## Content unit: _032510c ## Source details **Canonical URL:** [Content unit: _032510c](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_032510c.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_032510c.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_032510c.pdf.json) --- ### Background and mandate - IMFC decisions: - Agreed at April 2009 meeting to incorporate immediate financing from members of US$250 billion into an expanded and more flexible New Arrangements to Borrow (NAB) increased by up to US$500 billion. - Recognized that an expanded NAB is an important backstop but not a substitute for a quota increase; urged a prompt start to the Fourteenth General Review of Quotas to be completed by January 2011. - At October 4, 2009 meeting, IMFC agreed that the renewed and expanded NAB would be reviewed in light of the outcome of the quota review. - Development process: - Proposal developed in consultation with current and potential NAB participants through meetings in April, July, and November 2009 in Washington, D.C., under the chairmanship of Japan. - Current and potential participants reached agreement on an expanded and more flexible NAB at their November 2009 meeting; a draft is being submitted to the Executive Board. ### Proposal summary — key elements and eligibility - Amendment mechanics and thresholds: - Amendment of the NAB Decision to allow adherence of new participants outside of a renewal decision and introduce other flexibilities; amendment requires an Executive Board decision adopted by a majority of the votes cast and the concurrence of (current) participants representing 85 percent of total credit arrangements. - Increasing credit arrangements for existing participants requires an Executive Board decision and agreement of participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed; effectively the consent of participants representing at least 96 percent of total credit arrangements is required where all changed participants must consent. - Adherence of new participants requires depositing an instrument of adherence; for new participants that are official institutions of a member, the member must consent to their adherence (Article 1(a)(xii)). - Eligibility modification: - Proposed to eliminate the possibility of institutions of non-members becoming NAB participants (delete Paragraphs 1(a)(xii), 2(b), 3(b), 7A(c) and 7B(b) current NAB). ### Size of the NAB and participant-level commitments - Current NAB: - Provides for total credit arrangements of SDR 34 billion. - Credit arrangements subject to a minimum of SDR 340 million. - Proposed modification (exact figures preserved): - Increase total size of credit arrangements to SDR 367.46736 billion. - Corresponding US dollar amount: US$588.565 billion, converted at the official US dollar–SDR exchange rate on November 24, 2009. - Retain current minimum size of credit arrangements at SDR 340 million. - The official US dollar—SDR exchange rate on November 24, 2009 was 1.60168 USD = 1 SDR. - Table totals in source: Total 367,467.36 (Millions of SDR) and Total 588,565.13 (Millions of U.S. Dollars); Credit arrangements are subject to a minimum of USD 544.57 million (SDR 340 million). - Annex I (selected entries, in Millions of SDR — exact numbers preserved): - United States 6,639.83 69,074.27 - Japan 3,518.75 65,953.20 - Deutsche Bundesbank 3,518.75 25,370.81 - France 2,549.29 18,657.38 - United Kingdom 2,549.29 18,657.38 - China 31,217.22 (new participant) - Brazil 8,740.82 (new participant) - India 8,740.82 (new participant) - Total 367,467.36 - Note: Credit arrangements are subject to a minimum of SDR 340 million (footnote 1). ### Activation framework (three-step proposal) and Resource Mobilization Plan (RMP) - Three-step activation framework proposed: 1. Establishment of an activation period. 2. Approval of a Resource Mobilization Plan (RMP). 3. Calls on participants. - Activation period — proposal and limits: - Managing Director would propose activation after informal consultation where supplemental resources are needed to forestall or cope with an impairment of the international monetary system. - Activation proposal conditions: proposal made only if the Fund’s capacity to make commitments from quota-based resources has been or is expected shortly to be substantially depleted, and there appears potential for ongoing demand for Fund resources. - Proposal for establishment of an activation period would specify: - (a) the period of activation, which may not exceed 6 months; and - (b) the maximum aggregate amount of calls under credit arrangements of participants for (i) commitments under arrangements approved during the activation period (including augmentations), and (ii) outright purchases during the activation period (Paragraph 5(a) revised NAB). - Approval of an activation period requires: - first approval by NAB participants with an 85 percent majority of total credit arrangements of participants eligible to vote, and - then a decision by the Executive Board by a majority of the votes cast (Paragraphs 5(b) and 5(d) revised NAB). - Participants not included in the Financial Transactions Plan (FTP) at the time of a vote to establish an activation period would not be eligible to vote and their credit arrangements would not be taken into account for establishing the majority threshold (Paragraph 5(c) revised NAB). - Resource Mobilization Plan (RMP) — features: - Drawings under the NAB for financing outright purchases during the activation period or purchases under arrangements approved during an activation period would be subject to periodic—normally quarterly—RMPs approved by the Executive Board (Paragraph 6(a) revised NAB). - The RMP would be considered in parallel with the proposed FTP; occasional departures from quarterly frequency may occur but return to quarterly cycle expected. - RMP establishes the maximum amount for calls under each credit arrangement during the plan period for each participant (Paragraph 6(a) revised NAB). - Subject to RMP limits, there would be no limitations on the pace at which drawings could be made on individual credit arrangements (e.g., no weekly or monthly limit). - A participant not included in, or not proposed for inclusion in, the FTP for transfers because of its balance of payments and reserve position would be excluded automatically from the RMP for the relevant period (Paragraph 6(b) revised NAB). - The Executive Board, when approving the RMP with the FTP, would effectively approve the mix of quota and borrowed resources for the relevant quarter. - The Executive Board would decide at the time of RMP approval the extent to which NAB resources would actually supplement quota resources, depending on the Fund’s overall liquidity situation and borrowing policies. ### Calls, notice procedures, and proportionality - Calls — operational and notice rules: - During the RMP period, the Managing Director would have authority to make calls on participants for funding purchases, subject to maximum limits established under the RMP (Paragraph 6(a) revised NAB) and consistency with Fund borrowing policies. - Notice presumptions aligned with FTP standard procedures: - Presumption: participants would receive at least five (participant) business days notice of the intention to make a call, followed by detailed payment instructions two (participant) business days prior to value date of actual call. - Exceptional event: if at least five (participant) business days notice is not possible, notification of intent to call would be made at least three business days in advance of the value date. - Calls on multiple NAB participants would minimize amounts requested from each participant; participants would not be expected to provide their entire commitment with less than five (participant) business days notice. - No call would be made on a participant included in a RMP if, at the time of the call, the member’s currency is not being used in transfers under the FTP because of the member’s balance of payments and reserve position (Paragraph 6(c) revised NAB). - Proportionality of drawings — proposed approach: - RMP allocations would normally be determined so available commitments of participants are of equal proportion relative to their credit arrangements (Paragraph 6(a) revised NAB). - Managing Director would seek to allocate calls among participants to achieve available commitments that are of equal proportion relative to their credit arrangements (Paragraph 6(c) revised NAB). - If at the end of an RMP period available commitments are not proportional, the Executive Board would seek to correct the imbalance when establishing the next RMP. - Deviations from normal proportionality permitted for specified operational reasons; transfers of claims do not affect available commitment under the original credit arrangement until payment on a transferred claim restores it (Paragraph 13(c) revised NAB). ### Encashability, special calls, currencies for early repayment - Encashability and size limits: - Individual credit arrangements under the expanded NAB may exceed US$100 billion, making it infeasible for the Fund to support full and immediate encashment solely from quota resources. - Some proportion of credit arrangements would need to be set aside to finance encashment; therefore the total volume of lending supportable by the NAB would be less than the size of the NAB. - Example: if 20 percent of NAB credit arrangements were set aside to ensure NAB encashability, then the use of NAB resources to support lending would be limited to 80 percent of the total size of the NAB. - Special calls to finance encashment (exact procedural points): - Retain right to full and immediate encashability of claims under credit arrangements of NAB participants experiencing balance of payments needs (Paragraph 11(e) revised NAB). - Require participants to provide resources, within the limits of their credit arrangements, necessary to finance early repayment to any participant experiencing a balance of payments need and requesting full or partial early repayment when the Fund’s holdings of currencies for such repayments are not wholly adequate (“special calls”). - Right to early encashment available to a transferee of a NAB claim if the transferee is a member or the institution of a member and if, at the time of the transfer, the relevant member was included in the FTP. - Activation procedure in Section II.D would not apply to these calls; special calls to finance encashment would be made on a proportional basis, consistent with Section II.E (Paragraph 7(a) revised NAB). - Special calls would not be made on a participant that, because of its balance of payments and reserve position, is not included in the FTP for transfers at the time the call is made; and no special calls on a participant included in the FTP if, at time of call, the member’s currency is not being used in transfers under the FTP (Paragraph 7(a) revised NAB). - Currencies and conversion obligations for early repayment: - For calls to finance encashment, introduce a regime similar to Article V, Section 3(e): - At request of participant requesting early repayments, participants being called and whose currency is not a freely usable currency would be obliged to convert their currency into a freely usable currency of their choice. - A participant being called whose currency is a freely usable currency would be required to collaborate with the Fund and other members to enable exchange of its currency into another freely usable currency at the request of the participant requesting early repayment; such exchanges would not be mandated by the decision. - If repayment is made from quota resources, repayment will be made in a freely usable currency unless, with the agreement of the participant, repayment is made in another currency that is actually convertible (Paragraph 11(e), fourth sentence revised NAB). - Operational practice: procedures currently in place with FTP members regarding currency conversion for GRA purchases would also be followed for drawings to finance early repayment of NAB borrowing. ### Interest rate, indebtedness instruments, and repayment mechanics - Interest rate changes and thresholds: - Current practice: interest rate payable on outstanding credit under NAB credit arrangements is the SDR interest rate, or a higher rate as agreed between the Fund and participants representing 80 percent of total credit arrangements (Paragraph 9(a) current NAB). - Proposed modification: increase the required threshold for participants’ consent to an interest rate higher than the SDR interest rate from 80 percent to 85 percent of total credit arrangements (Paragraph 9(a) revised NAB). - Delete Paragraph 9(b) of the current NAB to eliminate Fund exposure to interest rate risk by removing the right of individual participants to retain the original method of SDR interest calculation. - Notes and loans — instruments of indebtedness: - Resources under the NAB could be provided as loans or by purchasing promissory notes; notes and loans would have identical substantive terms (maturity, interest rate, media of payment, exchange rates). - At participant request the Fund shall issue Notes up to the amount of any call, subject to General Terms and Conditions for NAB Notes (Annex II). - GTC may be amended by Fund decision with agreement of participants representing 85 percent of total credit arrangements; amended GTC applies to all outstanding Notes (paragraph 8(a)). - Repayment principles and allocation flexibility: - Standard repayment timing: subject to paragraph 11, the Fund shall repay the participant five years after a transfer by a participant in response to a call; if a drawer repurchases earlier, Fund shall repay participants at that date. - Proposed allocation flexibility: - All repurchases of Fund credit financed with NAB resources will be used to repay NAB participants an equivalent amount (Paragraph 11(a), second sentence revised NAB). - Repayments to individual participants prior to the 5-year maturity date will be allocated with due regard to achieving available commitments of participants that are of equal proportion relative to their credit arrangements (Paragraph 11(d) revised NAB). - Fund retains option to make early repayments beyond pass-through of repurchases; such early repayments also allocated with due