chapter 2 Admission of Other Members

International Monetary Fund
Published Date:
October 1985
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Organs Exercising Power to Admit New Members

The power to admit new members and determine the conditions of their admission is reserved to the Board of Governors and cannot be delegated to the Executive Directors.1 The Board of Governors can admit a new member by resolution, and it is not necessary to amend the Articles for this purpose. It was foreseen that the influx of new members might affect the structure of the Fund. The Articles therefore permit the Board of Governors to increase the number of elected executive directors and to adapt the rules for electing them that are included in the Articles.2 These increases and adaptations can be made by resolution and without the necessity for amendment.3

The drafters of the Articles believed that decisions on whether or not to admit applicants to the Fund might be affected by political considerations, and that for this reason it would be more appropriate for the plenary and not the executive organ to take the decisions. A curious problem arises in connection with this reserved power. It would be logical to hold that the Board of Governors must take a decision on every application, either by permitting or refusing membership, and must establish the terms for admission if it responds in favor of an application. In taking any of these decisions, the Board should be able to accept, reject, or modify any recommendations of the Executive Directors. The Board of Governors is in a position to act as it sees fit after an application is submitted to it, but the question that arises is whether the Executive Directors can decide not to place an application before the Board. The question must be considered if only because of the text of Rule D-1 of the Rules and Regulations,4 which was adopted on September 25, 1946 at a time when there must have been greater personal knowledge than there is today of the understandings of the drafters of the Articles. According to Rule D-1:

When a country applies for membership in the Fund, and the application is placed before the Executive Board, the Chairman shall announce a reasonable time to be allowed for discussion and preliminary investigation by the Executive Board before a decision is reached to proceed with the formal investigation.

If this decision is in the affirmative the Fund may proceed to obtain all relevant information and discuss with the applicant any matters relating to its application. Any Executive Director may request such information to be added to the list requested of the applicant as in his opinion is relevant to the decision to be made. The Executive Board shall then decide whether to submit an application for membership with its views to the Board of Governors for a telegraphic vote or hold the application until the next meeting of the Board of Governors.

The language of the first two sentences seems to authorize the Executive Directors to refuse to go on with the procedure for admitting an applicant, at least for the time being.

Section 21 of the By-Laws of the Board of Governors does not help to clarify Rule D-1. The By-Law, which was adopted on March 16, 1946, reads as follows:

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

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

The words “when submitting an application” can be taken to contemplate the submission of every application or the submission of only those that the Executive Directors decide to transmit.

In order to sustain the view that the Executive Directors may refuse to proceed with an application and are required to submit to the Board of Governors only those applications that they favor, it would be necessary to understand the power reserved to the Board of Governors in its most literal sense: “Admit new members and determine the conditions of their admission.”5 Only the Board of Governors could permit a country to become a member, but either the Board of Governors or the Executive Directors could prevent admission. The Board could refuse to admit an applicant by rejecting the favorable recommendation of the Executive Directors, and the Executive Directors could refuse admission by deciding not to proceed with the “formal investigation” of an application. The first draft proposed at the Bretton Woods Conference for the provision reserving the power of admission to the Board of Governors read as follows: “Determining what new members may be admitted and the conditions of their admission.” 6 This language might have been a little clearer in suggesting that only the Board of Governors can make the effective decision in response to an application.

The understanding of the words “admit new members” on which the reading that has been discussed so far must rest is obviously strained. It is also in opposition to the political considerations that have been mentioned. Decisions to reject applicants are likely to be more embarrassing for governments to take than decisions to admit them. It is possible that the Executive Directors are empowered to refrain from the formal investigation of an application in order to delay it, but not to reject it. There is evidence that the negotiators of the Articles before and at the Bretton Woods Conference had in mind the position of enemy countries once the Fund came into being. The Conference was a Monetary and Financial Conference of the United Nations and was held in July 1944 before the war had ended. The conferring governments realized that for one reason or another enemy countries would not be able to join the Fund for some time,7 even though they would become strong trading nations again. Article XI, which governs the relations of members with nonmembers, was inspired to a large extent by the realization that there could be a lengthy interval before enemy countries became members of the Fund. The same thought may be responsible for the words “at such times” in Article II, Section 2.

Another possible explanation is that the Executive Directors are empowered by Rule D-1 to decide against proceeding with the formal investigation of an application only if they find that the applicant does not meet the criteria for membership prescribed by the Articles or by decisions of the Board of Governors. For example, further consideration of the application of the Republic of Korea in 1948 was postponed by the Executive Directors to an indefinite date, and the application must be taken to have lapsed because a new application was submitted in 1954. The postponement seems to have resulted from doubts that the applicant government controlled the whole country. The drafters of Rule D-1 may have thought that it would be pointless to require the Board of Governors to vote on an application in circumstances such as these.

