For more information, see Brazil and the IMF

This Technical Memorandum of Understanding (TMU) sets out the specific performance criteria, indicative targets, and assumptions that will be applied under the arrangement for Brazil and details some specific daily data that the authorities will provide to the staff of the Fund. This TMU provides the technical details that underlie the government's plans as discussed in the government's Memorandum on Economic Policies (MEP), which has been sent separately. The document, which is the property of Brazil, is being made available on the IMF website by agreement with the member as a service to users of the IMF website.
 

Brazil—Technical Memorandum of Understanding

July 2, 1999

This Technical Memorandum of Understanding (TMU) sets out the specific performance criteria (PCs), indicative targets (ITs), structural benchmarks (SBs) and assumptions that will be applied under the Stand-By Arrangement (SBA) for Brazil for the second half of 1999.

I.  Phasing of Purchases and Reviews

While the general phasing of purchases remains unchanged from what was set out during the First and Second Reviews, some minor changes concerning the phasing of purchases for the second half of 1999 are proposed in Table 1;1 these changes are explained below. After completing the third review, which will make available to Brazil the third purchase under the Supplemental Reserve Facility (SRF) together with a purchase under the credit tranches (CT), Brazil will complete at least one more review with the Fund during the remainder of calendar year 1999 (as shown in Table 1).

  • The fourth purchase under the SRF, together with a purchase under the CT, will become available no earlier than August 31, 1999. These purchases will become available upon observance of the relevant PCs, and upon completion of the fourth review. Monetary sector PCs for December 1999 will be established at the time of the fourth review. Also, at the time of the fourth review, PCs, ITs, structural benchmarks, and all other relevant program parameters for calendar year 2000 (including, among others, number and timing of reviews) will be established.

  • A purchase under the CT will become available no earlier than December 3, 1999. This purchase will become available upon observance of the relevant PCs, and upon completion of the fifth review.

  • PCs, ITs, structural benchmarks, and all other relevant program parameters, including, among others, number and timing of reviews during calendar year 2001 will be established during calendar year 2000.

Table 1.  Brazil: Phasing of Purchases and Reviews, 1999-20011


Amounts (in million SDR) and sources Date of Review (earliest possible dates) Conditions


3,798.900 total
     542.700 CT
  3,256.200 SRF
December 2, 1998
(IMF Board date)
Board approval
  3,256.200 SRF March 30, 1999
(IMF Board date)
Completion of first and second reviews, and observance of end-December 1998 performance criteria.
1,709.505 total
   1,302.480 SRF
      407.025 CT
July 28, 1999
(preliminary IMF Board date)
Completion of third review, and observance of the relevant PCs under the arrangement.
1,709.505 total
   1,302.480 SRF
      407.025 CT
August 31, 1999 Completion of fourth review, and observance of the relevant PCs under the arrangement
      814.050 CT December 3, 1999 Completion of fifth review, and observance of the relevant PCs under the arrangement.
      217.080 CT February 15, 2000 Completion of sixth review, and observance of the relevant PCs under the arrangement.
      217.080 CT May 15, 2000 Completion of seventh review, and observance of the relevant PCs under the arrangement.
      217.080 CT August 15, 2000 Completion of eighth review, and observance of relevant PCs under the arrangement.
      217.080 CT November 15, 2000 Completion of ninth review, and observance of the relevant PCs under the arrangement.
Four more purchases of   217.080 each CT Quarterly from
February 15, 2001 to November 15, 2001
Quarterly PCs and semi-annual reviews (to be decided later)

1Review dates for 2000-2001 are only indicative. The exact number and timing of reviews during calendar year 2000 will be established at the time of the fourth review; the exact number and timing of reviews during calendar year 2001 will be established during the course of calendar year 2000.

 

II.  Quantitative Targets

1.  Fiscal Targets

a.  Performance criterion for the primary balance of the consolidated public sector1



Floor2
(In millions of R$)

Cumulative primary balance of the consolidated public sector 1
    January 1-December 31, 1998 (preliminary)
    January 1-March 31, 1999 (preliminary)
9,365
    January 1- June 30, 1999 (performance criterion)3 12,883
    January 1- September 30, 1999 (performance criterion)4 23,788
    January 1-December 31, 1999 (performance criterion)4 30,185

1As defined below.
2Minimum cumulative primary surplus of the consolidated public sector.
3As specified in the first and second reviews of the SBA (EBS/99/30; Supplement 2).
4To help assess progress toward the performance criteria for January 1-September 30, 1999 and January 1-December 31, 1999, the following indicative targets for the primary balance of the consolidated public sector will be used for the intervening periods: R$15,626 million during January 1-July 31, 1999; R$20,590 million during January 1-August 31, 1999; R$26,078 million during January 1-October 31, 1999; R$27,763 million during January 1-November 30, 1999.
 