regard to proportionality objectives (Paragraph 11(b) and (d) revised NAB). - Practicality caveat: because each purchase is normally repaid in eight equal installments, distributing each repurchase among all 39 participants may be impracticable for smaller repurchases; resulting deviations would be taken into account in allocating future repurchases, when approving/drawing under the next RMP, or when making repayments from quota resources. - The requirement for repayment of NAB participants on the same date as repurchases are made would be eliminated (Paragraph 11(a) revised NAB), allowing the Fund to bundle smaller repurchases during a quarterly period for repayment purposes. - When a repayment is made on a claim arising from a call, the amount that can be called under the participant’s credit arrangement shall be restored pro tanto (Paragraph 11(f) revised NAB). ### Transferability, folding in bilateral agreements, and transitional provisions - Transferability enhancements: - Integrate a regime for pre-authorized transfers of loans and notes into the NAB Decision to allow transfers without prior Fund approval: - Transfers could be made to (a) other participants; and (b) non-participants that are: (i) members of the Fund; (ii) the central bank or other fiscal agency of a member; or (iii) official entities that are prescribed holders of SDRs. Transfers outside this group continue to require prior consent of the Fund (Paragraph 13 revised NAB). - Right to request early repayment in event transferee experiences a balance of payments need limited to members or institutions of members that at the time of transfer were included on the transfer side of the FTP (Paragraph 13(c) revised NAB). - Transferees of a claim in the form of a loan may request at time of transfer that the claim be exchanged for a NAB note, and claims in the form of a note may be exchanged for a loan claim; the exchanged claim shall be held on the same substantive terms (Paragraph 13(k) revised NAB). - Transfers and related mechanics preserved in GTC and paragraph 6: transferred Notes considered drawn balances of first transferor for purposes of available commitment; Notes obtained by transferee participant are not considered drawn balances for transferee. - Folding in existing bilateral loans and NPAs: - Participants will have the option to fold into the NAB their claims under bilateral loan and note purchase agreements entered into prior to effectiveness of the expanded NAB, including claims obtained through transfers. - Process for outstanding bilateral claims: - For outstanding claims under bilateral agreements (amounts already drawn), the Fund would repay, at participant request, the outstanding claim by making a special call under the NAB credit arrangement of the participant that made the request; this special call would not involve the activation period in Section II.D and maturity date of each claim arising from the special call would be the final maturity date of each outstanding drawing or note under the original bilateral loan or NPA (Paragraph 23 revised NAB). - Such a special call could not be made until the revised NAB is fully operational, as set out in Section III.B. - Once outstanding claims have been repaid through a special call, participants would have the option to terminate or reduce the remaining commitment under their bilateral agreement; this right unaffected by the size of the NAB credit arrangement. ### Relationship with the GAB, renewal timing, and entry into effect - GAB and NAB interaction: - NAB remains facility of first and principal recourse vis-à-vis the General Arrangements to Borrow (GAB). - Proposed modification: Managing Director could make a proposal for calls under the GAB in circumstances in which participants have not accepted a proposal for an activation period under the NAB (Paragraph 21(a) revised NAB). - No changes proposed to the GAB itself. - Renewal, period, and effectiveness sequencing: - Proposed amendment: current NAB period would expire on November 16, 2012 (rather than November 16, 2013). - As a result, the next NAB Renewal Decision would need to be adopted no later than November 15, 2011. - Amendment of the NAB requires an Executive Board decision (majority of votes cast) and concurrence of participants representing 85 percent of total credit arrangements. - Package approach to NAB reform — sequencing for adoption and effectiveness: - Amendments to the NAB Decision and the changes in credit arrangements of existing participants would be adopted in one Executive Board decision. - Amendments and changes would become effective when: - (i) existing participants representing 85 percent of current credit arrangements have concurred to the proposed amendments, and - (ii) existing participants representing 85 percent of current credit arrangements have agreed to the proposed increases in the credit arrangements of existing participants, including each participant whose credit arrangement is changed. - As credit arrangements of participants representing 96 percent of credit arrangements are being increased under the proposed decision, effectively the agreement of participants representing at least 96 percent of total current credit arrangements is required for the proposed changes in credit arrangements. - For new participants, the amended NAB Decision provides that no drawings may be made under the amended NAB until new participants representing 70 percent of the credit arrangements of new participants have adhered to the amended NAB (paragraph 24 revised NAB). - Therefore, for the expanded and more flexible NAB to become operational, new participants representing 70 percent of total credit arrangements will need to adhere. ### Key numeric thresholds, timing, and procedural figures (preserved exactly) - Total size of credit arrangements proposed: SDR 367.46736 billion (Total 367,467.36 as in Annex I). - Corresponding US dollar amount: US$588.565 billion (Total 588,565.13 in USD table). - Official US dollar—SDR exchange rate on November 24, 2009: 1.60168 USD = 1 SDR. - Minimum credit arrangement: SDR 340 million (minimum; USD equivalent cited as USD 544.57 million). - Activation period maximum length: 6 months. - RMP frequency: normally quarterly. - Notice presumptions for calls: at least five (participant) business days notice; two (participant) business days for detailed payment instructions; exceptional event minimum three business days. - Thresholds for approvals and amendments: - Concurrence/approval thresholds frequently require participants representing 85 percent of total credit arrangements. - Interest-rate higher-than-SDR consent threshold increased from 80 percent to 85 percent of total credit arrangements. - Changes to credit arrangements that affect participants require agreement including each participant whose credit arrangement is changed — effectively requiring consent of participants representing at least 96 percent of total credit arrangements in the proposed package. - No drawings until new participants representing at least 70 percent of the total credit arrangements of new participants have adhered. - Repayment standard timing: five years after a transfer in response to a call. - Decision period: Decision continues in existence until November 16, 2012 (paragraph 19(a)). - Effective entry condition (transitional): decision shall become effective when adhered to by members or institutions included in the Annex with credit arrangements amounting to not less than SDR 28.9 billion, including the five members or institutions with the largest credit arrangements (exact transitional figure cited in source: 28.9 billion). *Source: Executive Board Decision text and related sections as presented in _032510c.