Appendix I DECISION ON STAND-BY CREDIT ARRANGEMENTS
- International Monetary Fund
- Published Date:
- September 1953
The Fund is prepared to consider requests by members for stand-by arrangements designed to give assurance that, during a fixed period of time, transactions up to a specified amount will be made whenever a member requests and without further consideration of its position, unless the ineligibility provisions of the Fund Agreement have been invoked. The following paragraphs set forth the general framework for stand-by arrangements:
1. Stand-by arrangements would be limited to periods of not more than six months. They could be renewed by a new decision of the Executive Board.
2. In considering the request for a stand-by arrangement or a renewal of a stand-by arrangement, the Fund would apply the same policies that are applied to requests for immediate drawings, including a review of the member’s position, policies and prospects in the context of the Fund’s objectives and purposes. The Fund would agree to a stand-by arrangement only for a member that would be in a position to make purchases of the same amount of exchange from the Fund.
3. Such arrangements would cover the portion of the quota which a member would be allowed, under Article V, Section 3, to draw within the period provided in the arrangement. However, this does not preclude the Fund from making stand-by arrangements for larger amounts on terms in accordance with Article V, Section 4.
4. A charge of ¼ of 1 per cent per annum would be payable to the Fund at the time a stand-by arrangement is agreed. This charge would be payable in gold (or United States dollars in lieu of gold) or the member’s currency as specified for other charges by Article V, Section 8(f). In the event that a stand-by arrangement is renewed, a new charge at the rate of ¼ of 1 per cent per annum would be payable to the Fund.
5. A member having a stand-by arrangement would have the right to engage in the transactions covered by the stand-by arrangement without further review by the Fund. This right of the member could be suspended only with respect to requests received by the Fund after: (a) a formal ineligibility, or (b) a decision of the Executive Board to suspend transactions either generally (under Article XVI, Section l(ii)) or in order to consider a proposal, made by an Executive Director or the Managing Director, formally to suppress or to limit the eligibility of the member.
6. In view of the policy of the Fund with respect to drawings within the so-called “gold tranche,” it is not considered likely that members will request stand-by arrangements confined to transactions within the “gold tranche.” Accordingly, the policy set forth in this decision is designed primarily to deal with stand-by arrangements for drawings beyond the “gold tranche.” If at any time a member proposes a stand-by arrangement which would, in part or entirely, involve drawings within the “gold tranche,” the Fund will reconsider the charge set forth in paragraph 4 above as applied to “gold tranche” transactions.
7. This decision will be effective until December 31, 1953, and will be reviewed by the Executive Board before that date.
October 1, 1952