The cumulative primary balance of the consolidated public sector is defined as the sum of the cumulative primary balances of the various entities that make up the public sector. The public sector is defined to comprise the central government, state and municipal governments, and the public enterprises (including federal, state and municipal enterprises); the central government includes the federal government, the social security system, and the central bank of Brazil (BCB).

For any given month, the primary balance of the consolidated public sector is measured, in Brazilian reais (R$), as the total net interest (i.e., net interest accrued on the consolidated net domestic debt of the public sector, plus the net interest due (competência contratual) on the net external debt of the public sector) minus the borrowing requirement of the consolidated public sector, where the public sector is defined as above. For foreign-exchange indexed government securities, the interest rate is the accumulated rate of change of the U.S. dollar vis-à-vis the R$, plus the fixed coupon rate. The fixed coupon rate applies to the nominal value of the security revalued by the rate of change of the U.S. dollar vis-à-vis the R$ from the issuance date to the relevant date. For any given month, the borrowing requirement of the consolidated public sector is defined as the change in the nominal outstanding net domestic debt plus the change in the net external debt, converted into R$ at the actual period average R$/US$ exchange rate.2 The stock of the U.S. dollar-indexed domestic debt is revalued at the end of a given month to reflect any change in the value of the real vis-à-vis the U.S. dollar that has taken place during the month. The proceeds from privatization during that period are added to these results; amounts representing the recognition of unregistered liabilities during that period are subtracted from these results. The cumulative primary balance from January 1, 1999 to the relevant date is the sum of the monthly primary balances of the consolidated public sector for that period.

The above floor for the cumulative primary balance of the consolidated public sector is predicated on the baseline path for concession revenue shown in Table 2 below. Deviations from this path will be taken into account as appropriate during the relevant reviews.

b.  Indicative target on the net debt of the consolidated public sector1



Ceiling 2
(In millions of R$)

Total net debt outstanding of the consolidated public sector
    End-March 1999 (preliminary) 470,492
    End-June 1999 (indicative target)3 514,266
    End-September, 1999 (indicative target)4 504,619
    End-December, 1999 (indicative target)4 513,519

1The public sector is defined as above; the net debt includes the monetary base.
2The Maximum stock outstanding of total net debt of the consolidated public sector
3The As specified in the first and second reviews of the SBA (EBS/99/30; Supplement 2).
4To help assess progress toward these indicative targets, indicative targets for the intervening months will be used. The indicative target for the net debt of the consolidated public sector for end-July 1999 is R$499,091 million; for end-August it is R$499,309 million; for end-October it is R$508,805 million; for end-November it is R$512,938 million.
 
Total net debt outstanding of the consolidated public sector (dívida líquida total) equals the public sector's gross debt (including the monetary base), net of its financial assets; it is defined as the sum of the registered net domestic and net external debt (all valued in R$), of the central government, state and municipal governments, and the public enterprises (including federal, state and municipal enterprises); the central government is defined as above.

Total net debt outstanding of the consolidated public sector is measured on an accrual basis (including accrued interest) for the domestic debt component, and on an interest-due basis (competência contratual) for the external debt component. The stock of external debt and of foreign-exchange indexed domestic debt is valued at the actual R$/US$ exchange rate prevailing at the end of each period. Deviations of the net debt of the consolidated public sector from the above ITs will be taken into account during the relevant reviews in setting or revising the PCs for the primary balance of the consolidated public sector for subsequent periods to give sufficient confidence that the target ratio for public sector debt to GDP of 46.5 percent can be reached by the year 2001.

The central government will continue to incorporate into its registered debt various unregistered liabilities that are currently outstanding. The above ceilings for the total net debt outstanding of the consolidated public sector are predicated on the paths for privatization receipts (defined here to exclude concession revenue) and the recognition of unregistered liabilities that are shown in Table 2 below. These ceilings will be adjusted downward (adjusted upward) to the extent that privatization receipts exceed (fall short of) the amounts implied by Table 2 below; they will be adjusted upward (adjusted downward) to the extent that the recognition of unregistered liabilities exceeds (falls short of) the amounts implied by Table 2 below.

