributed. This
distribution shall be subject to the prior settlement of all
outstanding claims of the Bank against each member.
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(g) Before any distribution of assets is made, the Executive
Directors shall fix the proportionate share of each member
according to the ratio of its shareholding to the total outstanding
shares of the Bank.
(h) The Executive Directors shall value the assets to be distributed
as at the date of distribution and then proceed to distribute in
the following manner:
(i) there shall be paid to each member in its own obligations
or those of its official agencies or legal entities within
its territories, insofar as they are available for
distribution, an amount equivalent in value to its
proportionate share of the total amount to be distributed;
(ii) any balance due to a member after payment has been
made under (i) above shall be paid, in its own currency,
insofar as it is held by the Bank, up to an amount
equivalent in value to such balance;
(iii) any balance due to a member after payment has been
made under (i) and (ii) above shall be paid in gold or
currency acceptable to the member, insofar as they are
held by the Bank, up to an amount equivalent in value
to such balance;
(iv) any remaining assets held by the Bank after payments
have been made to members under (i), (ii), and (iii)
above shall be distributed pro rata among the members.
(i) Any member receiving assets distributed by the Bank in
accordance with (h) above, shall enjoy the same rights with
respect to such assets as the Bank enjoyed prior to their
distribution.
ARTICLE VII
STATUS, IMMUNITIES AND PRIVILEGES
Section 1. Purposes of Article
To enable the Bank to fulfil the functions with which it is entrusted,
the status, immunities and privileges set forth in this Article shall be accorded
to the Bank in the territories of each member.
Section 2. Status of the Bank
The Bank shall possess full juridical personality, and, in particular the
capacity—
(i) to contract;
(ii) to acquire and dispose of immovable and movable property;
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(iii) to institute legal proceedings.
Section 3. Position of the Bank with regard to Judicial Process
Actions may be brought against the Bank only in a Court of competent
jurisdiction in the territories of a member in which the Bank has an office, has
appointed an agent for the purpose of accepting service or notice of process, or
has issued or guaranteed securities. No actions shall, however, be brought by
members or persons acting for or deriving claims from members. The property
and assets of the Bank shall, wheresoever located and by whomsoever held, be
immune from all forms of seizure, attachment or execution before the delivery
of final judgment against the Bank.
Section 4. Immunity of Assets from Seizure
Property and assets of the Bank, wherever located and by whomsoever
held, shall be immune from search, requisition, confiscation, expropriation or
any other form of seizure by executive or legislative action.
Section 5. Immunity of Archives
The archives of the Bank shall be inviolable.
Section 6. Freedom of Assets from Restrictions
To the extent necessary to carry out the operations provided for in this
Agreement and subject to the provisions of this Agreement, all property and
assets of the Bank shall be free from restrictions, regulations, controls and
moratoria of any nature.
Section 7. Privilege for Communications
The official communications of the Bank shall be accorded by each
member the same treatment that it accords to the official communications of
other members.
Section 8. Immunities and Privileges of Officers and Employees
All Governors, Executive Directors, alternates, officers and employees
of the Bank—
(i) shall be immune from legal process with respect to acts
performed by them in their official capacity except when the
Bank waives this immunity;
(ii) not being local nationals, shall be accorded the same
immunities from immigration restrictions, alien registration
requirements and national service obligations and the same
facilities as regards exchange restrictions as are accorded by
members to the representatives, officials, and employees of
comparable rank of other members;
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(iii) shall be granted the same treatment in respect of travelling
facilities as is accorded by members to representatives, officials
and employees of comparable rank of other members.
Section 9. Immunities from Taxation
(a) The Bank, its assets, property, income and its operations and
transactions authorised by this Agreement, shall be immune
from all taxation and from all Customs duties. The Bank shall
also be immune from liability for the collection or payment of
any tax or duty.
(b) No tax shall be levied on or in respect of salaries and
emoluments paid by the Bank to Executive Directors,
alternates, officials or employees of the Bank who are not local
citizens, local subjects, or other local nationals.
(c) No taxation of any kind shall be levied on any obligation or
security issued by the Bank (including any dividend or interest
thereon) by whomsoever held—
(i) which discriminates against such obligation or security
solely because it is issued by the Bank; or
(ii) if the sole jurisdictional basis for such taxation is the
place or currency in which it is issued, made payable
or paid, or the location of any office or place of business
maintained by the Bank.
(d) No taxation of any kind shall be levied on any obligation or
security guaranteed by the Bank (including any dividend or
interest thereon) by whomsoever held—
(i) which discriminates against such obligation or security
solely because it is guaranteed by the Bank; or
(ii) if the sole jurisdictional basis for such taxation is the
location of any office or place of business maintained
by the Bank.