Perhaps the clue to the meaning of Rule D-1 is provided by the last sentence. It can be taken to mean that the Executive Directors must submit all applications to the Board of Governors but may decide whether to submit each application for a telegraphic vote or hold it until the next meeting of the Board. The word “then” would not mean that the sentence applies only if there has been a decision to proceed with a formal investigation, but that the decision on how to place the application before the Board of Governors must await the outcome of the formal investigation if the Executive Directors have decided in favor of an investigation. If the Executive Directors should decide against a formal investigation, they must still submit the application to the Board of Governors. This version is not flawless, but it is compatible with the normal understanding of the distribution of authority in relation to the reserved powers of the Board of Governors.

The obscurities of Section 21 of the By-Laws and Rule D-1 of the Rules and Regulations became apparent in 1969 when the Executive Directors were drafting By-Laws for adoption by the Board of Governors and Rules and Regulations of their own as a result of the amendment of the Articles. The Fund is authorized by the amended Articles to permit certain entities that are not participants in the Special Drawing Account to accept, hold, and use special drawing rights in such operations and transactions as the Fund determines.8 The prescription of an “other holder” and of the operations and transactions in special drawing rights in which it may engage is a power of the Board of Governors that cannot be delegated to the Executive Directors.9 Proposals were made for drafting a By-Law and a Rule relating to other holders that would have avoided the ambiguities in the By-Law and the Rule on applications for membership. It was decided finally to follow existing texts as closely as possible in order to avoid compounding the difficulties of interpretation by having different texts for procedures that should be similar.10 It was pointed out in the course of discussion that if the Executive Directors were to decide against proceeding with the formal investigation of a country’s application to become a member or an other holder, any governor of the Fund could place the matter on the agenda of the Board of Governors.11 It was also pointed out, however, that no problems had arisen under Section 21 of the By-Laws and Rule D-1. The Executive Directors have never decided that they would not proceed with the formal investigation of an application for membership. In practice, any difficulties that may arise are resolved in the informal contacts with the Managing Director and staff before a formal application is submitted.

Procedure Leading to Membership

The customary formal procedure leading to membership begins with a letter of application addressed to the Managing Director of the Fund by an official of the applicant country acting on the instructions of his government. Communication of the letter is often preceded by much debate in governmental and other circles on the benefits and burdens of membership. The Managing Director and staff of the Fund may be asked to give informal advice on various aspects of the law, policies, and practice of the Fund. Normally, officials of a government that has decided to apply for membership approach the Secretary of the Fund before dispatching the letter, in order to learn what should be said in it.12 The officials are advised that the letter should include, in addition to the application for membership in the Fund, a statement on whether or not an application has been or is being filed for membership in the World Bank as well, and the name of the representative who is authorized to conduct negotiations with the Fund on behalf of the applicant country. The letter of application is not a commitment by the applicant to become a member.13 Similarly, the membership resolution when adopted by the Board of Governors does not obligate the applicant to take advantage of the resolution.

Sometimes the informal contacts with the Managing Director and staff have occurred before the prospective applicant achieved independence. Normally, the member that had accepted the Articles under Article XX, Section 2 (g), in respect of the intending applicant consented to the contacts and even participated in them. In some agreements that have provided for independence, the former colonial power has undertaken to support applications for membership in the Fund or other international organizations. For example, the executive director for the United Kingdom transmitted to the Managing Director a letter of August 8, 1956 from the Permanent Secretary of the Ministry of Finance of the Gold Coast informing the Managing Director of the wish of the Government of the Gold Coast to enter into negotiations with the Fund for admission to membership on the attainment of constitutional independence, which was expected to take place early in 1957. The Permanent Secretary stated that the executive director appointed by the United Kingdom had been authorized to conduct negotiations on behalf of the Government of the Gold Coast, and added that the name of his country would be changed to Ghana on independence.

Informal preliminary contacts are unlikely to be complicated or lengthy if the application that is in prospect involves no troublesome problems for the Fund, the prospective applicant, or other members. There may be complications, however. For example, the country considering membership may find, as a result of detailed discussions of the obligations that it would have as a member of the Fund, that there would be domestic legal, economic, or political difficulties in proceeding with membership, and it may seek advice from officials of the Fund on how to deal with some of the legal or economic difficulties. The government of a prospective applicant may be worried because of the limited recognition that the country or the government has received from members of the Fund, and the Managing Director may be asked to advise on the timing of an application. Political alliances may be the reason why some applications are considered more than routine. The first informal contacts preceding an application may be made through diplomatic channels to the governments of some members, and if there is no discouragement the Managing Director will then be approached. He may advise that informal reactions should be sought from the governments of other members before an application is addressed to him.