2.  External Sector Targets

a.  Performance criterion on external debt of the nonfinancial public sector1



Ceiling
(In millions of US$)

Stock of total external debt of the nonfinancial public sector at
    End-December 1998 (actual) 85,525
    End-March 1999 (actual) 83,420
    End-June 1999 (performance criterion)2 91,823
    End-September, 1999 (performance criterion) 90,407
    End-December, 1999 (performance criterion) 93,778

1The data in this table apply to all external debt of the nonfinancial public sector that is disbursed and outstanding. The nonfinancial public sector includes the federal, state, and municipal governments, the public enterprises, and the social security system. Excluded from measured debt stocks are any liabilities incurred in the context of the exceptional financing package, either vis-à-vis the Fund or bilateral sources of support.
2As specified in the first and second reviews under the SBA (EBS/99/30, Supplement 2).
 
For any given quarter, the stock of debt disbursed and outstanding is defined as the stock of debt disbursed and outstanding at the end of the previous quarter, plus gross disbursements that take place during the quarter in question, less the gross amortization payments made during the quarter in question.

The above limits will be adjusted upward to accommodate new external borrowing that is made in order to undertake a voluntary early or advance repurchase to the Fund or to the bilateral sources of support for the exceptional financing package. Should the authorities wish to make any advance repayments to other contributors to the exceptional financing package, they would make advance repurchases from the Fund on at least a proportional basis.

b.  Performance criterion on new publicly guaranteed external debt1



Ceiling
(In millions of US$)

Stock of publicly guaranteed external debt outstanding
    End-December 1998 (preliminary)    480
    End-March 1999 (preliminary)    480
    End-June 1999 (performance criterion)2 1,580
    End-September, 1999 (performance criterion)2 1,580
    End-December, 1999(performance criterion)2 1,580

1The limit applies to all private external debt guaranteed by the public sector. The public sector includes the nonfinancial public sector (as defined above), the Central Bank and the financial public sector.
2As specified in the first and second reviews under the SBA (EBS/99/30, Supplement 2).
 
For any given quarter, the stock of external debt guaranteed by the public sector is defined as the stock of external debt guaranteed by the public sector that is outstanding at the end of the previous quarter, plus the net addition to external debt guaranteed by the public sector during the quarter in question.

c.  Performance criterion on nonfinancial public sector short-term external debt 1



Ceiling
(In millions of US$)

Stock of total short-term external debt of the nonfinancial public sector as of
    End-December 1998 (preliminary) 4,276
    End-March 1999 (preliminary) 3,542
    End-June 1999 (performance criterion)2 5,804
    End-September, 1999 (performance criterion) 5,302
    End-December, 1999 (performance criterion) 5,419

1The data in this table apply to all external debt (disbursed and outstanding) of the nonfinancial public sector with original maturities of strictly less than one year. The nonfinancial public sector includes the federal, state, and municipal governments, the public enterprises, and the social security system. Excluded are any liabilities incurred in the context of the exceptional financing package, either vis-à-vis the Fund or the bilateral sources of support.
2As specified in the first and second reviews of the SBA (EBS/99/30, Supplement 2).
 
Short-term debt is defined as all debt with an original maturity of strictly less than one year. For any given quarter, the stock of short-term external debt (disbursed and outstanding) is defined as the stock of short-term external debt (disbursed and outstanding) at the end of the previous quarter, plus the net flows associated with the disbursements and amortizations of short-term debt that take place during the quarter in question.

The above limits will be adjusted upward to accommodate new external borrowing that is made in order to undertake a voluntary early or advance repurchase from the Fund or to the bilateral sources of support for the exceptional financing package.

d.  Performance criterion on net international reserves (NIR) in the BCB

The floor on NIR in the BCB at the end of each month from July 1999 to December 1999 will be equal to the NIR in the BCB projected for the corresponding month (as shown in Table 2 below) minus US$3 billion. This is a performance criterion under the program for each of these months.

The NIR in the BCB are equal to the balance-of-payments concept of net international reserves in the BCB (reservas internacionais líquidas ajustadas) and include gross official reserves minus gross official liabilities.

