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Recent Activity: International Monetary Fund

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
March 1965
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Transactions in 1964

In 1964, the International Monetary Fund provided 22 countries with $1.9 billion in 12 currencies, a notable increase over the $333 million drawn from the Fund in 1963 and the $584 million drawn in 1962. By the end of last year, total drawings on the Fund since it began operations in 1947 had increased to $9 billion and the number of countries which had used the Fund’s resources had risen to 56. Drawings outstanding on December 31, 1964, at $2.6 billion, were close to the record high figure reached in 1961. On the same date, the Fund’s commitments under stand-by arrangements amounted to an additional $685 million.

As in 1961, when drawings amounted to a peak $2.5 billion, the Fund’s operations in 1964 included a large drawing by the United Kingdom. Last year also saw the first drawings by 2 other industrial members (Italy and the United States) and by 4 African countries (Mali, Morocco, Somalia, and Tunisia), as well as further drawings by 15 other developing countries. Stand-by arrangements in effect at the end of the year included 3 with industrial countries—Japan, the United Kingdom, and the United States—and 16 with developing countries, of which 10 were in Latin America and 5 were in Africa.

The drawing by the United Kingdom, made early in December, was for $1 billion—the full amount available under its stand-by arrangement. It came at a time when the Fund’s holdings of European currencies had been reduced by other members’ drawings, and in order to acquire the currencies needed the Fund borrowed the equivalent of $405 million from 8 members participating in the General Arrangements to Borrow and also sold $250 million of its gold holdings.

The first U.S. drawing on the Fund, in the amount of $125 million, was made in February; it was followed by further drawings in June, September, and December, to raise total U.S. drawings to $525 million. However, during the course of 1964, dollars continued to be drawn from the Fund by other members and this had the effect of reducing U.S. net drawings to $231 million by the end of the year.

Drawings by the nonindustrial countries were again heavy in 1964, but repayments slightly exceeded the new drawings made by this group. In the past ten years, total outstanding drawings by the less developed countries as a group have shown an almost unbroken rise. At the end of 1964, outstanding drawings for these countries, at nearly $1.3 billion, were only slightly lower than the high level reached at the end of 1963 and about seven times greater than the corresponding figure at the end of 1955.

General Arrangements to Borrow

The Fund’s General Arrangements to Borrow, which became effective in October 1962 for a four-year term, are due to come up for review this year, in accordance with terms of the 1962 agreements. Under the Arrangements, the Fund is authorized to borrow up to the equivalent of $6 billion in the currencies of ten industrial members, if these resources are required to avert a major foreign exchange crisis. The facilities were used for the first time on December 2, 1964, when the Fund called upon eight participating members to lend their currencies in a total amount equivalent to $405 million to help the Fund meet a request for a $1 billion drawing by the United Kingdom.

The U.K. drawing was made up of 11 currencies, of which the equivalent of $345 million came from the Fund’s holdings, $405 million from borrowing, and $250 million from sales of the Fund’s gold holdings. The eight members which lent their currencies to the Fund, with the amounts shown in parentheses, were as follows: Belgium ($30 million), Canada ($15 million), France ($100 million), the Federal Republic of Germany ($180 million), Italy ($5 million), Japan ($20 million), the Netherlands ($40 million), and Sweden ($15 million).

Gold Sales

The gold sales made by the Fund in connection with the U.K. drawing were for the purchase of 10 currencies, made up of deutsche mark (in an amount equivalent to $93 million), French francs ($63 million), Netherlands guilders ($26 million), Belgian francs ($17 million), Japanese yen ($14 million), Spanish pesetas ($10 million), Canadian dollars ($9 million), Austrian schillings ($8 million), Swedish kronor ($7 million), and Italian lire ($3 million).

At the end of December 1964, the Fund’s gold account stood at $2,979 million, of which the equivalent of $800 million was invested in U.S. Government securities.

IMF Institute

A major step toward diversifying and expanding the Fund’s training activities was taken in May last year with the establishment of the IMF Institute at the Fund’s headquarters in Washington, D.C. The new Institute replaces a variety of training programs which have been organized by the Fund since 1950. One of the first tasks undertaken by the Institute was the holding between July and December last year of two new seminars, conducted in French, for senior officials from 17 of the newer French-speaking members. In March 1965 the Institute will begin the first of its regular 20-week courses that are to be conducted in English. The main purpose of the Institute’s program is to provide assistance to member countries by giving training in financial analysis, and in national and international monetary and financial policy, to a selected group of persons in government or central bank employment. Up to the time of the establishment of the IMF Institute, the Fund’s training programs had been attended by 339 participants from 73 countries. Many of the participants are continuing to serve their governments, and a number of them now occupy positions of high responsibility in financial institutions in their countries.

Visits of the Fund’s Managing Director

Mr. Pierre-Paul Schweitzer, the Fund’s Managing Director, made an extensive tour through several Far Eastern countries last September and October. His travels began with his attendance at the Fund’s Annual Meeting in Tokyo early in September and continued after that meeting through the Philippines, Thailand, Malaysia, India, Pakistan, and Iran. Since his return to Washington, Mr. Schweitzer has also visited the continent of Europe and the United Kingdom.

