## _061709b

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---

### General considerations motivating note issuance
- Purpose:
  - Provide a temporary supplement to the Fund’s resources to support timely and effective balance of payments assistance during the crisis.
  - Broaden and diversify the Fund’s sources of supplementary resources in a timely manner.
- Context and demand:
  - Total Fund credit commitments rose to over SDR 100 billion, including commitments under FCL arrangements of SDR 52 billion.
  - Several members or their central banks expressed interest in purchasing Fund notes.
- Proposed governance and limits:
  - Executive Board to approve a common set of General Terms and Conditions (GTC) for two series of IMF notes (“Series A” and “Series B”).
  - Executive Board to authorize the Managing Director to conclude individual Note Purchase Agreements (NPAs) with qualifying members/central banks consistent with a Form NPA.
  - Initial issuance ceiling proposed: SDR 100 billion, given envisaged NAB enlargement of up to $500 billion (about SDR 333 billion) and current pledges of bilateral borrowing of about $225 billion (about SDR 150 billion).
- Uniform treatment and liquidity:
  - A common framework/GTC would ensure uniform treatment of Purchasers and promote liquidity if multiple members/central banks purchase notes in parallel.
- Encashability and liquidity risk management:
  - To contain scale and concentration of liquidity risks, a limit on immediate encashment by any member under any NPA is proposed, consistent with limits on loan agreements.
  - Proposed initial limit on immediate encashability: SDR 15 billion; amounts above that would be Series B notes (encashable within 12 months).

### Structure of the proposed framework and documentation
- Three core documents attached to each NPA:
  - Note Purchase Agreement (NPA): bilateral commitment covering limits, term, purposes, modalities, and termination; may have small purchaser-specific variations (e.g., central bank vs. member, ceiling expressed in SDRs or currency, term between minimum initial 2 years and maximum total 5 years).
  - General Terms and Conditions (GTC): standard terms for Series A and Series B notes (interest rate, maturity, transferability, right to early payment, form and delivery); identical for both series except for early repayment provisions.
  - Form of Registered Series A Note or Series B Note: notes issued in book-entry form; physical registered notes available on request.
- Delegation and operationalization:
  - Executive Board to establish cumulative ceiling on commitments under NPAs and ceiling on maximum amount of Series A notes issued under a single NPA.
  - Managing Director delegated authority to conclude NPAs up to the Board-established cumulative ceiling.
  - Form NPA provides for minimum initial term of two years and maximum total term of five years; individual NPAs may specify initial term and Fund extensions with purchaser consent.

### Uses and issuance limits
- Permitted uses of notes (NPA Paragraph 3(a)):
  - (i) Any use of Fund resources in the GRA (no reference to a particular GRA facility or policy; includes credit tranches, FCL, Stand-By, and special facilities).
  - (ii) Payment of the Fund’s outstanding indebtedness under other official sector borrowing that can be drawn down to repay notes (reciprocity requirement).
- Operational controls:
  - Issuance would be preceded by consultation with the Purchaser.
  - NPAs may include optional monthly and/or weekly limits on issuance (NPA Paragraph 3(b)); overall ceiling on purchases may be expressed in SDRs or a currency (NPA Paragraph 1).
  - If expressed in currency terms, a valuation rule would fix the currency value of each note at time of issuance (NPA Paragraph 5(d)).
  - Under a revolving limit approach, Fund payment of principal on a note restores equivalent issuance capacity under the NPA (NPA Paragraph 3(d)).

### Key financial terms (parallels with Japan Agreement)
- Maturity:
  - Initial maturity: three months; Fund may unilaterally extend maturity by additional three-month periods up to total maturity of five years.
  - Streamlined deeming procedure: Fund deemed to extend at each three-month period unless it gives prior notice not to extend (GTC Paragraph 4(a)).
- Interest rate:
  - Interest at the SDR interest rate (GTC Paragraph 5(a)).
  - “Most-favored creditor” clause: Permitted Holder becomes entitled to any higher interest rate the Fund pays on comparable borrowings while that higher rate persists (GTC Paragraph 5(a)).
  - Interest accrues daily and is paid quarterly (GTC Paragraph 5(b)).
- Early payment / encashability:
  - Series A: encashable on demand if purchaser represents a balance of payments need; holdings classified as a reserve asset.
  - Series B: encashable as soon as practicable within 12 months.
  - Fund has option to make early payment of any note after consultation with the relevant Permitted Holder (GTC Paragraph 4(c)).
- Denomination and exchange risk:
  - All notes denominated in SDRs (NPA Paragraph 4) to avoid the Fund incurring exchange rate risk.
- Media of payment:
  - Purchases by Purchaser and Fund payments of principal generally in the currency of the Purchaser or, for central bank Purchasers, in the currency of the Relevant Member (NPA Paragraph 5(a), GTC Paragraph 8(a)).
  - Typically, a freely usable currency would be provided by Purchaser to a Fund borrower purchasing the Purchaser’s currency from the Fund; cross-referenced to Articles governing exchanges (NPA Paragraph 5(b)).
  - Interest generally paid in SDRs to Fund members/central banks/fiscal agencies/prescribed SDR holders, or in a freely usable currency to other Permitted Holders (GTC Paragraph 8(b)).
  - For SDR interest payments to a central bank or fiscal agency Permitted Holder, payment made to the member’s account on behalf of the relevant Permitted Holder to facilitate quarterly interest payments.