Whenever the Managing Director thinks that an application might be troublesome, for whatever reason, he may decide to send staff officials to the prospective applicant in order to discuss its problems in detail and to give technical assistance, which may be quite extensive in scope. If an application is thought to involve unusually sensitive problems, there may be more than one mission, and the discussions may extend over a considerable period, during which it may be necessary to keep the contacts confidential.

The procedure that has been followed for some years is simpler in some respects than was contemplated when Section 21 of the By-Laws and Rule D-1 of the Rules and Regulations were adopted. According to the By-Laws, an applicant should set forth “all relevant facts” when applying for membership, whereas the letter of application states little more than the fact of application. Under Rule D-1, the application is placed before the Executive Directors, and the Chairman announces a reasonable time for “discussion and preliminary investigation” by the Executive Directors before a decision is reached to proceed with the “formal investigation.”

In actual practice, the Managing Director circulates a letter of application to the Executive Directors within a few days after receipt and places it on their agenda for preliminary disposition at a meeting at which he proposes the appointment of a special committee of the Executive Directors “to obtain relevant information, discuss any related matters with the applicant, and report” to the Executive Directors. The Managing Director proposes for approval by the Executive Directors a committee of five or six directors, of whom he names one as chairman. In normal circumstances, a committee is appointed a few days after circulation of the application, but there have been longer periods when there were doubts whether the applicant was a country, or when the date on which the applicant was to become independent had not yet arrived. The committee meets for the first time a few months, and normally not more than six months, after its appointment, although on one occasion the delay was as much as two and a half years because of the outbreak of civil strife in the applicant’s territory. During that period the Fund’s staff gave extensive technical assistance to the applicant.

In accordance with the established practice of the Fund, any executive director may attend the meetings of any committee and take part in its discussions,14 even though the committee’s report is confined to the views of members of the committee. The chairman undertakes the main task of conducting any negotiations or contacts with the applicant’s representative that may be necessary. The results of these negotiations or contacts are reported to the committee, which takes them into account in reaching its recommendations to the Executive Directors. Sometimes, the representative requests and is given the opportunity to present his views to the committee, but this is likely to occur only if there has been a difference of opinion between the committee, acting through the chairman, and the representative on any of the terms for membership that the committee favors. At all stages of the procedure, the staff participates by preparing memoranda and drafts, advising the chairman of the committee, and joining in discussions. Although the Board of Governors exercises the legal authority to establish the terms for membership, and acts on recommendations of the Executive Directors in exercising this authority, the real determination is made by the committee on the basis of the preparatory work of the staff.

Under the Articles of Agreement of the World Bank, membership in the Bank is available only to members of the Fund.15 At an early stage in the history of the Fund and the Bank there were joint meetings of the membership committees of the two organizations to consider the applications of some countries. This procedure has not been followed for many years, but the Fund encourages countries that apply for membership in the Fund to apply for membership in the Bank as well. The staffs of the two institutions work together on many aspects of applications, and officials of the staff of the Bank attend meetings of the Fund’s membership committees. The procedures leading to membership are usually conducted contemporaneously in the two institutions, although the subscription to the Bank is determined only after an understanding is reached on the applicant’s quota in the Fund. Normally, a resolution is not sent to the Board of Governors of one organization unless a resolution is being sent at about the same time to the Board of Governors of the other. This procedure has been relaxed in connection with the applications of some small countries in recent years. They have not submitted a contemporaneous application to the Bank when applying for membership in the Fund, and they have become members of the Fund without becoming members of the Bank at the same time.16 Some had not yet become members of the Bank at the end of 1973.

The basic memorandum prepared by the staff to assist a membership committee deals in some detail with the applicant’s economy, including exports and imports, reserves, the exchange system, and other matters relevant to the application. The applicant may be requested to supply data on some or all of these matters. The memorandum suggests a range within which it would be appropriate to select a quota for the applicant and also the gold subscription that would be appropriate on the basis of the applicant’s reserves. The committee arrives at a recommendation on quota and gold subscription and in reporting to the Executive Directors informs them that the applicant is willing to accept the quota and pay the gold subscription that the committee recommends. Among the topics that the committee must discuss, these two are often the most controversial. The committee usually does not make a recommendation to the Executive Directors until agreement is reached between the applicant and the committee. Reservations by the applicant are not accepted, but this practice does not prevent it from stating certain hopes or understandings of the Articles. For example, Argentina stated its understanding that a member may request an increase in its quota at any time and its hope and expectation that the number of executive directors elected by the American Republics not entitled to appoint directors would be increased from two to three.17 Usually, the committee reports to the Executive Directors soon after its first meeting, but there may be several meetings and some delay if issues of principle arise or if there is uncertainty on the part of the applicant or members of the committee about the quota or the gold subscription. The committee has made more than one report to the Executive Directors on some applications before making its recommendation. This procedure has been followed when there have been divergent views in the committee that could not be reconciled without the guidance of the Executive Directors.