* ### 1. The IMFC agreed at its April 2009 meeting to incorporate immediate financing ### The IMFC agreed at its April 2009 meeting to incorporate immediate financing from members of US$250 billion into an expanded and more flexible New Arrangements to Borrow (NAB) increased by up to US$500 billion. ### Background and mandate - IMFC decisions: - Agreed at April 2009 meeting to incorporate immediate financing from members of US$250 billion into an expanded and more flexible New Arrangements to Borrow (NAB) increased by up to US$500 billion. - Recognized that an expanded NAB is an important backstop but not a substitute for a quota increase; urged a prompt start to the Fourteenth General Review of Quotas to be completed by January 2011. - At October 4, 2009 meeting, IMFC agreed that the renewed and expanded NAB would be reviewed in light of the outcome of the quota review. - Development process: - Proposal developed in consultation with current and potential NAB participants through meetings in April, July, and November 2009 in Washington, D.C., under the chairmanship of Japan. - Current and potential participants reached agreement on an expanded and more flexible NAB at their November 2009 meeting; a draft is being submitted to the Executive Board. ### Proposal summary - Key elements of the NAB reform proposal: - Amendment of the NAB Decision to allow adherence of new participants outside of a renewal decision and introduce other flexibilities. Amendment requires an Executive Board decision adopted by a majority of the votes cast and the concurrence of (current) participants representing 85 percent of total credit arrangements. - Increasing credit arrangements for existing participants requires an Executive Board decision and agreement of participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed. Because consent is required of all participants whose credit arrangements are changed, effectively the consent of participants representing at least 96 percent of total credit arrangements is required. - Adherence of new participants requires depositing an instrument of adherence setting forth that, in accordance with its law, the new participant has taken all steps necessary to enable it to carry out the terms and conditions of the NAB Decision. For new participants that are official institutions of a member, the member must consent to their adherence to the NAB (Article 1(a)(xii)). - Link proposed elements of NAB reform with respect to their effectiveness; model consent and adherence communications set out in Attachment II. ### Proposed modifications — Size of the NAB - Current NAB: - Provides for total credit arrangements of SDR 34 billion. - Size of individual credit arrangements based in principle on participants’ relative economic strength as reflected in quotas. - Credit arrangements are subject to a minimum of SDR 340 million. - Proposed modification: - Increase total size of credit arrangements to SDR 367.46736 billion. - Corresponding US dollar amount: US$588.565 billion, converted at the official US dollar–SDR exchange rate on November 24, 2009. - Retain current minimum size of credit arrangements at SDR 340 million. - The official US dollar—SDR exchange rate on November 24, 2009 was 1.60168 USD = 1 SDR. - Table 1 (in source) lists participant-level credit arrangements in Millions of Special Drawing Rights, yielding Total 367,467.36. - Table 2 (in source) lists participant-level credit arrangements in Millions of U.S. Dollars, yielding Total 588,565.13 and notes Credit arrangements are subject to a minimum of USD 544.57 million (SDR 340 million). ### Proposed modifications — Eligibility to participate - Current NAB: - Limits eligibility to members of the Fund, official institutions of members, and official institutions of non-members (Paragraph 1(a)(xi) through (xiii) current NAB). - Consideration and proposed modification: - Provision allowing institutions of non-members was carried over from the GAB and is now unnecessary given near-universal Fund membership. - Proposed to eliminate the possibility of institutions of non-members becoming NAB participants (delete Paragraphs 1(a)(xii), 2(b), 3(b), 7A(c) and 7B(b) current NAB). ### Proposed modifications — Purposes and uses for NAB resources - Current NAB: - Purpose: provide a backstop to the Fund’s quota-based financing mechanism; only used when supplementary resources to quota resources are required. - Different conditions for participants and non-participants for eligible transactions and activation circumstances: - For participants: NAB resources may be used for stand-by or extended arrangements or an exchange transaction when necessary to forestall or cope with an impairment of the international monetary system (Paragraph 6A current NAB). - For non-participants: NAB resources may be used to meet actual or expected requests for financing reflecting exceptional balance of payments situations that could threaten international monetary system stability; excludes financing for reserve tranche purchases or first credit tranche stand-by arrangements (Paragraph 6B current NAB). - Considerations for reform: - Need to allow NAB to finance any use of General Resource Account (GRA) resources by participants and non-participants alike, including Flexible Credit Line (FCL) arrangements. - Adopt a uniform definition of economic circumstances that allow activation of the NAB for GRA financing for participants and non-participants. - Proposed modifications: - Modify the Preamble to reflect explicitly that NAB resources will only be used when necessary to supplement quota resources (Preamble revised NAB). - Adopt a uniform standard for NAB activation: the need to supplement the Fund’s resources in order to forestall or cope with an impairment of the international monetary system (Preamble, Paragraph 5(a) revised NAB). - Allow NAB resources to be used for any type of GRA financing for all members (Paragraph 5(a) revised NAB). ### Proposed modifications — Activation of the NAB / Calls - Current NAB: - Activation involves a loan-by-loan process: Managing Director proposes calls after consultations specifying prospective drawer, amount, and period; proposal must be accepted by participants with an 80 percent majority of total credit arrangements of participants eligible to vote and then approved by the Executive Board (Paragraph 7A(i) current NAB). - Calls under individual participants’ credit arrangements are made in accordance with the proposal for calls (Paragraph 7B current NAB). - Considerations for reform: - Current loan-by-loan activation is complex and lengthy (example: took over three weeks in 1998). - Global financial system is subject to sudden liquidity freezes; need for substantial commitments at short notice to multiple members. - Proposal to permit a general activation for a defined period subject to a maximum level of commitments rather than the loan-by-loan mechanism. - Proposed activation framework (three steps): 1. Establishment of an activation period. 