### Interaction with NAB and folding-in considerations
- Objective:
  - Enable immediate supplementary financing sources (bilateral loans and NPAs) to be folded into an expanded and more flexible New Arrangements to Borrow (NAB) when such NAB enters into effect, per G20 proposal.
- Two main aspects of folding-in NPAs and outstanding notes:
  - Outstanding notes: process and terms for folding into NAB raise issues of permissible NAB resource uses; would need to be established under amended NAB decision. Staff considering proposal where amended NAB would allow draw downs under a participant’s credit arrangement to repay claims outstanding under pre-existing bilateral NPAs and loan agreements, with participant able to elect to be issued notes rather than loan claims under amended NAB.
  - Outstanding commitments to purchase notes: Form NPA incorporates a provision (Subparagraph 2(c)) authorizing ex ante termination of the NPA term once the expanded NAB becomes effective; no requirement that the effective NAB credit arrangement be at least equal to the remaining undrawn balance under the NPA at termination.

### Operational and risk-management considerations
- Equity and burden-sharing:
  - Issuance of notes and loan drawings arranged via the quarterly Financial Transactions Plan to maintain equitable burden sharing between quota and other resources.
- Liquidity management:
  - Limit on immediate encashment initially proposed at SDR 15 billion to manage liquidity concentration; amounts above that classified as Series B notes with 12-month encashment window.
  - Board may review and decide on future increases to the general limit on immediate encashment and related Series A note limits, and whether to apply higher limits to existing NPAs and permit exchange of Series B for Series A notes.
- Flexibility in NPAs:
  - Individual NPAs can vary in ceiling currency expression (SDR or specific currency), term (2–5 years), maximum commitments, weekly/monthly issuance limits, and specified maximum amount of Series A notes consistent with Board-determined limits.

### Transferability and permitted transferees
- Purchasers and other Permitted Holders may transfer notes to certain official sector entities without Fund consent (GTC Paragraphs 1(c) and 6(a)).
- Transfers to official sector transferees not listed in GTC Paragraph 1(c) require prior written consent of the Fund (GTC Paragraph 6(b)).
- Transfers outside the official sector are prohibited (GTC Paragraph 6(c)); this limitation is stated in the Form of Registered Note.
- Upon transfer, a transferee acquires the right to request early repayment of the note only if:
  - (i) the transferee is a member or the central bank or fiscal agency of a member, and
  - (ii) at the time of transfer, the balance of payments and reserve position of the member or Relevant Member, as applicable, was considered sufficiently strong in the opinion of the Fund that its currency was being used in transfers under the Financial Transactions Plan (GTC Paragraphs 6(e) and 7(a)).

### Termination of Purchases and early payment at request of Permitted Holders
- The NPA authorizes termination of the Purchaser’s commitment to purchase notes if the Purchaser or Relevant Member faces a deterioration of its balance of payments and reserve position, subject to:
  - a representation by the Purchaser, and
  - a Fund determination—after giving the Purchaser’s representation the overwhelming benefit of any doubt—that no further notes should be purchased under the NPA in light of the balance of payments and reserve position (NPA Paragraph 6).
- The Purchaser’s commitment to purchase Notes shall be terminated if:
  - (i) the Purchaser represents that its balance of payments and reserve position (or that of the Relevant Member) does not justify further purchases, and
  - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that no further purchases should be made in light of the balance of payments and reserve position of the Purchaser or Relevant Member.

### Encashment regimes: Series A and Series B notes
- Series A notes:
  - Subject to a broader “encashment” regime than in the Japan Agreement (GTC Paragraphs 7(a) and 7(b)(i)).
  - Qualifying Permitted Holders can obtain immediate early payment on demand of up to the full amount of Series A notes.
  - Immediate early payment on demand requires:
    - (i) a representation by an eligible holder that its balance of payments and reserve position or that of the Relevant Member justifies early payment, and
    - (ii) a Fund determination—having given this representation the overwhelming benefit of any doubt—that there is a need for early payment in light of the balance of payments and reserve position of the holder or the Relevant Member (GTC Paragraph 7(b)(i)).
  - Series A notes form part of a member’s reserve assets as they are immediately encashable in case of balance of payments need by the member.
- Series B notes:
  - Encashment regime similar to the Japan Agreement.
  - Requires a representation from an eligible holder regarding balance of payments and reserve position and a Fund determination after giving the representation the overwhelming benefit of any doubt.
  - Fund obligation after such determination is to pay Series B notes “as soon as practicable” but, in any event, within the 12-month period following the Fund’s determination that early payment is justified (GTC Paragraph 7(b)(ii) and (c)).
  - Series B notes are not part of a member’s reserve assets but are part of a member’s external assets for purposes of balance of payments statistics.

### Form and custodial arrangements for notes
- Notes will be issued in book entry form; the Fund’s Finance Department will maintain book entry records.
- Each Purchaser or other Permitted Holder will receive a periodic Statement of Account showing its claims on the Fund for notes issued.
- A Purchaser or other Permitted Holder of either Series A or Series B notes may request notes in physical form; the Fund would issue registered Series A or Series B notes generally in the form set out in the attachment to the NPA.
- The Fund will serve as custodian for all registered notes, unless agreed otherwise (GTC Paragraph 3(c)); actual delivery of paper notes would not necessarily be required.