It has been seen that the Executive Directors, when making a recommendation to the Board of Governors, may decide whether to submit an application, with their views, to the Board of Governors for a vote without meeting or hold the application until the next meeting of the Board. The Executive Directors usually approve the committee’s report, which includes the draft of a resolution to be submitted to the Board of Governors for its approval. When the first membership resolutions were being considered, it was suggested that an alternative to a resolution authorizing membership might be an agreement between the Fund and an applicant executed by both, but there was no support for this idea. The decision of the Executive Directors on their recommendation to the Board of Governors and the decision of the Board on the proposed resolution are decisions of organs of the Fund and not of members. The decisions are taken by a majority of the votes cast, even though special majorities are required for numerous other decisions of the Fund.18 There is no requirement of a special participation in the decision by the original members or any number of them, and therefore they have no control in that capacity over membership in the organization.19 The majority that is necessary for a decision by the Fund to admit a new member is more modest than the requirements for acceptance of amendment of the Articles by members. For amendment, there must be acceptance by members that number three fifths of the total membership and exercise four fifths of the total voting power. The majority required for admission shows how strongly the drafters favored the spread of membership. A special majority is not required to admit a former enemy of the United Nations even though the Articles were drafted at a Conference of the United Nations and contain a number of references to the enemy.20 The charter of the International Civil Aviation Organization requires a special high majority for the admission of a state that fought against the Allies and the assent of any state that was invaded or attacked by the applicant.21

The standard form of membership resolution permits the applicant to accept membership within six months of the effective date of the resolution, which is the date of its adoption by the Board of Governors, but the Executive Directors are authorized to extend this period, on the request of an applicant, to such date as they may determine if they consider that “extraordinary circumstances” warrant an extension. The period of six months was chosen on the theory that this would suffice to enable a government to make the necessary domestic legal arrangements to accept membership. The criterion of “extraordinary circumstances” is intended to encourage an applicant to be as expeditious as possible in taking the necessary action. If there is a protracted delay, the quota and the gold subscription as prescribed by the resolution may become less appropriate. Nevertheless, six months is frequently inadequate and extensions have been common. The authority of the Executive Directors to extend the period avoids the inconvenience of requesting action by the Board of Governors for this purpose. At one time the Executive Directors were empowered to extend the period up to but not beyond a fixed date, and this led to the necessity for a resolution of the Board of Governors for an extension beyond that date.22 The Executive Directors have taken a liberal view of “extraordinary circumstances” and have sometimes granted successive extensions. For example, there were four extensions at the request of Laos, and the Articles were signed on its behalf on July 5, 1961 under a resolution that took effect on September 29, 1959.23

Applicants have failed to accept membership under only two resolutions. On October 29, 1948, a resolution became effective for Liberia that permitted it to accept membership until March 31, 1949, with the proviso that the Executive Directors might extend the period, but not beyond October 1, 1949. The Executive Directors granted the maximum extension, and thereafter the Board of Governors resolved to extend the period until March 31, 1950, with the proviso that the Executive Directors were authorized to grant a further extension, but not beyond October 1, 1950.24 On August 23, 1950, Liberia informed the Fund that it would not be in a position, in the circumstances then prevailing, to take the necessary action to accept membership. Liberia subsequently entered the Fund on March 28, 1962 under a membership resolution that became effective on September 20, 1961.25 A resolution became effective for Haiti on September 16, 1949 that permitted Haiti to accept membership until March 31, 1950.26 At the request of Haiti, the Executive Directors extended the period for the acceptance of membership until September 30, 1950, which was the maximum extension that the Executive Directors could grant under the terms of the resolution. On September 1, 1950, Haiti informed the Fund that its circumstances prevented it from becoming a member. Haiti entered the Fund on September 8, 1953 under a resolution that became effective on September 12, 1952.27