2. Approval of a Resource Mobilization Plan (RMP). 3. Calls on participants. - Details on Activation Period proposal: - Managing Director, after informal consultation with participants and Executive Directors, would propose activation where supplemental resources are needed to forestall or cope with an impairment of the international monetary system. - Proposals made only if the Fund’s capacity to make commitments from quota-based resources has been or is expected shortly to be substantially depleted, and there appears potential for ongoing demand for Fund resources. - Proposal for establishment of an activation period would specify: - (a) the period of activation, which may not exceed 6 months; and - (b) the maximum aggregate amount of calls under credit arrangements of participants for (i) commitments under arrangements approved during the activation period (including augmentations of existing arrangements), and (ii) outright purchases during the activation period (Paragraph 5(a) revised NAB). - Proposal supported by a memorandum from the Managing Director summarizing the need for temporary supplement and providing information, to be updated quarterly, on: - the size of the pipeline of possible Fund arrangements on which discussions are well advanced and the Managing Director’s assessment of the additional borrowing headroom needed; - a broad indication of expected balance between arrangements expected to be drawn upon and arrangements expected to be precautionary (including FCLs), and the mix of quota-based resources and NAB resources intended to be proposed in the RMP. - Information on identities of potential borrowers available to the Executive Board prior to activation could be obtained by NAB participants through their Executive Directors, consistent with early consultation arrangements under exceptional access and FCL procedures. - Managing Director would not be expected to propose establishment of an activation period if the Forward Commitment Capacity (on the basis of quota resources) is substantially larger than the identified pipeline plus the Managing Director’s assessment of additional borrowing headroom needed. - Approval of an activation period requires: - first approval by NAB participants with an 85 percent majority of total credit arrangements of participants eligible to vote, and - then a decision by the Executive Board by a majority of the votes cast (Paragraphs 5(b) and 5(d) revised NAB). - Participants not included in the Financial Transactions Plan (FTP) at the time of a vote to establish an activation period would not be eligible to vote on the proposal and their credit arrangements would not be taken into account for purposes of establishing the majority threshold for the proposal (Paragraph 5(c) revised NAB). *Source: _032510c - 1. The IMFC agreed at its April 2009 meeting to incorporate immediate financing (PDF chapter/section).* ### 20. With respect to the consequences of the establishment of an activation period, the ### _032510c - 20. With respect to the consequences of the establishment of an activation period, the ### Activation period — key consequences - Individual calls under credit arrangements approved during an activation period would only take place after—and in accordance with—the RMP approved by the Executive Board. (paragraph reference: see below) - All use of GRA resources by members under arrangements approved during an activation period could be funded with NAB resources (up to the aggregate limit approved for the particular activation period), even after the expiration of the activation period. - Example: if a one-year FCL arrangement is approved during the fifth month of a six-month activation period, calls could be made under the NAB in respect of that arrangement until the expiration of the arrangement. - Once an activation period with a maximum amount is established, any changes to either the period or the amount would require: - a new proposal by the Managing Director; and - both the approval of participants with the requisite majority for NAB activation (i.e., 85 percent of total credit arrangements of participants eligible to vote) and a decision by the Executive Board. ### Resource Mobilization Plan (RMP) — features and operation - Drawings under the NAB for financing outright purchases during the activation period or purchases under arrangements approved during an activation period would be subject to periodic—normally quarterly—RMPs that would be approved by the Executive Board (Paragraph 6(a) revised NAB). - The proposed RMP would be considered in parallel with the proposed FTP. - Occasional departures from a quarterly frequency of the RMP and FTP may be necessary for short extensions, but the Fund would return promptly to the quarterly cycle. - In approving the RMP with the FTP, the Executive Board would effectively approve the mix of quota and borrowed resources for the relevant quarter. - In the event of unexpected developments, the RMP and/or FTP might be amended, possibly at short notice, consistent with existing FTP practice. - The RMP would establish the maximum amount for calls under each credit arrangement during the plan period for each participant (Paragraph 6(a) revised NAB). - Subject to these limits, there would be no limitations on the pace at which drawings could be made on individual credit arrangements (e.g., no weekly or monthly limit on calls). - A participant not included in, or not proposed for inclusion in, the FTP for transfers because of its balance of payments and reserve position would also be excluded automatically from the RMP for the relevant period (Paragraph 6(b) revised NAB). - Following Board approval of the RMP, the Fund would immediately notify each participant of the maximum calls that the RMP specifies may be made under its credit arrangement during the period covered by the plan, as is currently done for FTP members. - The fact that commitments approved during the activation period may be funded with NAB resources does not mean the Fund would necessarily use NAB resources in practice; the Executive Board would decide at the time of RMP approval the extent to which NAB resources would actually supplement quota resources, depending on the Fund’s overall liquidity situation and borrowing policies. ### Calls — framework and notice procedures - During the period of the RMP, the Managing Director would have the authority to make calls on participants for purposes of funding purchases made by members, subject to: - the maximum limits established under the RMP (Paragraph 6(a) revised NAB); and - consistency with the Fund’s borrowing policies. - Notice presumptions aligned with FTP standard procedures: - Presumption: participants would receive at least five (participant) business