Gross official reserves are defined as liquid foreign currency denominated claims in the BCB. Gross official reserves include (i) monetary claims, (ii) free gold, (iii) holdings of SDRs, (iv) the reserve position in the IMF, and (v) holdings of fixed income instruments. Items (i) through (iv) will be valued at the end-period prices shown in Table 3 below. Item (v) will be valued at the purchase price. Gross official reserves will exclude participation in international financial institutions, the holdings of nonconvertible currencies, and the holdings of precious metals other than gold.

Gross official liabilities in foreign currencies include (i) foreign currency liabilities with original maturity of one year or less, (ii) the use of Fund resources extended in the context of the exceptional financing package, (iii) the use of bilateral credit extended in the context of the exceptional financing package, and (iv) any forward foreign exchange (FX) liabilities on a net basis—defined as the long position (posição vendida) minus the short position (posição comprada)—directly undertaken by the BCB or by other financial institutions on behalf of the BCB. Items (i) through (iii), will be valued at the prices shown in Table 3 below.

After May 31, 1999, any increases in foreign currency-denominated claims (both spot and forward) against residents, or against foreign branches or subsidiaries of Brazilian institutions, do not count towards NIR in the BCB.

  • Adjuster for a deviations from the baseline path of gross disbursements of loans from the Interamerican Development Bank and the World Bank
The above floor on NIR in the BCB for December 1999 is predicated on the assumption of net disbursements of loans from the Interamerican Development Bank (IDB) and the World Bank Group as shown in Table 2 below. The NIR floor for each month during July-December 1999 will be adjusted downward (upward) for the cumulative shortfall (excess) from July 1999 to the month in question of the actual net disbursements of loans from these sources relative to the cumulative baseline path in Table 2, up to a maximum adjustment of US$1,000 million.

e.  Performance criterion on the BCB's exposure in FX futures markets

The BCB will continue to refrain from entering into FX futures contracts, either directly or through any institution it uses as its financial agent. This constitutes a performance criterion under the program.

f.  Performance criterion on the BCB's exposure in FX forward markets

The BCB will continue to refrain from entering into FX forward contracts, either directly or through any institution it uses as its financial agent. This constitutes a performance criterion under the program.

3.  Monetary Targets

a.  Performance criterion on net domestic assets in the BCB



Ceiling1
(in millions of R$)

Outstanding stock of net domestic assets as of:
    May 1999 (actual) -6,442
    June 1999 (preliminary) -7,977
    September 1999 (performance criterion)2   -650
    December 1999 (indicative target)3 2,640

1Calculated on the basis of the definitions set out below; indicates the maximum level of net domestic assets in the BCB; i.e., smaller or more negative numbers are within the ceiling.
2To help assess progress toward the September performance criterion, indicative targets will be used for the intervening months. For July 1999, the indicative target on net domestic assets in the BCB is R$-1,390 million; for August 1999 it is R$150 million.
3To help assess progress toward this indicative target, indicative targets net domestic assets in the BCB for the intervening months are specified as follows: R$-975 million for October 1999; R$-1,200 million for November 1999. Monetary performance criteria for December 1999 are to be reviewed during the fourth review of the program, and amended, as needed, to conform to the inflation targeting framework of the BCB.
 
Net domestic assets in the BCB (NDA) are defined as the difference between the monetary base and the net international reserves in the BCB (NIR) valued in Brazilian reais (R$). The monetary base consists of currency issued and total reserves on demand deposits of financial institutions. Total reserves on demand deposits include both required reserves and free reserves. The NIR are equal to the balance-of-payments concept of net international reserves in the BCB (reservas internacionais líquidas ajustadas) and are defined as set out above (section 2.d).

The monetary base for any given month is measured as the average of the daily closing positions during the working days of that month (média nos dias úteis do mês). The NIR for any given month, are measured as the average of the NIR (daily closing positions) during the working days of that month (média nos dias úteis do mês). The resulting U.S. dollar number will be converted into R$ using the average accounting exchange rate for that month, as shown in Table 3 below.