In order to become a member, an applicant must represent to the Fund that it has taken all the actions that are necessary to enable it to deposit an instrument of acceptance and sign the Articles. The instrument of acceptance states that the applicant accepts, in accordance with its law, the Articles and all the terms and conditions of the resolution and has taken all the steps necessary to enable it to carry out all its obligations under the Articles and the resolution. The Fund does not accept an instrument that contains a reservation or interpretation. For example, it objected on one occasion to the draft of an instrument in which the applicant proposed to say that it interpreted Article IX, Section 9, in a particular way. The Fund objects whether the interpretation is considered correct or incorrect. The objection that has been referred to is of special interest because the interpretation of Article IX, Section 9, corresponded with the interpretation placed upon it by the Drafting Committee of Commission I at the Bretton Woods Conference.28 The Fund has not objected to the insertion of this interpretation in the legislation adopted by some members for the purpose of authorizing them to accept membership.29 The difference is that a reservation, if accepted, might deprive the Fund of its power of exclusive and authoritative interpretation of the Articles under Article XVIII,30 whereas a member would have to amend its legislation if it prevented the member from performing its obligations in accordance with an interpretation of the Articles adopted by the Fund under Article XVIII.

It is possible that the Fund would regard a particular qualification that an applicant intended to include in its legislation as a reservation and not an interpretation by the applicant. If the Fund were to reach that conclusion, it would object to the proposed legislation as inconsistent with the representation that the applicant must make in its instrument of acceptance.

The United States wanted to establish a particular understanding of the Articles when it made provision for joining the Fund, but the procedure followed by the United States involved no qualification of its representation. It was interested in clarifying that the Fund shared the opinion of the United States on the proper use of the Fund’s resources. The United States provided in its Bretton Woods Agreements Act that the governor and the executive director appointed by the United States were instructed to obtain promptly an official interpretation on the questions set forth in Section 13 (a) of the statute. According to Section 13 (b), if the Fund’s interpretation answered any of the questions in a particular way, the governor appointed by the United States was instructed to propose promptly and to support an amendment to the Articles that would negate the interpretation. The President was authorized and directed to accept an amendment of this kind on behalf of the United States.31 The Executive Directors adopted an interpretation on September 26, 1946 that did not require the proposal of an amendment under Section 13 (b).32

There were doubts in India about membership in the Fund and the Bank because of such problems as the effect of membership on India’s sterling balances. The Government of India, having obtained the necessary legal authority, signed the Articles and deposited its instrument of acceptance on December 27, 1945. It announced, however, that it would put the question of continued membership or withdrawal to the legislature. After much intervening debate in the legislature and in committees, a motion was adopted on October 28, 1946 approving India’s continued membership in the two organizations.33

The requirements that a country must sign the Articles and deposit an instrument of acceptance are the same as the requirements that were imposed on original members.34 A country must make two declarations in its instrument of acceptance. It must declare that the Articles, and the terms and conditions of its membership resolution if it is an “other member,” have been accepted in accordance with its law, and it must also declare that it has taken all steps necessary to enable it to carry out all its obligations under the Articles and the membership resolution. The first declaration is likely to involve only the country’s constitutional law, but the latter may go beyond that branch of domestic law, although both declarations may have been made possible by a single statute or decree. The United States, an original member, published a detailed legal opinion of the Treasury Department and the Department of State on the question whether the participation of the United States in the Fund and the Bank could be effected by an act of Congress authorizing the President to sign the two sets of Articles or whether they were treaties that could be made by the President only by and with the consent of the Senate. The opinion also dealt with the question whether participation would involve an unlawful delegation of legislative power to the two institutions or to foreign countries.35

Neither the Articles nor membership resolutions determine who may sign the instrument of acceptance. In practice, it is the head of state or the minister in charge of foreign affairs who signs, but some other official may be authorized to sign on behalf of the government of the applicant.

The Secretary of the Fund requests the applicant to submit drafts of its enabling legislation, memorandum of law explaining the legal steps that are being taken in connection with membership, instrument of acceptance, full powers for the person designated to deposit the instrument and sign the Articles, and letter of transmittal.36 The staff of the Fund pays particular attention to the enabling legislation (usually referred to as the Bretton Woods legislation) and the memorandum of law, but may make suggestions on any of the drafts. The memorandum, which is signed by the minister in charge of legal or foreign affairs or some other appropriate official, explains the measures that must be taken under the applicant’s law to enable it to become a member of the Fund and perform the obligations of the Articles and the terms and conditions of the membership resolution. If the applicant is completing arrangements to join both the Fund and the Bank, and perhaps the affiliates of the Bank, at the same time, the staffs of the Fund and the Bank transmit joint comments to the applicant. The procedures for membership in each organization are conducted by its own organs and result in separate membership in each organization. There is no concept of a single membership in the Fund and the Bank, even though the procedures are conducted contemporaneously and in collaboration.