days notice of the intention to make a call, followed by detailed payment instructions two (participant) business days prior to value date of actual call. - Exceptional event: if at least five (participant) business days notice is not possible, notification of intent to call would be made at least three business days in advance of the value date. - Calls on multiple NAB participants would minimize amounts requested from each participant; participants would not be expected to provide their entire commitment with less than five (participant) business days notice. - No call would be made on a participant included in a RMP if, at the time of the call, the member’s currency is not being used in transfers under the FTP because of the balance of payments and reserve position of the member (Paragraph 6(c) revised NAB). - The three-step activation procedures (activation period, RMP, and calls) are designed to provide increasingly specific notice to participants; where staff has advance notice of upcoming purchases, prompt informal consultations with participants would occur. ### Proportionality of drawings — current rule, considerations, and proposed modification - Current NAB: proposals for calls shall provide for calls proportional to the amount of each participant’s credit arrangement, subject to limited exceptions (Paragraph 7A(d) and (e) current NAB). Each call shall be in proportion to the amounts in the proposal unless otherwise provided (Paragraph 7B(a) current NAB). - Objective: maintain proportionality of drawings as a means of promoting fair burden sharing, while introducing carefully circumscribed operational flexibility. - Proposed approach: - When the RMP is approved, the maximum amounts of calls allocated to individual participants would normally be determined so available commitments (i.e., undrawn balances, see Paragraph 1(a)(iii) revised NAB) of participants are of equal proportion relative to their credit arrangements (assuming calls for the maximum authorized amount would be made under each credit arrangement) (Paragraph 6(a) revised NAB). - In implementing the plan for specific purchase transactions, the Managing Director would seek to allocate calls among participants with due regard to achieving available commitments of participants that are of equal proportion relative to their credit arrangements (Paragraph 6(c) revised NAB). - If at the end of the RMP period participants’ available commitments are not proportional, the Executive Board would seek to correct this imbalance when establishing the next RMP. - Implementation caveats and flexibility: - Deviations from normal proportionality may occur where a participant folds in outstanding claims under a bilateral credit arrangement (reducing its undrawn NAB commitment) or where a new participant adheres when others’ arrangements have been drawn; the Executive Board has flexibility to deviate when necessary (the rule uses “normally”). - Operational reasons permitting deviations include administrative inefficiency in drawing on all participants for small purchases, participant business closures on the purchase day, or domestic money market developments impeding mobilization. - Transfers of claims under credit arrangements do not affect the available commitment under the original credit arrangement; only payment on a transferred claim restores the amount that could be drawn (Paragraph 13(c) revised NAB). ### Interest rate — current practice and proposed changes - Current NAB: - Interest rate payable on outstanding credit under NAB credit arrangements is the SDR interest rate, or a higher rate as agreed between the Fund and participants representing 80 percent of total credit arrangements (Paragraph 9(a) current NAB). - If the method of calculating the SDR interest rate changes, the new rate would apply to outstanding indebtedness only if participants representing 80 percent of total credit arrangements agree; individual participants could retain the right to continue to receive interest calculated under the original method (Paragraph 9(b) current NAB). This creates interest rate risk exposure for the Fund. - Proposed modification: - Increase the required threshold for participants’ consent to an interest rate higher than the SDR interest rate from 80 percent to 85 percent of total credit arrangements (Paragraph 9(a) revised NAB). - Delete Paragraph 9(b) of the current NAB to eliminate Fund exposure to interest rate risk by removing the right of individual participants to retain the original method of SDR interest calculation. ### Repayment of NAB borrowing — principles and proposed allocation flexibility - Current NAB: - Claims under credit arrangements have a maximum maturity of five years (Paragraph 11(a), first sentence current NAB). - The Fund must repay participants prior to that maturity in accordance with the repurchase obligation schedule for purchases funded with NAB resources (Paragraph 11(a), second sentence current NAB). - The Fund may make early repayments in part or in full to one or several participants, in consultation with participants (Paragraph 11(b) current NAB). - Considerations: - Maintain principle that NAB participants should be repaid when the Fund is repaid under Fund credit funded from the NAB. - Provide the Fund flexibility to allocate repayments to achieve balanced creditor positions among participants, given potential imbalances from folding-in or non-proportional funding. - In stronger liquidity circumstances, there would be a strong presumption the Fund would exercise the option to make early repayments; this would be governed by a separate Fund policy. - Proposed modifications to allow allocation that balances participants’ creditor positions: - All repurchases of Fund credit financed with NAB resources (including through borrowing agreements folded into the NAB) will be used to repay NAB participants an equivalent amount (Paragraph 11(a), second sentence revised NAB). - Repayments to individual participants prior to the 5-year maturity date will be allocated with due regard to achieving available commitments of participants that are of equal proportion relative to their credit arrangements (Paragraph 11(d) revised NAB). - The Fund’s option to make early repayments beyond pass-through of repurchases would be retained; such early repayments would also be allocated with due regard to proportionality objectives (Paragraph 11(b) and (d) revised NAB). - Practicality caveat: because each purchase is normally repaid in eight equal installments, distributing each repurchase among all 39 participants may be impracticable for smaller repurchases; resulting deviations would be taken into account in allocating future repurchases funded with NAB resources, when approving and drawing under the next RMP, or when making repayments from quota resources, all with the objective of reducing differences. - The requirement for repayment of NAB participants on the same date as repurchases are made would be eliminated (Paragraph 11(a) revised NAB), allowing the Fund to bundle smaller repurchases during a quarterly period for repayment purposes. - Information on scheduled repayments of NAB resources and