Section 10. Application of Article
Each member shall take such action as is necessary in its own
territories for the purpose of making effective in terms of its own law the
principles set forth in this Article and shall inform the Bank of the detailed
action which it has taken.
ARTICLE VIII
AMENDMENTS
(a) Any proposal to introduce modifications in this Agreement,
whether emanating from a member, a Governor or the
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Executive Directors, shall be communicated to the Chairman
of the Board of Governors who shall bring the proposal before
the Board. If the proposed amendment is approved by the Board
the Bank shall, by circular letter or telegram, ask all members
whether they accept the proposed amendment. When three-
fifths of the members, having four-fifths of the total voting
power, have accepted the proposed amendments, the Bank shall
certify the fact by formal communication addressed
to all members.
(b) Notwithstanding (a) above, acceptance by all members is
required in the case of any amendment modifying—
(i) the right to withdraw from the Bank provided in
Article VI, Section 1;
(ii) the right secured by Article II, Section 3(c);
(iii) the limitation on liability provided in Article II,
Section 6.
(c) Amendments shall enter into force for all members three
months after the date of the formal communication unless a
shorter period is specified in the circular letter or telegram.
ARTICLE IX
INTERPRETATION
(a) Any question of interpretation of the provisions of this
Agreement arising between any member and the Bank or
between any members of the Bank shall be submitted to the
Executive Directors for their decision. If the question
particularly affects any member not entitled to appoint an
Executive Director, it shall be entitled to representation in
accordance with Article V, Section 4(h).
(b) In any case where the Executive Directors have given a
decision under (a) above, any member may require that the
question be referred to the Board of Governors, whose decision
shall be final. Pending the result of the reference to the Board,
the Bank may, so far as it deems necessary, act on the basis of
the decision of the Executive Directors.
(c) Whenever a disagreement arises between the Bank and a
country which has ceased to be a member, or between the Bank
and any member during the permanent suspension of the Bank,
such disagreement shall be submitted to arbitration by a
tribunal of three arbitrators, one appointed by the Bank, another
by the country involved and an umpire who, unless the parties
otherwise agree, shall be appointed by the President of the
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Permanent Court of International Justice or such other authority
as may have been prescribed by regulation adopted by the
Bank. The umpire shall have full power to settle all questions
of procedure in any case where the parties are in disagreement
with respect thereto.
ARTICLE X
APPROVAL DEEMED GIVEN
Whenever the approval of any member is required before any act may
be done by the Bank, except in Article VIII, approval shall be deemed to have
been given unless the member presents an objection within such reasonable
period as the Bank may fix in notifying the member of the proposed act.
ARTICLE XI
FINAL PROVISIONS
Section 1. Entry into Force
This Agreement shall enter into force when it has been signed on behalf
of Governments whose minimum subscriptions comprise not less than sixty-
five per cent of the total subscriptions set forth in Schedule A and when the
instruments referred to in Section 2(a) of this Article have been deposited on
their behalf, but in no event shall this Agreement enter into force before
May 1, 1945.
Section 2. Signature
(a) Each Government on whose behalf this Agreement is signed
shall deposit with the Government of the United States of
America an instrument setting forth that it has accepted this
Agreement in accordance with its law and has taken all steps
necessary to enable it to carry out all of its obligations under
this Agreement.
(b) Each Government shall become a member of the Bank as
from the date of the deposit on its behalf of the instrument
referred to in (a) above, except that no Government shall
become a member before this Agreement enters into force
under Section 1 of this Article.
(c) The Government of the United States of America shall inform
the Governments of all countries whose names are set forth in
Schedule A, and all Governments whose membership is
approved in accordance with Article II, Section 1(b), of all
signatures of this Agreement and of the deposit of all
instruments referred to in (a) above.
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(d) At the time this Agreement is signed on its behalf, each
Government shall transmit to the Government of the United
States of America one one-hundredth of one per cent of the
price of each share in gold or United States dollars for the
purpose of meeting administrative expenses of the Bank. This
payment shall be credited on account of the payment to be
made in accordance with Article II, Section 8(a). The
Government of the United States of America shall hold such
funds in a special deposit account and shall transmit them to
the Board of Governors of the Bank when the initial meeting
has been called under Section 3 of this Article. If this
Agreement has not come into force by the 31st December 1945,
the Government of the United States of America shall return
such funds to the Governments that transmitted them.