Although it is clear that the Fund is entitled to verify the correctness of an applicant’s representation, it is possible that the drafters assumed that the Fund might accept representations, at least by original members, without inquiry or without a full inquiry. This assumption may explain Section 10 of Article IX, which deals with the status, privileges, and immunities of the Fund: “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.” This provision appears to be no more than a particular application of the general commitment of members to take the domestic legal measures necessary for the performance of their obligations. The legal and administrative actions that a member’s central government and political subdivisions 37 may have to take in order to give effect to Article IX may be complicated, and possibly the drafters thought that a detailed inquiry could be made most efficiently after membership. This explanation would imply a certain acceptance of the idea that an applicant may have to take action after it becomes a member to give effect to the principles of Article IX, notwithstanding the reference to all obligations in the representation that an applicant must make. The staff of the Fund, however, does not exclude Article IX from its examination of the draft memorandum of law because of the special provision of Section 10. If it becomes apparent at a later date that a member has not taken all the measures that are necessary to enable it to perform its obligations, it must make good its representation, whether or not the Fund examined the correctness of the representation and whether the omission relates to obligations under Article IX or under any other provision. The representation has continuing effect and does not relate exclusively to the date when membership is assumed. Therefore, the representation may require action at a later date even though action did not appear necessary when the member made its representation. Action may become necessary because of an interpretation by the Fund of its Articles. The Fund’s authoritative interpretation of Article IX, Section 7, in connection with its official communications is an example of such an interpretation.38

Once the Fund has received the representation and is satisfied that the member has taken the legal action to which the representation refers, the Fund informs the Government of the United States as the depositary of the original copy of the Articles. The applicant is then in a position to become a member by depositing its instrument of acceptance with the Government of the United States and signing the original copy of the Articles. Signature is required because the Articles begin with the statement, “The Governments on whose behalf the present Agreement is signed agree as follows. …” Most often the applicant’s ambassador, chargé d’affaires, or other diplomatic officer serving in Washington has been authorized to sign the Articles, but there have been occasions on which authority has been conferred on the applicant’s minister of finance or its permanent representative to the United Nations. On some occasions, authority has been conferred on an executive director of the Fund or on the ambassador of another member.

The Government of the United States is the depositary of the Articles in accordance with the usual practice at the time of the Bretton Woods Conference of depositing multilateral treaties with the state in which the treaty was signed.39 The Charter of the United Nations had not yet been agreed at the time of the Conference, so that there was no inducement to follow the practice by which the United Nations is the depositary for the constituent instruments of some specialized agencies. The Government of the United States is the depositary of the Charter of the United Nations. There is a third practice, according to which the constituent instrument of a specialized agency is deposited with an organ of the specialized agency itself or with an organ of a specialized agency with which it is affiliated.40

When a country becomes a member of the Fund, “the Chiefs of Mission of Governments concerned with the Articles of Agreement of the International Monetary Fund” are informed of this fact by the Secretary of State of the United States. He takes this step in accordance with Article XX, Section 2 (c), of the Articles, which requires the Government of the United States to inform the governments of all countries included in Schedule A and the governments of all countries that have been approved for membership under Article II, Section 2. In accordance with this provision, he informs even the governments of nonmembers that are listed in Schedule A, i.e., the U. S. S. R., Czechoslovakia, Poland, and Cuba (the last named through Switzerland, itself a nonmember but the agent in relations between the United States and Cuba).

The Department of State takes another formal action, but at an earlier stage in the procedure. The Fund always sends a certified copy of a membership resolution, or of any amendment of a resolution, to the Department of State, which then sends four copies to the United Nations. The Department of State bases its practice of sending copies of membership resolutions to the United Nations on Article 2 of the Regulations of the United Nations adopted by the General Assembly to give effect to Article 102 of the Charter.41 Article 2 of the Regulations states that “[w]hen a treaty or international agreement has been registered with the Secretariat, a certified statement regarding any subsequent action which effects a change in the parties thereto, or the terms, scope or application thereof, shall also be registered with the Secretariat.” 42

Originally, the Secretariat of the United Nations concluded that the Regulations required the publication of membership resolutions, and the first six individual resolutions adopted by the Fund were published in Annex A of Volume 19 (1948) of the United Nations Treaty Series.43 Sub-Committee 1 of the Sixth Committee of the General Assembly expressed the view that publication in the Treaty Series of information supplemental to a registered agreement should be left to the discretion of the Secretariat. It seems that the Secretariat decided not to publish supplemental information, such as membership resolutions, because of the cost of publication and the amount of work involved.44

The Secretariat of the United Nations has also decided that membership resolutions are not subject to independent registration under Article 102 of the Charter: “Resolutions, adopted by the Assembly of a specialized agency in the performance of its functions … were not considered as subject to registration.” 45 This decision is compatible with the Fund’s view that a membership resolution, even though it is adopted only after the applicant has indicated its concurrence in the terms of the resolution, is not an international agreement between the applicant and the Fund but a unilateral action on the part of the Fund in the exercise of its powers. Similarly, the acceptance of membership by a country is the acceptance by it of the provisions of an existing international agreement as supplemented by the terms of the membership resolution, and not a new international agreement between the Fund and the country or between the country on the one hand and all other members on the other hand.