### Term of NPAs and extensions
- Minimum initial term of each NPA: two years.
- Initial term could be extended up to five years.
- Individual NPAs can provide for initial term and possible extensions as agreed between the Managing Director and the Purchaser (example structures given: initial two years with one two-year extension; initial two years extendable for up to three additional one-year periods).
- Any extension of the initial term requires the consent of the Purchaser (NPA Paragraph 2(b)).

### Non-subordination
- The Fund commits not to take any action that would have the effect of making a Permitted Holder’s claims on the Fund resulting from a note subordinate to claims on the Fund resulting from any other borrowing effected under Article VII, Section 1(i) (GTC Paragraph 11).
- This provision prevents the Fund from according seniority to any particular group of note holders or other lenders (e.g., through the granting of collateral).

### Termination upon NAB participation
- The Purchaser may terminate the term of the NPA once the enlargement and amendment of the NAB becomes effective if the Purchaser is a participant in the enlarged and amended NAB (NPA Paragraph 2(c)).
- The right to terminate also applies if the NPA is with the central bank of a member and subsequently the member is a NAB participant, or vice versa.

### Proposed Executive Board decision limits and authorizations
- Total commitments under Note Purchase Agreements shall not exceed SDR 100 billion.
- Maximum amount of Series A notes issued under a single Note Purchase Agreement shall be SDR 15 billion.
- The Managing Director is authorized to conclude Note Purchase Agreements consistent with the Form Note Purchase Agreement in the Attachment and to make determinations and take actions necessary to implement such agreements, including issuance of notes, issuance and delivery of registered notes substantially in the form set forth in Annex II or Annex III of the Attachment, extension of terms, and determination of media for payment.
- The Executive Board shall be informed of developments related to implementation in reports by the Managing Director on a quarterly basis, with more frequent reports for significant developments; reports shall cover all aspects of implementation, including issuances, disposition of amounts received, and payments by the Fund of principal.

### Key terms in the Form of Note Purchase Agreement (selected)
- Notes denominated in the special drawing right (SDR).
- Notes issued in multiples of SDR 10 million; purchase price 100 percent of principal.
- Initial Availability Period: not less than two year(s), extendable with Purchaser consent, total not to exceed five years.
- Fund to give Purchaser at least five business days’ notice of intention to issue Notes for purchase and provide payment instructions at least two business days prior to value date (locations and mechanisms specified in the Agreement).
- Purchaser may not transfer rights or obligations under the Agreement except with prior written consent of the Fund; transfers of Notes subject to transfer restrictions in the General Terms and Conditions (paragraph 7).

### Settlement of Questions and Execution
- Any question arising under this Agreement shall be settled by mutual agreement between the Purchaser and the Fund.
- This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original and both of which together shall constitute but one and the same instrument.
- Execution block includes signature lines for the Purchaser and the International Monetary Fund, with the Managing Director named as Dominique Strauss-Kahn.

### Annex I. General Terms and Conditions — selected provisions
- Definitions include “Applicable Note Purchase Agreement”, “Eligible Purchaser”, “Eligible Holder”, “Notes”, “Permitted Holder”, and “Relevant Member”.
- Eligible Purchasers: (i) a member of the Fund, and (ii) the central bank of a member of the Fund.
- Eligible Holders: (i) an Eligible Purchaser, (ii) a fiscal agency designated by a member for Article V, Section 1 purposes, and (iii) a prescribed SDR holder under Article XVII, Section 3.
- Notes issued only in book entry form; Fund maintains book entry account for each Permitted Holder recording number, issue date, principal amount, Series and maturity date.
- Maturity and extension mechanics:
  - Each Note initial maturity three months; Fund may extend by additional three-month periods up to fifth anniversary of issue date.
  - Extension is automatically deemed elected unless Fund gives written notice at least five business days before maturity.
- Interest:
  - Each Note bears interest at the SDR interest rate; if Fund pays a higher rate on comparable borrowings effected pursuant to Article VII, Section 1(i), the interest payable on Notes will be equivalent to that higher rate while it persists.
  - Interest accrues daily and is paid promptly after each July 31, October 31, January 31 and April 30.
- Transfer mechanics:
  - Permitted Holder may transfer to any Eligible Holder; transfers to other official entities require prior written consent of the Fund.
  - Derivative transactions and transfers of participation interests prohibited.
  - Transfers effected by authenticated notice; Fund cancels and reissues Notes preserving issue and maturity dates.
- Early payment at request of certain Permitted Holders:
  - Conditions for Series A early payment rights include representation by holder and Fund determination after giving the representation the overwhelming benefit of any doubt.
  - Fund shall pay principal of Series A Notes requested for early payment up to amount requested; remaining Notes for which early repayment requested shall have maturity changed to date 12 months after Fund’s determination and be paid as soon as practicable and, in any event, within the 12-month period.
- Media and modalities of payment:
  - Principal payments in (i) currency of the Permitted Holder if member, (ii) currency of the Relevant Member for central bank/fiscal agency/prescribed SDR holder that is official institution, or (iii) any freely usable currency determined by the Fund for other Permitted Holders; Fund may, after consultation, make payments in SDRs or freely usable currency as specified.
  - Interest payments normally in SDRs for members/central banks/fiscal agencies/prescribed SDR holders; otherwise in a freely usable currency as determined by the Fund.
- Effective exchange rate for payments:
  - Payments in currency made at exchange rates for relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) for the second business day of the Fund before the value date of the payment.
- Changes in method of valuation of SDR:
  - If Fund changes method of valuing the SDR, payments made two or more business days after the effective date will be made on the basis of the new method.
- Non-subordination:
  - The Fund will not take any action that would have the effect of making a Permitted Holder’s claim on the Fund resulting from any Note subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i).