The Executive Board

At its Annual Meeting in Tokyo last September, the Board of Governors approved an increase in the number of Executive Directors from 19 to 20. In the subsequent election, 4 new Directors were elected and 11 others reelected, for a term of two years. The five members having the largest quotas—currently, the United States, the United Kingdom, France, the Federal Republic of Germany, and India —are each entitled to appoint an Executive Director. The Executive Board of the Fund now consists of 3 Directors from Africa, 5 from the Far East and Pacific Area, 3 from Latin America, and 6 from continental Europe, in addition to Directors from Canada, the United Kingdom, and the United States.

Recent Fund Activity

The four Executive Directors who were elected in 1964 and took their seats on the Board as from November 1 were Mr. Kurt Eklöf (Sweden), Mr. Luis Escobar (Chile), Mr. Semyano Kiingi (Uganda) and Mr. Alfonso Espinosa (Venezuela). Subsequently, the United Kingdom Government notified the Fund that Mr. J. M. Stevens would succeed Sir Eric Roll as Executive Director for the United Kingdom, effective January 15.

Staff Changes

There were an unusual number of executive staff changes during 1964. These included the appointment of Mr. F. A. G. Keesing (Netherlands) as Director of the IMF Institute, Mr. Hamzah Merghani (Sudan) as Director of the African Department, Mr. Jan Mládek (U.S.) as Director of the new Central Banking Service, Mr. Jakob Saper (U.S.) as Acting Director of the new Fiscal Affairs Department, Mr. Ernest Sturc (U.S.) as Director of the Exchange Restrictions Department and Mr. L. A. Whittome (U.K.) as Director of the European Department.

Erratum

In the December 1964 issue, page 188, it was stated that the National Bank of Ethiopia was created in 1945: this date should read 1963.

Table 1.DRAWINGS BY MEMBERS DURING THE FOURTH QUARTER OF 19641
MemberMonthAmount ($ million)
CyprusDecember2.0
Dominican RepublicNovember5.0 *
HaitiOctober1.0 *
November0.5 *
HondurasNovember2.5 *
IranOctober17.5
IsraelOctober12.5
LiberiaOctober1.1 *
December1.1 *
NicaraguaOctober1.0 *
November1.0 *
December0.7 *
SomaliaOctober1.4 *
TunisiaOctober5.2 *
United KingdomDecember1,000.0 *
United StatesDecember125.0 *
Total drawings in the fourth quarter of 19641,177.5
Total net drawings at the end of the fourth quarter of 19642,621.3

Drawings made under stand-by arrangements are indicated by an asterisk.

Drawings made under stand-by arrangements are indicated by an asterisk.

MEMBERS’ NET FUND DRAWINGS

END OF EACH YEAR BETWEEN 1952 AND 1964 In millions of U.S. dollars
Table 2.STAND-BY ARRANGEMENTS APPROVED IN THE FOURTH QUARTER OF 1964
MemberMonthAmount ($ million)
HaitiOctober4.0
ParaguayNovember5.0
TunisiaOctober14.2
Total23.2

STAND-BY ARRANGEMENTS

As at December 31, 1964 In millions of U.S. dollars

USE OF FUND’S RESOURCES

ECONOMIC GROWTH AND EXTERNAL DEBT by Dragoslav Avramovic and others of the Economic Department of the World Bank

This factual and analytical study is concerned with the problems of external indebtedness of the developing countries and with their debt servicing burden. Three major areas are discussed: the liquidity aspect of debt servicing capacity, its long-term aspect, and the problem of measurement of the debt servicing burden. The study also contains a review of the recent increase in international indebtedness and in debt service payments. 1965, 200 pp., $6.00.

Debt studies published previously were:

Debt Servicing Capacity & Postwar Growth in International Indebtedness, 1946-1955, by Dragoslav Avramovic, 1958, 228 pp., $5.00.

Debt Servicing Problems of Low-Income Countries, 1956-1958, by Dragoslav Avramovic and Ravi Gulhati, 1960, 74 pp., $2.50.

Bookstores should order from The Johns Hopkins Press, Baltimore, Maryland 21218, U.S.A., or Hopkins’ agents.

THE INTERNATIONAL MONETARY FUND: ITS FORM AND FUNCTIONS

by J. Marcus Fleming

This 57-page pamphlet reproduces two lectures given by Mr. J. Marcus Fleming, Deputy Director of the Fund’s Research Department, to the fifth SEANZA Banking Course at Karachi, Pakistan, early in 1964. The first lecture deals with the Fund’s “Code of International Behavior,” explaining what this is and how it is administered by the Fund. The second, discussing “The Fund as a Financial Institution,” elaborates on the Fund’s policies and procedures in connection with drawings and stand-by arrangements.

The pamphlet is obtainable free of charge.

Apply to

The Secretary

INTERNATIONAL MONETARY FUND

19th and H Streets, N.W.

Washington, D.C. 20431

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