(e) This Agreement shall remain open for signature at Washington
on behalf of the Governments of the countries whose names
are set forth in Schedule A until December 31, 1945.
(f) After December 31, 1945, this Agreement shall be open for
signature on behalf of the Government of any country whose
membership has been approved in accordance with Article II,
Section 1(b).
(g) By their signature of this Agreement, all Governments accept
it both on their own behalf and in respect of all their colonies,
overseas territories, all territories under their protection,
suzerainty or authority and all territories in respect of which
they exercise a mandate.
(h) In the case of Governments whose metropolitan territories have
been under enemy occupation, the deposit of the instrument
referred to in (a) above may be delayed until one hundred and
eighty days after the date on which these territories have been
liberated. If, however, it is not deposited by any such
Government before the expiration of this period, the signature
affixed on behalf of that Government shall become void and
the portion of its subscription paid under (d) above shall be
returned to it.
(i) Paragraphs (d) and (h) shall come into force with regard to
each signatory Government as from the date of its signature.
Section 3. Inauguration of the Bank
(a) As soon as this Agreement enters into force under Section 1
of this Article, each member shall appoint a Governor and the
member to whom the largest number of shares is allocated in
Schedule A shall call the first meeting of the Board of
Governors.
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(b) At the first meeting of the Board of Governors, arrangements
shall be made for the selection of provisional Executive
Directors. The Governments of the five countries, to which
the largest number of shares are allocated in Schedule A, shall
appoint provisional Executive Directors. If one or more of
such Governments have not become members, the Executive
Directorships which they would be entitled to fill shall remain
vacant until they become members, or until the 1st January
1946, whichever is the earlier. Seven provisional Executive
Directors shall be elected in accordance with the provisions
of Schedule B and shall remain in office until the date of the
first regular election of Executive Directors which shall be
held as soon as practicable after January 1, 1946.
(c) The Board of Governors may delegate to the provisional
Executive Directors any powers except those which may not
be delegated to the Executive Directors.
(d) The Bank shall notify members when it is ready to commence
operations.
Done at Washington, in a single copy which shall remain deposited in
the archives of the Government of the United States of America, which shall
transmit certified copies to all Governments whose names are set forth in
Schedule A and to all Governments whose membership is approved in accordance
with Article II, Section 1(b).
SCHEDULE A
SUBSCRIPTIONS
[In millions of United States dollars]
Australia … … 200
Belgium … … 225
Bolivia … … 7
Brazil … … 105
Canada … … 325
Chile … … 35
China … … 600
Colombia … … 35
Costa Rica … … 2
Cuba … … 35
Czechoslovakia… … 125
Denmark … … (1)
Dominican Republic … 2
Ecuador … … 3.2
Egypt … … 40
El Salvador … … 1
Ethiopia … … 3
France … … 450
Greece … … 25
Guatemala … … 2
Haiti … … 2
Honduras … … 1
Iceland … … 1
India … … 400
Iran … … 24
Iraq … … 6
Liberia … … .5
Luxembourg … … 10
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1The quota of Denmark shall be determined by the Bank after Denmark accepts
membership in accordance with these Articles of Agreement.
SCHEDULE B
ELECTION OF EXECUTIVE DIRECTORS
1. The election of the elective Executive Directors shall be by ballot of
the Governors eligible to vote under Article V, Section 4(b).
2. In balloting for the elective Executive Directors, each Governor
eligible to vote shall cast for one person all of the votes to which the member
appointing him is entitled under Section 3 of Article V. The seven persons
receiving the greatest number of votes shall be Executive Directors, except
that no person who receives less than fourteen per cent of the total of the
votes which can be cast (eligible votes) shall be considered elected.
3. When seven persons are not elected on the first ballot, a second ballot
shall be held in which the person who received the lowest number of votes
shall be ineligible for election and in which there shall vote only—
(a) those Governors who voted in the first ballot for a person
not elected; and
(b) those Governors whose votes for a person elected are deemed
under 4 below to have raised the votes cast for that person
above fifteen per cent of the eligible votes.
4. In determining whether the votes cast by a Governor are to be deemed
to have raised the total of any person above fifteen per cent of the eligible
votes, the fifteen per cent shall be deemed to include, first, the votes of the
Governor casting the largest number of votes for such person, then the votes
of the Governor casting the next largest number, and so on until fifteen per
cent is reached.