In addition, in any period, the following automatic adjusters to the NDA ceilings will apply:3

  • Adjuster for a deviations from the baseline path of gross disbursements of loans from the Interamerican Development Bank and the World Bank

The NDA ceilings are predicated on the assumption of net disbursements of loans from the Interamerican Development Bank (IDB) and the World Bank Group as shown in Table 2 below. The NDA ceilings for each month during July-December 1999 will be adjusted downward (upward) for the cumulative excess (shortfall) from July 1999 to the month in question of the actual net disbursements from these sources, relative to the cumulative baseline path in Table 2, up to a maximum adjustment of R$1,750 million.

  • Adjuster for changes in the required reserve ratio on demand deposits.

For any change to the required reserve ratio on the stock of demand deposits, the NDA ceilings will be adjusted by NDA = D(rn-ro), where rn and ro denote the new and the old reserve ratio respectively, and D denotes the stock of demand deposits subject to the relevant reserve ratio at the time of the change. In the formula, D is measured as the average of the daily closing positions in the last month for which the old reserve requirement is still in effect.

For any change to the required reserve ratio on changes in the stock of demand deposits, the NDA ceiling, in any period t subsequent to the change in reserve requirements, will be adjusted by NDA =  (Dt-Do)(rn- ro), where Dt and Do denote the stock of demand deposits subject to the relevant reserve ratio at time t and at the time of the change, respectively. In the formula, Do is measured as the average of the daily closing positions in the last month for which the old reserve requirement is still in effect, and Dt is measured as the average of the daily closing positions in month t.

  • Adjuster for changes in the reservable base of demand deposits.

For any change to the definition of the reservable base for any category of demand deposits, the NDA ceilings will be adjusted by NDA = r R, where R represents the difference in the reservable base as a result of the change in definition, and r is the relevant reserve ratio that applies to the reservable base; _R is measured using the data for the close of business on the day immediately prior to the day the change enters into effect.

b.  Understanding on consultations

There will be regular consultations between the BCB management and IMF management or staff on the implementation of the inflation targeting framework.

III.  Structural Benchmarks

1. By end-August 1999

  • Proposal of an action plan for statistical improvements that will permit Brazil's subscription to the Special Data Dissemination Standard (SDDS).

  • Submission to congress of the multi-year plan (PPA) that will guide the selection of expenditure priorities during calendar years 2000-2003 (as described in paragraph 13 of the Memorandum of Economic Policies (MEP) of July 1999).

  • Submission to congress of legislation reforming the pension systems for private sector workers, including the special regimes for the self-employed and for rural workers (as described in paragraph 15 of the MEP of July 1999).

2. By end-November 1999

  • Acceptance of the obligations under Article VIII, Sections 2, 3 and 4 of the Fund's Articles of Agreement, with a definite time table for removing remaining restrictions (if any).

  • Submission to congress of legislation on reform of the pension system for public sector workers (RJU).

  • Further progress in the resolution of state-owned banks, including privatization of BANESPA.

  • Implementation of regulations for the implementation of a capital charge related to market risks, and a forward-looking loan classification system (as described in paragraphs 21 of the MEP of July 1999).

IV.  Disclosure of Specific Bi-Weekly (or More Frequent) Information

The authorities will regularly provide to Fund staff the following specific daily, weekly, and bi-weekly data (at the indicated frequencies, and lags):

  • Composition of gross international reserves under the cash concept (posição de caixa) and the liquidity concept (posição liquidez internacional) (weekly, the following week);

  • The levels of gross international reserves and of net international reserves as defined under the NIR concept (daily, the next business day);

  • The BCB's position in FX futures, including (i) notional amounts of open-interest contracts, both bought and sold, in each contract for the next four months; (ii) cumulative fiscal gains or losses on these positions; and (iii) estimates of cumulative fiscal gains or losses if contracts are held to maturity under different scenarios (daily, the next business day);

  • Base money (base monetária); currency issued (papel-moeda emitido); bank reserves (reservas bancárias); factors determining the monetary base (fatores condicionantes da base monetária); sources of base money expansion (base monetária—fontes de expansão) with details; monetary impact of federal debt titles (impacto monetário com títulos públicos federais) with details (daily, the next business day);

  • Maturity structure (vencimentos) of outstanding federal debt by instrument and day (bi-weekly, with a one week lag);

  • Results of domestic debt auctions, listing the instruments, the amounts supplied and demanded, the demand accepted; averages, minimum, and maximum prices and interest rates achieved in the auctions (weekly, with a lag of one week);

  • Individual bank data for the 50 largest banks on their summary balance sheets (monthly, with a two-month lag);

  • Coded individual bank data on foreign currency exposure for the 50 largest banks, including exposure in off-shore branches and affiliates, dollar-indexed assets and liabilities, and off-balance sheet positions (monthly, with a two-month lag).

