Selected Decisions and Selected Documents of the IMF, Thirty- Sixth Issue -- The Chairman's Remarks at the Conclusion of the Discussion on the Enhancement of the Structural Adjustment Facility- Legal Documentation

Prepared by the Legal Department of the IMF
As updated as of December 31, 2011

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ARTICLE V, SECTION 2(b)
Technical and Financial Services
Financial Services

The Chairman’s Remarks at the Conclusion of the Discussion on the Enhancement of the Structural Adjustment Facility—Legal Documentation
Executive Board Meeting 87/176, December 18, 1987

Two issues of substance raised during this meeting deserve special mention. First, it was reconfirmed that lending to the ESAF Trust could be considered as part of a member’s official reserves by the Fund. Second, it was explained that access to the Fund’s general resources could be provided for members that had extended loans to the Trust and that needed liquidity in an amount not exceeding their claim. Purchases under these circumstances would be allowed if the member represented that it had a need, because of developments in its reserves in the sense of Article V, Section 3(b)(ii), and that the Fund agreed that the purchase was justified taking into account the amount of the requested purchase and the existence of a claim on the Trust. If the liquidity problem can be addressed on its own, there would be no need for an adjustment program to solve the balance of payments problem. Moreover, those purchases could be given certain characteristics by a decision to be taken when required. For instance, it could be decided, with respect to such purchases, to provide for special repurchase periods and for their exclusion from the definition of reserve tranche purchases. Those decisions would need to be adopted by an 85 percent majority. On the occasion on which this question was discussed, I heard no objections by an Executive Director to this approach, which had been suggested in the staff papers that have been discussed by the Board.

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