Article XII, Section 2 (b) (i).

In this study, the Articles of Agreement are followed in distinguishing between individual executive directors (or directors) and the Executive Directors as an organ of the Fund, that is, capital letters are used for the latter but not for the former, and the term “Executive Board” is not used at all unless it appears in a quotation.

Similarly, capital letters are used for the Board of Governors, but not for the individual governors.


Article XII, Section 3 (b) and (d); Schedule C.


Appendix V shows the increases that have occurred in the numbers of members and executive directors, but it must be noted that increases in the number of directors have depended more on the voting power than on the number of new members. See Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972), pp. 78–79. (Hereinafter referred to as Gold, Voting and Decisions.)


The Rules and Regulations are adopted by the Executive Directors and are subject to review by the Board of Governors. The By-Laws are adopted by the Board of Governors. The By-Laws and the Rules and Regulations that are cited in this study are reproduced in Appendix IX and Appendix X, respectively.


Article XII, Section 2 (b) (i).


Procs. and Docs., p. 42.


Ibid., p. 1167.


Article XXVII (a) (i).


By-Laws, Section 25. Rules and Regulations, Rule D-4.


By-Laws, Section 6 (b). Other holders of special drawing rights may be nonmember countries, members of the Fund that do not participate in the Special Drawing Account, or institutions that perform functions of a central bank for more than one member.—Article XXIII, Section 3 (i).


The Fund publishes a manual to guide applicants, the latest issue of which (June 1972) is reproduced below as Appendix I. The manual describes the procedures and suggests the content of the documents connected with an application, but the Fund does not regard its “forms” with the awe they seem to have inspired in at least one observer:

“Senator Green: I have very few questions to ask. I wonder whether you have, in view of these series of transactions, forms prepared, I don’t mean including dates or places or amounts, but otherwise, standard forms that you have adopted?—Mr. McCloy: In the Bank?—Senator Green: Yes.—Mr. McCloy: Oh, there are a number. I am not in the Bank now, as you understand, Senator. I was in the Bank years ago. I know at that time we had questionnaires.—Senator Green: I am not talking about the Bank previously, but I mean in carrying on this business of this department. They have certain forms, I take it.—Mr. McCloy: You mean forms within the Bank and the Fund?—Senator Green: Yes.—Mr. McCloy: Oh, surely they have. They couldn’t function without it.—Senator Green: Exactly. I wondered whether you would kindly furnish the committee with copies of each form that you use.—Mr. McCloy: I are sure the Bank can do that. I haven’t got access to the documents or files of the Bank.—Senator Green: I am asking you.—Mr. McCloy: I can pass that on to Mr. Eugene Black and I am sure he would be willing to respond.—Senator Green: That is all.”

—U.S. Congress, Senate, Committee on Foreign Relations, A Bill to Amend the Bretton Woods Agreements Act, Hearings on S. 1094, 86th Cong., 1st Sess., March 9, 12, and 17, 1959 (Washington, 1959), p. 104.


See, for example, International Monetary Fund and World Bank: Implications of New Zealand Membership, presented by Hon. H. R. Lake, Minister of Finance, to the House of Representatives by Leave (Wellington, 1961), p. 5.


Rules and Regulations, Rule C-5 (a). Gold, Voting and Decisions, p. 204.


Art. II, Sec. 1, of the Articles of Agreement of the International Bank for Reconstruction and Development (ibrd).


The Executive Directors recommended a membership resolution for Barbados on November 16, 1970, it became a member of the Fund on December 29, 1970, and it applied for membership in the Bank on January 12, 1973. The corresponding dates for Western Samoa are June 25, 1971, December 28, 1971, and April 19, 1972; for Equatorial Guinea, September 22, 1969, December 22, 1969, and December 10, 1970; and for Malta, July 8, 1966, September 11, 1968, and October 11, 1972.


Article XII, Section 3 (b).


Article XII, Section 5 (d). Gold, Voting and Decisions, pp. 117, 122.