*Source — IMF staff paper on framework for issuing notes to the official sector (Form NPA and GTC), including discussion of initial ceilings, Series A/Series B features, and interaction with NAB and liquidity management.*

### 1.      At the conclusion of the February 2009 meeting on Fund resources, Directors agreed

### 1.      At the conclusion of the February 2009 meeting on Fund resources, Directors agreed that placement of Fund paper in the official sector was worthy of further consideration together with other modalities to provide a temporary supplement to the Fund’s resources in the short run.

### General considerations motivating note issuance
- Purpose:
  - Provide a temporary supplement to the Fund’s resources to support timely and effective balance of payments assistance during the crisis.
  - Broaden and diversify the Fund’s sources of supplementary resources in a timely manner.
- Context and demand:
  - Total Fund credit commitments rose to over SDR 100 billion, including commitments under FCL arrangements of SDR 52 billion.
  - Several members or their central banks expressed interest in purchasing Fund notes.
- Proposed governance and limits:
  - Executive Board to approve a common set of General Terms and Conditions (GTC) for two series of IMF notes (“Series A” and “Series B”).
  - Executive Board to authorize the Managing Director to conclude individual Note Purchase Agreements (NPAs) with qualifying members/central banks consistent with a Form NPA.
  - Initial issuance ceiling proposed: SDR 100 billion, given envisaged NAB enlargement of up to $500 billion (about SDR 333 billion) and current pledges of bilateral borrowing of about $225 billion (about SDR 150 billion).
- Uniform treatment and liquidity:
  - A common framework/GTC would ensure uniform treatment of Purchasers and promote liquidity if multiple members/central banks purchase notes in parallel.
- Encashability and liquidity risk management:
  - To contain scale and concentration of liquidity risks, a limit on immediate encashment by any member under any NPA is proposed, consistent with limits on loan agreements.
  - Proposed initial limit on immediate encashability: SDR 15 billion; amounts above that would be Series B notes (encashable within 12 months).

### Structure of the proposed framework and documentation
- Three core documents attached to each NPA:
  - Note Purchase Agreement (NPA): bilateral commitment covering limits, term, purposes, modalities, and termination; may have small purchaser-specific variations (e.g., central bank vs. member, ceiling expressed in SDRs or currency, term between minimum initial 2 years and maximum total 5 years).
  - General Terms and Conditions (GTC): standard terms for Series A and Series B notes (interest rate, maturity, transferability, right to early payment, form and delivery); identical for both series except for early repayment provisions.
  - Form of Registered Series A Note or Series B Note: notes issued in book-entry form; physical registered notes available on request.
- Delegation and operationalization:
  - Executive Board to establish cumulative ceiling on commitments under NPAs and ceiling on maximum amount of Series A notes issued under a single NPA.
  - Managing Director delegated authority to conclude NPAs up to the Board-established cumulative ceiling.
  - Form NPA provides for minimum initial term of two years and maximum total term of five years; individual NPAs may specify initial term and Fund extensions with purchaser consent.

### Uses and issuance limits
- Permitted uses of notes (NPA Paragraph 3(a)):
  - (i) Any use of Fund resources in the GRA (no reference to a particular GRA facility or policy; includes credit tranches, FCL, Stand-By, and special facilities).
  - (ii) Payment of the Fund’s outstanding indebtedness under other official sector borrowing that can be drawn down to repay notes (reciprocity requirement).
- Operational controls:
  - Issuance would be preceded by consultation with the Purchaser.
  - NPAs may include optional monthly and/or weekly limits on issuance (NPA Paragraph 3(b)); overall ceiling on purchases may be expressed in SDRs or a currency (NPA Paragraph 1).
  - If expressed in currency terms, a valuation rule would fix the currency value of each note at time of issuance (NPA Paragraph 5(d)).
  - Under a revolving limit approach, Fund payment of principal on a note restores equivalent issuance capacity under the NPA (NPA Paragraph 3(d)).

### Key financial terms (parallels with Japan Agreement)
- Maturity:
  - Initial maturity: three months; Fund may unilaterally extend maturity by additional three-month periods up to total maturity of five years.
  - Streamlined deeming procedure: Fund deemed to extend at each three-month period unless it gives prior notice not to extend (GTC Paragraph 4(a)).
- Interest rate:
  - Interest at the SDR interest rate (GTC Paragraph 5(a)).
  - “Most-favored creditor” clause: Permitted Holder becomes entitled to any higher interest rate the Fund pays on comparable borrowings while that higher rate persists (GTC Paragraph 5(a)).
  - Interest accrues daily and is paid quarterly (GTC Paragraph 5(b)).
- Early payment / encashability:
  - Series A: encashable on demand if purchaser represents a balance of payments need; holdings classified as a reserve asset.
  - Series B: encashable as soon as practicable within 12 months.
  - Fund has option to make early payment of any note after consultation with the relevant Permitted Holder (GTC Paragraph 4(c)).
- Denomination and exchange risk:
  - All notes denominated in SDRs (NPA Paragraph 4) to avoid the Fund incurring exchange rate risk.
- Media of payment:
  - Purchases by Purchaser and Fund payments of principal generally in the currency of the Purchaser or, for central bank Purchasers, in the currency of the Relevant Member (NPA Paragraph 5(a), GTC Paragraph 8(a)).
  - Typically, a freely usable currency would be provided by Purchaser to a Fund borrower purchasing the Purchaser’s currency from the Fund; cross-referenced to Articles governing exchanges (NPA Paragraph 5(b)).
  - Interest generally paid in SDRs to Fund members/central banks/fiscal agencies/prescribed SDR holders, or in a freely usable currency to other Permitted Holders (GTC Paragraph 8(b)).
  - For SDR interest payments to a central bank or fiscal agency Permitted Holder, payment made to the member’s account on behalf of the relevant Permitted Holder to facilitate quarterly interest payments.

