News Briefs

France and the IMF





News Brief No. 95/1
January 3, 1995
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

The IMF Signs a Borrowing Agreement with
the Caisse Francaise de Développement of France

Mr. Michel Camdessus, Managing Director of the International Monetary Fund (IMF), and Mr. Edmond Alphandery, Minister of Economy, have signed an exchange of letters on the terms of the contribution by France to the enlarged and extended enhanced structural adjustment facility Trust (ESAF).1 France's loan and subsidy contribution will be extended through the Caisse Francaise de Developpement (CFD). Mr. Michel Camdessus and Mr. Philippe Jurgensen, Director General of the Caisse Francaise de Developpement, have signed a borrowing agreement for SDR 750 million (about US$1.1 billion) for the enlarged and extended enhanced structural adjustment facility Trust (ESAF). The IMF is the trustee for the ESAF Trust, and France is one of the largest contributors, both to the ESAF Loan Account and in terms of its subsidy contribution to the ESAF, amounting to SDR 250 million (about US$366 million).

The IMF has been responding to the balance of payments difficulties facing many low income developing countries by providing concessional financing through the ESAF. Under it, loans are made to low income IMF member countries undertaking three year economic reform programs to strengthen their balance of payments and improve growth prospects. The experience of low income countries - mainly in Africa but also in Asia and Latin America - undertaking economic adjustment programs supported by ESAF arrangements has been generally favorable. From a very weak starting position, many of the countries implementing ESAF-supported programs have experienced improvements in real GDP growth, trade volume growth, and reductions in inflation and debt burdens.

Operations under the ESAF commenced in December 1987 with agreements with creditors providing SDR 5.1 billion in funding for the facility. In December 1993, the Executive Board of the IMF decided to extend the duration of the ESAF facility and enlarge the ESAF Trust with lending in an additional amount of SDR 5.0 billion (about US $7.3 billion) and subsidies in an additional amount of SDR 2 billion (about US$2.9 billion). Operations under the enlarged ESAF Trust were initiated in February 1994.

Work on most of the necessary arrangements for loan and subsidy contributions to the enlarged ESAF by a broad range of the IMF's membership is now essentially completed.




Enhanced Structural Adjustment Facility
Estimated Value of Bilateral Contributions for the Enlargement 1
(In millions of SDRs)


ContributorSubsidies 2
(Grant or Grant
Equivalent)
Loans
Argentina28--
Australia14--
Austria23--
Bangladesh1--
Belgium46--
Botswana3--
Canada60200
Chile5--
China12100
Colombia6--
Czech Republic11--
Denmark 324--
Egypt11100
France250750
Germany--700
Greece17--
Iceland1--
India10--
Indonesia5--
Iran, Islamic Republic of2--
Ireland7--
Italy42210
Japan2502,150
Korea828
Luxembourg 310--
Malaysia16--
Malta1--
Mexico 336--
Morocco8--
Netherlands51--
Norway1360
Pakistan4--
Portugal5--
Singapore17--
Spain3167
Sweden44--
Switzerland 346167
Thailand17--
Tunisia2--
Turkey10--
United Kingdom74--
United States71--
Uruguay2--
Other countries16--
OPEC Fund--36
Total1,310 34,567 3


Source: Annual Report 1994.

1. Some contributions are subject to legislative approval.

2. Figures reflect the effective value to the ESAF of direct or indirect grant contributions. Calculations are based on an assumed interest rate of 6.0 percent.

3. Some contributions are conditioned on others' efforts, or are expressed as a share of final amounts expected to be mobilized; the amounts indicated assume achievement of these funding targets. Certain other contributions are to be confirmed.


1. ESAF loans carry an interest rate of 0.5 percent, and are repayable over 10 years, with a 5 1/2-year grace period. The interest subsidy is financed through concessional loans to the Loan Account or through the use of resources from the Subsidy Account.



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