Cf. Henry G. Schermers, International Institutional Law (Leiden, 1972), Vol. I, p. 33. (Hereinafter referred to as Schermers, International Institutional Law.)


For an explanation of the term United Nations as used here, see Chap. 1 above, p. 13.


Art. 93 of the Convention on International Civil Aviation.


The practice of giving the Executive Directors authority to extend the period for acceptance of membership began with the membership resolution for Thailand. See Resolution No. 3-4, Summary Proceedings of the Third Annual Meeting of the Board of Governors, 1948 (Washington, 1948), pp. 46–48. (Hereinafter referred to as Summary Proceedings, 19—.) See also the first membership resolution for Indonesia (Resolution No. 7-9) and the resolution extending the period for acceptance by Indonesia (Resolution No. 8-3), Summary Proceedings, 1952, pp. 171–74, and 1953, p. 96. The latter resolution empowered the Executive Directors to extend the period until such later date as they might determine.


Resolution No. 14-8, Summary Proceedings, 1959, pp. 164–66.


Resolutions Nos. 4-1 and 4-5, Summary Proceedings, 1949, pp. 41–43 and 46.


Resolution No. 16-8, Summary Proceedings, 1961, pp. 196–99.


Resolution No. 4-4, Summary Proceedings, 1949, pp. 44–46.


Resolution No. 7-10, Summary Proceedings, 1952, pp. 174–77.


Procs. and Docs., p. 572.


For example: Barbados, International Monetary Fund Act, 1970 (Act 1970–45), Sec. 6; Burma, The International Monetary Fund and Bank Act, 1951 (Act No. XXXVII of 1951), Sec. 10; Botswana, The International Financial Organizations Act, 1968 (No. 2 of 1968), Sec. 7; India, The International Monetary Fund and Bank Act, 1945 (Act No. XLVII of 1945), Sec. 5. The provisions referred to and similar provisions in other statutes are based on Sec. 3 of the Bretton Woods Agreements Order in Council (S. R. & O. 1946, No. 36) of the United Kingdom.


See Joseph Gold, Interpretation by the Fund, IMF Pamphlet Series, No. 11 (Washington, 1968). (Hereinafter referred to as Gold, Interpretation.)


Public Law 171, 79th Cong., 1st Sess., 59 Stat. 512 (1945). See U. S. Congress, Senate, Committee on Banking and Currency, Bretton Woods Agreements Act, Hearings on H.R. 3314, 79th Cong., 1st Sess., June 12–16, 18–22, 25, and 28, 1945 (Washington, 1945), pp. 231–33; see also pp. 224–29. (Hereinafter referred to as U. S. Senate Hearings on Bretton Woods Agreements Act.)


Decision No. 71-2, September 26, 1946, Selected Decisions of the International Monetary Fund and Selected Documents, Sixth Issue (Washington, September 30, 1972), p. 20. (Hereinafter referred to as Selected Decisions.) See also International Monetary Fund, First Annual Meeting of the Board of Governors: Report of the Executive Directors and Summary Proceedings (Washington, 1946), p. 106, and History, Vol. I, pp. 148–49.


Reserve Bank of India, History of the Reserve Bank of India, 1935–51, prepared by S. L. N. Simha (Bombay, 1970), pp. 586–90, 597–99, 606–608. (Hereinafter referred to as Simha, Reserve Bank of India.)


U. S. Senate Hearings on Bretton Woods Agreements Act, pp. 529–62.


See Appendix I below.


Procs. and Docs., p. 573.


Decision No. 534-3, February 20, 1950, Selected Decisions, pp. 114–15.


The signature and depositary clause followed Article XX in the original Articles and follows Article XXXII of the Articles as amended on July 28, 1969.


Art. 76 (1) of the Vienna Convention on the Law of Treaties, UN Doc. A/CONF. 39/27, May 23, 1969. See also Tore Modeen, The Deposit and Registration of Treaties of International Organizations: Possible Application of the Rules of the Vienna Convention on the Law of Treaties (Abo, Finland, 1971), p. 5.


The General Assembly adopted the Regulations by Resolution 97 (I) on December 14, 1946, and the Regulations were later modified by Resolutions 364 B (IV) and 482 (V), adopted by the General Assembly on December 1, 1949 and December 12, 1950, respectively.—United Nations Treaty Series, Vol. 76 (New York, 1950), p. XVIII. (Hereinafter referred to as U. N. T. S.)


76 U. N. T. S. XXII.


19 U. N. T. S. 282–99.


United Nations, Repertory of Practice of United Nations Organs (New York, 1955), Vol. V, pp. 308, 310–11.


Ibid., p. 295.

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