### Interaction with NAB and folding-in considerations
- Objective:
  - Enable immediate supplementary financing sources (bilateral loans and NPAs) to be folded into an expanded and more flexible New Arrangements to Borrow (NAB) when such NAB enters into effect, per G20 proposal.
- Two main aspects of folding-in NPAs and outstanding notes:
  - Outstanding notes: process and terms for folding into NAB raise issues of permissible NAB resource uses; would need to be established under amended NAB decision. Staff considering proposal where amended NAB would allow draw downs under a participant’s credit arrangement to repay claims outstanding under pre-existing bilateral NPAs and loan agreements, with participant able to elect to be issued notes rather than loan claims under amended NAB.
  - Outstanding commitments to purchase notes: Form NPA incorporates a provision (Subparagraph 2(c)) authorizing ex ante termination of the NPA term once the expanded NAB becomes effective; no requirement that the effective NAB credit arrangement be at least equal to the remaining undrawn balance under the NPA at termination.

### Operational and risk-management considerations
- Equity and burden-sharing:
  - Issuance of notes and loan drawings arranged via the quarterly Financial Transactions Plan to maintain equitable burden sharing between quota and other resources.
- Liquidity management:
  - Limit on immediate encashment initially proposed at SDR 15 billion to manage liquidity concentration; amounts above that classified as Series B notes with 12-month encashment window.
  - Board may review and decide on future increases to the general limit on immediate encashment and related Series A note limits, and whether to apply higher limits to existing NPAs and permit exchange of Series B for Series A notes.
- Flexibility in NPAs:
  - Individual NPAs can vary in ceiling currency expression (SDR or specific currency), term (2–5 years), maximum commitments, weekly/monthly issuance limits, and specified maximum amount of Series A notes consistent with Board-determined limits.

_Italic: Source — IMF staff paper on framework for issuing notes to the official sector (Form NPA and GTC), including discussion of initial ceilings, Series A/Series B features, and interaction with NAB and liquidity management._

### 17.      Purchasers and other Permitted Holders would be able to transfer notes to certain

### _061709b - 17.      Purchasers and other Permitted Holders would be able to transfer notes to certain

### Transferability and permitted transferees
- Purchasers and other Permitted Holders may transfer notes to certain official sector entities without Fund consent (GTC Paragraphs 1(c) and 6(a)).
- Transfers to official sector transferees not listed in GTC Paragraph 1(c) require prior written consent of the Fund (GTC Paragraph 6(b)).
- Transfers outside the official sector are prohibited (GTC Paragraph 6(c)); this limitation is stated in the Form of Registered Note.
- Upon transfer, a transferee acquires the right to request early repayment of the note only if:
  - (i) the transferee is a member or the central bank or fiscal agency of a member, and
  - (ii) at the time of transfer, the balance of payments and reserve position of the member or Relevant Member, as applicable, was considered sufficiently strong in the opinion of the Fund that its currency was being used in transfers under the Financial Transactions Plan (GTC Paragraphs 6(e) and 7(a)).

### Termination of Purchases and early payment at request of Permitted Holders
- The NPA authorizes termination of the Purchaser’s commitment to purchase notes if the Purchaser or Relevant Member faces a deterioration of its balance of payments and reserve position, subject to:
  - a representation by the Purchaser, and
  - a Fund determination—after giving the Purchaser’s representation the overwhelming benefit of any doubt—that no further notes should be purchased under the NPA in light of the balance of payments and reserve position (NPA Paragraph 6).
- The Purchaser’s commitment to purchase Notes shall be terminated if:
  - (i) the Purchaser represents that its balance of payments and reserve position (or that of the Relevant Member) does not justify further purchases, and
  - (ii) the Fund, having given this representation the overwhelming benefit of any doubt, determines that no further purchases should be made in light of the balance of payments and reserve position of the Purchaser or Relevant Member.

### Encashment regimes: Series A and Series B notes
- Series A notes:
  - Subject to a broader “encashment” regime than in the Japan Agreement (GTC Paragraphs 7(a) and 7(b)(i)).
  - Qualifying Permitted Holders can obtain immediate early payment on demand of up to the full amount of Series A notes.
  - Immediate early payment on demand requires:
    - (i) a representation by an eligible holder that its balance of payments and reserve position or that of the Relevant Member justifies early payment, and
    - (ii) a Fund determination—having given this representation the overwhelming benefit of any doubt—that there is a need for early payment in light of the balance of payments and reserve position of the holder or the Relevant Member (GTC Paragraph 7(b)(i)).
  - Series A notes form part of a member’s reserve assets as they are immediately encashable in case of balance of payments need by the member.
- Series B notes:
  - Encashment regime similar to the Japan Agreement.
  - Requires a representation from an eligible holder regarding balance of payments and reserve position and a Fund determination after giving the representation the overwhelming benefit of any doubt.
  - Fund obligation after such determination is to pay Series B notes “as soon as practicable” but, in any event, within the 12-month period following the Fund’s determination that early payment is justified (GTC Paragraph 7(b)(ii) and (c)).
  - Series B notes are not part of a member’s reserve assets but are part of a member’s external assets for purposes of balance of payments statistics.