  • Quantitative results of the monitoring of the external credit lines of financial institutions (two business days after the deadline at which these institutions have to comply), and of external medium- and long-term bank claims on Brazilian nonbank debtors (once a week for the previous week).

All data will be provided preferably in electronic format; the above list will be reassessed during scheduled reviews of the program.

V.  Baselines and Conversion Rates Used for Selected Variables

The following Tables 2 and 3 set out baselines and accounting rates used for selected variables.

Table 2.   Baseline Assumptions for Selected Variables


     

Prel.

Baseline


 

Dec

Mar

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

1998

1999

1999

1999

1999

1999

1999

1999

1999


 

(in R$ million)

Privatization receipts (cumulative)1

. . .

1,554

5,218

5,218

6,851

7,851

7,851

7,851

13,211

   Federal

. . .

1,554

3,187

3,187

4,820

5,820

5,820

5,820

9,180

   States and municipalities

. . .

0

2,031

2,031

2,031

2,031

2,031

2,031

4,031

Concession revenues (cumulative)2

. . .

3,385

6,194

6,516

9,079

9,137

9,306

9,306

9,322

Recognition of unregistered
   liabilities (cumulative)

. . .

3,852

9,491

10,063

10,904

14,787

15,917

16,427

19,579

 

(in US$ million)

NIR in the BCB (end of month)

34,362

24,136

23,224

23,800

24,600

25,000

25,200

25,600

26,300

Net loan disbursements of World

                 

   Bank Group and IDB (cumul.

                 

   from July to December 1999)

. . .

. . .

. . .

186

426

575

1,480

1,634

3,198


1Excluding concession revenues.
2Comprises receipts from the following sources: Telebrás-Celular (Banda A) (Telesp, Tele Sudeste, Telemig, Tele Celular Sul, Tele Centro-Oeste, Tele Norte, Tele Leste, Tele Nordeste); Telebrás-Fixa (Tele Norte Leste, Tele Centro Sul, Telesp); Telebrás-Longa Distância (Embratel); mirror companies including Celular Banda B (Área 1, Área 2, Área 3, Área 4, Área 5, Área 6, Área 7, Área 8, Área 9, Área 10), Fixa (Norte Leste, Centro Sul, São Paulo), Longa Distância (Brasil); Agência Nacional do Petróleo ("Bonus assinatura - União: TN", "Aluguel de Área 100% União: ANP"); railway concessions; federal toll road concessions; "Distribuidora Sinais Multip. Multic-MMD"; "TV a cabo"; "Outorga Serv. Radiodifusão."

 

Table 3.  Assumptions on Accounting Exchange Rates and Gold Prices1


     

Prel.

Baseline


 

Dec

Mar

Jun

Jul

Aug

Sep

Oct

Nov

Dec

 

1998

1999

1999

1999

1999

1999

1999

1999

1999


U.S. Dollar (R$/US$)

                 

   Average

1.205

1.897

1.765

1.750

1.750

1.750

1.750

1.750

1.750

   End-period

1.209

1.722

1.770

1.750

1.750

1.750

1.750

1.750

1.750

SDR/US$ (end-period)

1.407

1.358

1.336

1.336

1.336

1.336

1.336

1.336

1.336

Gold price (US$/ounce, end-period)

288.3

279.8

261.0

261.0

261.0

261.0

261.0

261.0

261.0


1Currencies not shown here will first be converted into U.S. dollars using the official rate used by the Fund's Treasury Department as of July 1, 1999. The accounting exchange rate and gold price conversion rates for the year 2000 will determined in the context of the fourth review under the arrangement.

 


1See EBS/99/30, Supplement 2.
2Non-US$ debt is first converted into US$ at actual period average exchange rates.
3In each and every case where reference is made to a reserve ratio (or "r" as in any of the formulas set out), it is defined strictly as the sum of the relevant reserve ratio in the form of cash in vault and the relevant reserve ratio in the form of deposits at the central bank. All changes in the reserve ratio are measured with respect to the relevant reserve ratio that was in effect on June 30, 1999

-->