their allocation to participants would be included in the RMP and, in periods without an RMP, in the FTP for the relevant period; participants would be notified per Fund rules and practices for GRA repurchases. - To reduce the drawn balance of a participant that had transferred a claim arising from a call (loan claim or note), repayments would have to be made to the holder of that claim; payment to the transferee would restore pro tanto the amount that can be called under the credit arrangement of the participant under which the claim originally arose (Paragraph 11(f) revised NAB). ### Early repayment of participants in case of balance of payments need — current rule and considerations - Current NAB: the Managing Director may request participants to provide resources needed to finance an early repayment to another participant experiencing balance of payments difficulties; however, consent of participants is required as there is no obligation under the current NAB to provide resources in response to such a request (Paragraph 11(e) current NAB). - Considerations for reform: - Retaining the full and immediate encashability of participants’ claims under their credit arrangements in case of balance of payments need is critical for their treatment as reserve assets and for statistical reporting. - The Fund must maintain adequate liquidity to mitigate liquidity risks associated with encashment to sustain confidence in its capacity to meet commitments to borrowers. *Italicized source: IMF PDF chapter/section _032510c - 20. With respect to the consequences of the establishment of an activation period, the* ### 38. The size of individual credit arrangements under the expanded NAB are expected to ### _032510c - 38. The size of individual credit arrangements under the expanded NAB are expected to ### Encashability, size limits, and need for special calls - Individual credit arrangements under the expanded NAB may exceed US$100 billion, making it infeasible for the Fund to support full and immediate encashment solely from quota resources. - Need: automatic access to available credit commitments of participants to finance early repayments of NAB claims (notes and loans) so that necessary resources would be available should the need arise. - Consequence: some proportion of credit arrangements would need to be set aside to finance encashment; therefore the total volume of lending supportable by the NAB would be less than the size of the NAB. - Example: if 20 percent of NAB credit arrangements were set aside to ensure NAB encashability, then the use of NAB resources to support lending would be limited to 80 percent of the total size of the NAB. Proposed modification (preserve full and immediate repayment ability) - Retain the right to full and immediate encashability of claims (loan claims and notes) under credit arrangements of NAB participants experiencing balance of payments needs (Paragraph 11(e) revised NAB). - Require participants to provide resources, within the limits of their credit arrangements, necessary to finance early repayment to any participant experiencing a balance of payments need and requesting full or partial early repayment when the Fund’s holdings of currencies for such repayments are not wholly adequate (“special calls”). - Right to early encashment would be available to a transferee of a NAB claim (loan or note) if the transferee is a member or the institution of a member and if, at the time of the transfer, the relevant member was included in the FTP. - Activation procedure in Section II.D would not apply to these calls. - Special calls to finance encashment would be made on a proportional basis, consistent with the framework in Section II.E (Paragraph 7(a) revised NAB). - Special calls would not be made on a participant that, because of its balance of payments and reserve position, is not included in the FTP for transfers at the time the call is made. - No special calls would be made on a participant that has been included in the FTP if, at the time of the call, the member’s currency is not being used in transfers under the FTP because of the member’s balance of payments and reserve position (Paragraph 7(a) revised NAB). ### Currencies for early repayment of participants in case of balance of payments need Current NAB findings - Resources provided under the NAB to finance purchases must effectively be provided in freely usable currencies as a result of Article V, Section 3(e) of the Articles of Agreement; no such obligation currently applies to resources provided to finance early repayment of NAB borrowing. - Under the current NAB, early repayment to participants is to be made in the currencies of other members that are actually convertible (defined in the current NAB as currencies included in the Fund's quarterly operational budget, which is the Financial Transactions Plan in today’s terminology) for transfers (Paragraph 1(a)(vii) current NAB), which may or may not be freely usable currencies (Paragraph 11(e) current NAB). - Participants providing resources to fund early repayment are under no obligation to convert balances of their currency (if not freely usable) into a freely usable currency; participants seeking early repayment may therefore not obtain the freely usable currencies they may need. Considerations for reform - Desirable that a participant experiencing balance of payments difficulties receive early repayment of NAB claims in freely usable currencies, as with NAB resources used to fund purchases by members with balance of payments need from the GRA. - Because Article V, Section 3(e) conversion provisions do not apply to balances drawn to fund early encashment, an obligation to convert such balances into freely usable currencies would need to be established under the NAB Decision. Proposed modification - For calls to finance encashment, introduce a regime similar to Article V, Section 3(e): - At the request of the participant requesting early repayments, participants being called and whose currency is not a freely usable currency would be obliged to convert their currency into a freely usable currency of their choice. - A participant being called whose currency is a freely usable currency would be required to collaborate with the Fund and other members to enable exchange of its currency into another freely usable currency at the request of the participant requesting early repayment; such exchanges would not be mandated by the decision. - If repayment is made from quota resources, repayment will be made in a freely usable currency unless, with the agreement of the participant, repayment is made in another currency that is actually convertible (Paragraph 11(e), fourth sentence revised NAB). - Operational practice: procedures currently in place with FTP members regarding currency conversion for GRA purchases would also be followed for drawings to finance early repayment of NAB borrowing. ### Admitting new participants and changing the size of credit commitments Current NAB - New participants can only be admitted at the time of renewal of the NAB Decision; admission at renewal requires a Board decision and agreement of participants representing 80 