### Form and custodial arrangements for notes
- Notes will be issued in book entry form; the Fund’s Finance Department will maintain book entry records.
- Each Purchaser or other Permitted Holder will receive a periodic Statement of Account showing its claims on the Fund for notes issued.
- A Purchaser or other Permitted Holder of either Series A or Series B notes may request notes in physical form; the Fund would issue registered Series A or Series B notes generally in the form set out in the attachment to the NPA.
- The Fund will serve as custodian for all registered notes, unless agreed otherwise (GTC Paragraph 3(c)); actual delivery of paper notes would not necessarily be required.

### Term of NPAs and extensions
- Minimum initial term of each NPA: two years.
- Initial term could be extended up to five years.
- Individual NPAs can provide for initial term and possible extensions as agreed between the Managing Director and the Purchaser (example structures given: initial two years with one two-year extension; initial two years extendable for up to three additional one-year periods).
- Any extension of the initial term requires the consent of the Purchaser (NPA Paragraph 2(b)).

### Non-subordination
- The Fund commits not to take any action that would have the effect of making a Permitted Holder’s claims on the Fund resulting from a note subordinate to claims on the Fund resulting from any other borrowing effected under Article VII, Section 1(i) (GTC Paragraph 11).
- This provision prevents the Fund from according seniority to any particular group of note holders or other lenders (e.g., through the granting of collateral).

### Termination upon NAB participation
- The Purchaser may terminate the term of the NPA once the enlargement and amendment of the NAB becomes effective if the Purchaser is a participant in the enlarged and amended NAB (NPA Paragraph 2(c)).
- The right to terminate also applies if the NPA is with the central bank of a member and subsequently the member is a NAB participant, or vice versa.

### Proposed Executive Board decision limits and authorizations
- Total commitments under Note Purchase Agreements shall not exceed SDR 100 billion.
- Maximum amount of Series A notes issued under a single Note Purchase Agreement shall be SDR 15 billion.
- The Managing Director is authorized to conclude Note Purchase Agreements consistent with the Form Note Purchase Agreement in the Attachment and to make determinations and take actions necessary to implement such agreements, including issuance of notes, issuance and delivery of registered notes substantially in the form set forth in Annex II or Annex III of the Attachment, extension of terms, and determination of media for payment.
- The Executive Board shall be informed of developments related to implementation in reports by the Managing Director on a quarterly basis, with more frequent reports for significant developments; reports shall cover all aspects of implementation, including issuances, disposition of amounts received, and payments by the Fund of principal.

### Key terms in the Form of Note Purchase Agreement (selected)
- Notes denominated in the special drawing right (SDR).
- Notes issued in multiples of SDR 10 million; purchase price 100 percent of principal.
- Initial Availability Period: not less than two year(s), extendable with Purchaser consent, total not to exceed five years.
- Fund to give Purchaser at least five business days’ notice of intention to issue Notes for purchase and provide payment instructions at least two business days prior to value date (locations and mechanisms specified in the Agreement).
- Purchaser may not transfer rights or obligations under the Agreement except with prior written consent of the Fund; transfers of Notes subject to transfer restrictions in the General Terms and Conditions (paragraph 7).

*Source: Excerpt from the Note Purchase Agreement and General Terms and Conditions material in _061709b.*

### 8.      Settlement of Questions

### _061709b - 8.      Settlement of Questions

### Settlement of Questions and Execution
- Any question arising under this Agreement shall be settled by mutual agreement between the Purchaser and the Fund.
- This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original and both of which together shall constitute but one and the same instrument.
- Execution block includes signature lines for the Purchaser and the International Monetary Fund, with the Managing Director named as Dominique Strauss-Kahn.

### Annex I. General Terms and Conditions for International Monetary Fund Series A and Series B Notes — Overview
- These General Terms and Conditions apply to International Monetary Fund Series A and Series B Notes referenced in the Applicable Note Purchase Agreement and the Notes described therein.
- Key cross-references to the Fund’s Articles of Agreement: Article V, Section 1; Article VII, Section 1(i); Article XVII, Section 3; Article XIX, Section 7(a); Article XX, Section 3.

### 1. Definitions (selected)
- “Applicable Note Purchase Agreement”: the Note Purchase Agreement between the Fund and the original Eligible Purchaser to whom the Fund (i) had issued the Note, or (ii) had issued any Note in cancellation of which the Note had been issued.
- “Eligible Purchaser”: (i) a member of the Fund, and (ii) the central bank of a member of the Fund.
- “Eligible Holder”: (i) an Eligible Purchaser, (ii) a fiscal agency designated by a member for Article V, Section 1 purposes, and (iii) a prescribed SDR holder under Article XVII, Section 3.
- “Notes”: International Monetary Fund Series A and Series B Notes; Series A and Series B Notes are identical except that only Series A Notes are eligible for immediate early payment at the request of certain Permitted Holders as provided in paragraph 7.
- “Permitted Holder”: (i) an Eligible Holder, and (ii) any other official entity for which the Fund has consented in writing to a transfer pursuant to subparagraph 6(b).
- “Relevant Member”: where applicable, the member of the Fund associated with a Permitted Holder that is a central bank, fiscal agency, or other official institution.
- “Series”: indicates Series A or Series B with respect to any Note.