Mexico … … 65
Netherlands … … 275
New Zealand … … 50
Nicaragua … … .8
Norway … … 50
Panama … … .2
Paraguay … … .8
Peru … … 17.5
Philippine
Commonwealth … 15
Poland … … 125
Union of South Africa … 100
Union of Soviet
Socialist Republics … 1,200
United Kingdom… … 1,300
United States … … 3,175
Uruguay … … 10.5
Venezuela … … 10.5
Yugoslavia … … 40
Total … … 9,100
UNOFFICIAL VERSION
UPDATED TO DECEMBER 31ST 2014
MINISTRY OF LEGAL AFFAIRS www.legalaffairs.gov.tt
L.R.O.
LAWS OF TRINIDAD AND TOBAGO
International Financial Organisations Chap. 70:01 111
5. Any Governor, part of whose votes must be counted in order to raise
the total of any person above fourteen per cent, shall be considered as casting
all of his votes for such person even if the total votes for such person thereby
exceed fifteen per cent.
6. If, after the second ballot, seven persons have not been elected, further
ballots shall be held on the same principles until seven persons have been elected,
provided that after six persons are elected, the seventh may be elected by a
simple majority of the remaining votes and shall be deemed to have been elected
by all such votes.
INDEX
PAGE
A""o$n&'
Bank’s!Audited!Statement!of,!Art.!V,!Sec.!13()* … … … 99
Borrower’s,!Art.!III,!Sec.!5!("*… … … … … 87
Ad,-'o.y!0o$n"-12!Art.!V,!Sec.!6 … … … … … 97
A3en"-e'!fo.!0omm$n-")&-on,!Art.!III,!Sec.!2… … … … 86
A1&e.n)&e'
Executive!Directors,!Art.!V,!Sec.!4!… … … … … 95
Governors,!Art.!V,!Sec.!2 … … … … … 94
Amendmen&'2!A.&-"1e'!of!A3.eemen&2!Art.!VIII… … … … 105
Amo.&-')&-on!7)ymen&'2!Art.!IV,!Sec.!4;!Art.!IV,!Sec.!7… … … 90,!92
Ann$)1!8e9o.&2!Art.!V,!Sec.!13()* … … … … … 99
A99.o,)1!of!:embe.',!Art.!X … … … … … 107
A.b-&.)&-on2!o..oC-n3'2!>)n?@'
Approval!of!Member!on,!Art.!IV,!Sec.!1… … … … 88
Limitations!on,!Art.!III,!Sec.!3;!Art.!IV,!Sec.!1,!4 … …!!!!!!!!!!!!!!86,!88,!90
>.)n"=!Dff-"e',!Art.!V,!Sec.!9 … … … … … 98
0)11'!on!0)9-&)1,!Art.!II,!Sec.!5,!7,!8… … … … … 84,!85
0)9-&)1!A&o"?
Division!of!Calls!on,!Art.!II,!Sec.!5 … … … … 84
Division!into!Shares,!Art.!II,!Sec.!2 … … … … 83
Increase!to,!Art.!II,!Sec.!2;!Art.!V,!Sec.!2… … … … 83,!94
Subscription!to!Shares,!Sch.!“A”;!Art.!II,!Sec.!3 … … 109,!83
0=)-.m)n
Board!of!Governors,!Art.!V,!Sec.!2()* … … … … 94
Executive!Directors,!Art.!V,!Sec.!5()* … … … … 97
01)-m'2!7)ymen&!-n!A$'9en'-on!of!D9e.)&-on',!Art.!VI,!Sec.!5 … … 102
PAGE
UNOFFICIAL VERSION
UPDATED TO DECEMBER 31ST 2014
MINISTRY OF LEGAL AFFAIRS www.legalaffairs.gov.tt
L.R.O.