### 2. Eligible Purchasers and Permitted Holders
- Notes will be issued solely to Eligible Purchasers.
- Each Eligible Purchaser enters into a Note Purchase Agreement with the Fund governing purchases.
- Permitted Holders shall be the only authorized holders of the Notes.

### 3. Series, Form, Delivery and Custody of Notes
- Notes issued as either Series A or Series B.
- Notes issued only in book entry form; Fund maintains book entry account for each Permitted Holder recording number, issue date, principal amount, Series and maturity date.
- Making of an entry in the Fund’s records constitutes delivery.
- Upon request, Fund will issue registered Notes substantially in the form set out in Annex II (Series A) or Annex III (Series B).
- Registered Notes bear as issue date the value date of purchase; Fund will keep registered Notes in custody unless otherwise agreed.

### 4. Maturity (exact terms preserved)
- Each Note shall have a maturity date that is three months from its issue date, except as provided.
- Fund may in its sole discretion elect to extend maturity date by additional periods of three months after the initial maturity date.
- Extension is automatically deemed elected for all Notes unless, at least five business days (Washington) before a maturity date, the Fund notifies a Permitted Holder in writing that it does not elect to extend.
- In no event shall the maturity date of any Note be extended to a date that is later than the fifth anniversary of the issue date.
- Fund shall pay principal on the applicable maturity date. If maturity date is not a business day where payment is to be made, payment date will be the next business day in that place.
- Fund may at its option make an early payment in part or in full prior to maturity after consultation with the Permitted Holder.
- Fund will cancel a Note upon payment of principal and all accrued interest; procedures for partial early payment and issuance of remainder Notes preserved.
- Any Note to be cancelled not in Fund custody shall be surrendered by the Permitted Holder for cancellation.

### 5. Rate of Interest (exact scheduling preserved)
- Each Note bears interest at the SDR interest rate established by the Fund pursuant to Article XX, Section 3; if Fund pays an interest rate higher than the SDR interest rate on outstanding balances from any other borrowing on comparable terms effected pursuant to Article VII, Section 1(i), and for as long as that higher rate remains in effect, the interest rate payable on each Note will be equivalent to that higher rate.
- Interest amount calculated on principal (including principal of any substituted Note). Interest accrues daily and is to be paid promptly by the Fund after each July 31, October 31, January 31 and April 30.

### 6. Transferability of Notes (restrictions and mechanics)
- Permitted Holder may transfer all or part of any Note at any time to any Eligible Holder; Fund will use best efforts to arrange transfers if requested.
- Transfers to an official entity other than an Eligible Holder require prior written consent of the Fund and may be subject to additional terms approved by the Fund.
- No transfer to entities other than (i) Eligible Holders or (ii) official entities for which the Fund has given written consent.
- Derivative transactions and transfers of participation interests in any Note are prohibited.
- Transferee must assume obligations of a Permitted Holder with respect to maturity extensions (subparagraph 4(a)); transferred Notes held on same terms as by transferor, except for paragraph 7 early repayment rights.
- Price of a transferred Note is as agreed between transferor and transferee.
- Transfers effected by a duly authenticated notice of transfer to the Fund specifying transferee, eligibility and value date.
- Fund will cancel transferred Notes and issue new Notes in the names of transferee and, if applicable, transferor for retained amounts; issue date of new Notes equals issue date of cancelled Note; maturity date preserved (including prior extensions).
- If a transfer occurs during a quarterly period as described in paragraph 5(b), Fund will pay interest to the transferee on the principal amount for the whole of that period.

### 7. Early Payment by the Fund at Request of Certain Permitted Holders (conditions and procedures)
- Rights in subparagraph (b) apply only to Permitted Holders that are either (i) Eligible Purchasers in respect of such Notes, or (ii) transferees pursuant to subparagraphs 6(a) or 6(b) for which: (A) transferee is a member of the Fund or the central bank or fiscal agency of a member, and (B) at time of transfer, the balance of payments and reserve position of the member or Relevant Member was considered sufficiently strong in the opinion of the Fund that its currency was being used in transfers under the Financial Transactions Plan.
- If such a Permitted Holder represents that its balance of payments and reserve position justifies early payment and the Fund determines there is a need for early payment, then:
  - (i) Fund shall pay the principal amount of the Permitted Holder’s Series A Notes that is then outstanding, up to the amount requested for early payment.
  - (ii) The maturity date for that portion of the Permitted Holder’s remaining Notes for which early repayment has been requested shall be changed to the date that is 12 months after the date of the Fund’s determination.
- Fund shall pay principal of the Notes covered by subparagraph (b)(ii) as soon as practicable after its determination and shall, in any event, make full payment within the 12-month maturity period specified.

### 8. Media and Modalities of Payments on the Notes
- Principal payments by the Fund to a Permitted Holder shall be made in:
  - (i) the currency of the Permitted Holder, if the Permitted Holder is a member of the Fund,
  - (ii) the currency of the Relevant Member, if the Permitted Holder is the central bank or fiscal agency of a member of the Fund, or is a prescribed SDR holder that is an official institution of a member, or
  - (iii) any freely usable currency determined by the Fund, in the case of all other Permitted Holders;
  - provided the Fund, after consultation, may make payments of principal to Permitted Holders covered by clauses (i) or (ii) in SDRs or any freely usable currency as determined by the Fund; and provided further that the Fund, after consultation with a Permitted Holder covered by clause (iii) that is a prescribed SDR holder, may make payments of principal to such Permitted Holder in SDRs.
- Interest payments will normally be made in SDRs if the Permitted Holder is a member, central bank or fiscal agency of such a member, or a prescribed SDR holder, or in any freely usable currency as determined by the Fund for other Permitted Holders.
- Currency payments will be credited to an account specified in advance by the Permitted Holder; SDR payments will be credited to the SDR Department account of the Permitted Holder or of the Relevant Member as the case may be.

### 9. Effective Exchange Rate for Payments (exact rule)
- Unless otherwise agreed, all payments in currency of principal and interest will be made at the exchange rates for the relevant currencies in terms of the SDR established pursuant to Article XIX, Section 7(a) and Fund rules for the second business day of the Fund before the value date of the payment.
- If that exchange rate determination date is not a business day in the Permitted Holder’s principal location, the date will be the last preceding business day of the Fund that is also a business day in the Permitted Holder’s principal location.

### 10. Changes in Method of Valuation of SDR
- If the Fund changes the method of valuing the SDR, all payments of principal and interest made two or more business days of the Fund after the effective date of the change will be made on the basis of the new method of valuation.

### 11. Non-Subordination of Claims
- The Fund will not take any action that would have the effect of making a Permitted Holder’s claim on the Fund resulting from any Note subordinate in any way to claims on the Fund resulting from any other borrowing effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement.

*Source: _061709b - 8.      Settlement of Questions (PDF chapter/section).*

### 12. Settlement of Questions

### 12. Settlement of Questions

### Settlement mechanism
- Any question arising under any Note shall be settled by mutual agreement between the relevant Permitted Holder and the Fund.

### Transfer and eligibility restrictions (applies to Series A Note and Series B Note)
- IN NO EVENT SHALL ANY HOLDER OF THIS NOTE SELL, ASSIGN, DISPOSE OF OR OTHERWISE TRANSFER THIS NOTE, DIRECTLY OR INDIRECTLY, TO ANY ENTITY THAT IS NOT:
  - (I) A MEMBER OF THE FUND OR THE CENTRAL BANK OF A MEMBER OF THE FUND,
  - (II) A FISCAL AGENCY DESIGNATED BY A MEMBER OF THE FUND FOR PURPOSES OF ARTICLE V, SECTION 1 OF THE FUND’S ARTICLES OF AGREEMENT,
  - (III) AN OFFICIAL ENTITY THAT HAS BEEN PRESCRIBED AS A HOLDER OF SPECIAL DRAWING RIGHTS PURSUANT TO ARTICLE XVII, SECTION 3 OF THE FUND’S ARTICLES OF AGREEMENT, OR
  - (IV) ANY OTHER OFFICIAL ENTITY IN RESPECT OF WHICH THE FUND HAS CONSENTED IN WRITING TO A TRANSFER PURSUANT TO PARAGRAPH 6(B) OF THE GENERAL TERMS AND CONDITIONS.

### Prohibitions on derivatives and participation transfers
- ANY DERIVATIVE TRANSACTIONS IN RESPECT OF THIS NOTE, AND TRANSFERS OF PARTICIPATION INTERESTS IN THIS NOTE, ARE PROHIBITED.

### Interest accrual and payment terms
- Interest shall accrue daily on the principal amount of this Note at the SDR interest rate established by the Fund pursuant to Article XX, Section 3 of the Fund’s Articles of Agreement;
- Provided however that, if the Fund pays an interest rate higher than the SDR interest rate on outstanding balances from any other borrowing on comparable terms that has been effected pursuant to Article VII, Section 1(i) of the Fund’s Articles of Agreement, and for as long as the payment of such higher interest rate remains in effect, then the interest rate payable on this Note shall be equivalent to the interest rate paid by the Fund on such other comparable borrowing.
- Interest shall be paid promptly after each July 31, October 31, January 31 and April 30.
- Payments of interest shall normally be made in SDRs if the registered holder is:
  - a member of the Fund, or
  - a central bank or fiscal agency of a member of the Fund, or
  - a prescribed holder of SDRs;
  otherwise payments shall be made in a freely usable currency as determined by the Fund in the case of other registered holders.
- Payments in SDRs shall be made by crediting the SDR Department account of the registered holder, or of the member for which the registered holder serves as central bank or fiscal agency in the case of registered holders that are the central bank or fiscal agency of a member of the Fund.

### Note form and contractual incorporation
- The Series A Note and Series B Note each:
  - Promise to pay the registered holder an amount equivalent to a stated number of Special Drawing Rights (SDR _____) on the maturity date specified in the Note.
  - Are issued in accordance with the General Terms and Conditions for International Monetary Fund Series A and Series B Notes (the “General Terms and Conditions”) and the Applicable Note Purchase Agreement as defined therein.
  - Deem each holder to have agreed to the General Terms and Conditions and relevant terms of the Applicable Note Purchase Agreement, including without limitation:
    - the maturity date (including the terms on which it may be extended at the sole option of the Fund from time to time),
    - the interest rate,
    - the terms and conditions of early payment at the request of the Fund or the holder,
    - the terms and conditions of transfer of this Note or any part thereof.
- THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY JURISDICTION.

*Source: _061709b - 12. Settlement of Questions*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2009/_061709b.pdf_