LAWS OF TRINIDAD AND TOBAGO
International Financial Organisations Chap. 70:01 113
0omm-''-on'2!Eo)n'
Conditions;!Rate,!Art.!IV,!Sec.!4()* … … … … 90
Use,!Art.!IV,!Sec.!6!. … … … … … 92
0omm-&&ee'
Executive!Directors,!Art.!V,!Sec.!4(-* … … … … 96
Loan!Committee,!Art.!V,!Sec.!7;!Art.!III,!Sec.!4(iii)!… … … 98,!87
0omm$n-")&-on'
Agencies!for,!Art.!III,!Sec.!2 … … … … … 86
Privileges!Accorded,!Art.!VII,!Sec.!7 … … … … 104
0o$n"-12!Ad,-'o.y,!Art.!V,!Sec.!6 … … … … … 97
0$..en"-e'
Availability!and!Transferability,!Art.!IV,!Sec.!1,!2… … … 88
Borrowings!by!Bank,!Art.!IV,!Sec.!8(iii) … … … 93
Depository!for,!Art.!V,!Sec.!11 … … … … 98
Distribution!of!Income,!Art.!V,!Sec.!14… … … … 99
Form!of!Holdings,!Art.!V,!Sec.!12 … … … … 99
Maintenance!of!Value,!Art.!II,!Sec.!9 … … … … 85
Provision,!Direct!Loans,!Art.!IV,!Sec.!3 … … … 89
Repurchase!by!Members,!Art.!IV,!Sec.!3(d* … … … 90
Suspension!of!Operations,!Distribution!of!Assets,!Art.!VI,!Sec.!5(=* … !103
Feben&$.e'
Power!to!Buy!and!Sell;!Power!to!Guarantee,!Art.!IV,!Sec.!8!… … 93
Warning!Placed!on,!Art.!IV,!Sec.!9 … … … … 93
Fef)$1&2!on!Eo)n',!Art.!IV,!Sec.!7 … … … … … 92
Fe9o'-&o.-e',!Art.!V,!Sec.!11 … … … … … 98
G1e"&-on
Board!of!Governors,!Chairman,!Art.!V,!Sec.!2()* … … … 94
Directors,!Vacancy,!Art.!V,!Sec.!4(d* … … … … 96
Executive!Directors,!Sch.!“B”!… … … … … 110
Gm91oyee'
Appointment;!Dismissal;!Recruitment,!Art.!V.!Sec.!5 … … 97
Immunities!and!Privileges,!Art.!VII,!Sec.!8,!9 … … 104,!105
GHe"$&-,e!F-.e"&o.'
Annual!Report,!Art.!V,!Sec.!13… … … … … 99
Committees,!Art.!V,!Sec.!7;!Art.!III,!Sec.!4(iii) … … … 98,!87
Election,!Sch.!“B” … … … … … 110
Immunities,!Art.!VII,!Sec.!8,!9… … … … …104,!105
Meetings,!Art.!V.!Sec.!4(f*;!Art.!V,!Sec.!5()* … … … 96,!97
PAGE
UNOFFICIAL VERSION
UPDATED TO DECEMBER 31ST 2014
MINISTRY OF LEGAL AFFAIRS www.legalaffairs.gov.tt
LAWS OF TRINIDAD AND TOBAGO
114 Chap. 70:01 International Financial Organisations
Powers;!Selection;!Terms!of!Office,!Art.!V,!Sec.!2,!4,!5;
Art.!VI,!Sec.!5;!Art.!IX …!!!!!!!!!!!!!!94,!95,!97,!102,!106
I-n)n"-)1!A&)&emen&'2!7$b1-")&-on2!Art.!V,!Sec.!13 … … … 99
Io.e-3n!GH"=)n3e
Availability!and!Transferability!of!Currencies,!Art.!IV,!Sec.!1,!2 … 88
Borrowers’!Requirements,!Art.!IV,!Sec.!3("* !… … … 90
Borrowing!of!Currencies!by!Bank,!Art.!IV,!Sec.!8(iii) … … 93
Changes!in!Value,!Art.!II,!Sec.!9 … … … … 85
Depository!for!Currencies,!Art.!V,!Sec.!11 … … … 98
Distribution!of!Income!in!Currencies,!Art.!V.!Sec.!14 … … 99
Form!of!Currency!Holdings,!Art.!V,!Sec.!12 … … … 99
Repurchase!From!Borrowers,!Art.!IV,!Sec.!3(d* … … 90
Suspension!of!Operations,!Distribution!of!Assets!in!Currencies,
Art.!VI,!Sec.!5(=* … … … … … 103
Bo,e.no.'2!>o).d!of
Alternates,!Powers,!Term,!Art.!V,!Sec.!1,!2 … … … 94
Appointment,!Art.!V,!Sec.!2()* … … … 94
Delegation!of!Powers!to!Executive!Directors,!Art.!V,!Sec.!2(b* … 94
Meetings,!Art.!V,!Sec.!2("*2!(d*2!(e*2!(f* … … 94,95
Powers,!Art.!V,!Sec.!2(f*;!Sec.!6!… … … … … 95,!97
Tenure!of!Office,!Art.!V,!Sec.!2()* … … … … 94
Terms!of!Service,!Art.!V,!Sec.!2(3* … … … … 95
Vote!Without!Meeting,!Art.!V,!Sec.!2!(e* … … … 95
Voting,!Art.!V,!Sec.!3 … … … … … 95
B$).)n&ee2!Eo)n',!Art.!III,!Sec.!4;!Art.!IV,!Sec.!5 … … … 86,!92