percent of total credit arrangements (Paragraph 3(b) current NAB). - Admission of a new participant other than at renewal requires an amendment of the NAB Decision: a Board decision and concurrence of participants representing 85 percent of total credit arrangements. An amendment is cumbersome and can involve legislative approvals and other domestic authorization procedures (Paragraph 3(b) current NAB). - An increase in the size of total credit arrangements at the time of admission of a new participant (which cannot exceed the amount of the new participant’s credit agreement) requires support of participants representing 85 percent of total credit arrangements (Paragraph 5(a) current NAB). - Individual participants’ credit arrangements can be changed at any time but require a Fund decision and agreement of participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed (Paragraph 5(b) current NAB); this latter provision can only be amended with agreement of all participants. Proposed modification - New participants may be admitted at any time with the agreement of the Fund and participants representing 85 percent of total credit arrangements (Paragraph 3(b) revised NAB), eliminating the need for an amendment of the NAB Decision for adherence outside renewal. - No change proposed to provision relating to increases in the size of total NAB credit arrangements upon adherence of a new participant by up to the size of the new participant’s credit arrangement (Paragraph 4(a) revised NAB). - No change proposed to provision relating to changes in the size of individual credit arrangements in light of developing circumstances (Paragraph 4(b) revised NAB). ### Nature and evidence of indebtedness (loans and notes) Current NAB - Resources made available under the current NAB are provided in the form of loans. - At the request of a participant, the Fund issues certificates evidencing the Fund’s indebtedness to the participant in the form of non-negotiable instruments (Paragraph 8 current NAB). Considerations for reform - Proposal to broaden instruments through which participants can provide credit to increase attractiveness of NAB participation: allow option to extend credit as loans or by purchasing promissory notes. - Whether resources are provided through notes or loans would have no effect on rights and obligations as participants under the NAB; identical substantive terms would apply to both notes and loans and would not affect how the Fund uses obtained resources. Proposed modification - Resources under the NAB could be either in the form of loans or notes. - Key substantive terms of notes (maturity, interest rate, media of payment, or exchange rates) would be identical to those of loans. - General Terms and Conditions (GTC) for NAB Notes reflecting these terms would be attached to the NAB Decision. - Any changes to the GTC would require a decision by the Fund and agreement of participants representing 85 percent of total credit arrangements; the amended GTC would apply to all outstanding notes issued under the NAB Decision. ### Transferability of NAB claims Current NAB - NAB Decision provides for transferability of claims to repayment under credit arrangements with prior consent of the Fund, on terms the Fund may approve. - Separate Executive Board decision consented in advance to transfer of claims under the NAB to other NAB participants. Considerations for reform - Proposal to align transferability provisions under the NAB with those applicable to notes (based on borrowing agreement with Japan and other bilateral borrowing agreements and the NPA framework) to make liquidity of claims similar to notes and to strengthen incentives to fold NPAs into the NAB. - This alignment would allow transfer of claims to members that are not participants and to certain official entities under a regime for pre-authorized transfers as part of the NAB Decision. - To manage liquidity risks associated with encashment, transferee would have right to request early repayment only if transferee is a member (or institution of a member) that was included in the FTP at the time of transfer. - Expansion of transferability does not affect rights and obligations of NAB participants or available credit commitment of a participant under the NAB. Proposed modification - Integrate a regime for pre-authorized transfers of loans and notes into the NAB Decision to allow transfers without prior Fund approval: - Transfers could be made to: (a) other participants; and (b) non-participants that are: (i) members of the Fund; (ii) the central bank or other fiscal agency of a member; or (iii) official entities that are prescribed holders of SDRs. Transfers outside this group would continue to require prior consent of the Fund (Paragraph 13 revised NAB). - Right to request early repayment in event transferee experiences a balance of payments need limited to members or institutions of members that at the time of transfer were considered to have balance of payments and reserve positions sufficiently strong to have been included on the transfer side of the FTP (Paragraph 13(c) revised NAB). - Transferees of a claim in the form of a loan may request at the time of transfer that the claim be exchanged for a NAB note, and claims in the form of a note may be exchanged for a loan claim; the exchanged claim shall be held on the same substantive terms as the transferred claim regarding amount, maturity, interest rate and right to early encashment (Paragraph 13(k) revised NAB). ### Folding in existing agreements (bilateral loans and NPAs) Considerations - Consolidating bilateral loan agreements and NPAs into a single multilateral NAB framework would provide a predictable and uniform backstop to the Fund’s quota resources and facilitate encashment of claims without limits adopted under bilateral loan and NPA frameworks through use of unutilized credit arrangements. Proposed approach - Participants will have the option to fold into the NAB their claims under bilateral loan and note purchase agreements entered into prior to effectiveness of the expanded NAB; this applies to claims arising from agreements entered into by participants and those obtained through transfers. - Process: - For outstanding claims under bilateral agreements (amounts already drawn), the Fund would repay, at participant request, the outstanding claim by making a special call under the NAB credit arrangement of the participant that made the request. This special call would not involve the activation period in Section II.D. The maturity date of each claim arising from the special call would be the final maturity date of each outstanding drawing or note under the original bilateral loan or NPA. All other NAB terms and conditions would apply (Paragraph 23 revised NAB). Such a special call could not be made until the revised NAB is fully operational, as set out in Section III.B. - Once outstanding claims under bilateral agreements have been repaid through a special call under Paragraph 23 of the revised NAB, participants would have the option to terminate or reduce the remaining commitment under their bilateral agreement. This right would not be affected by the size of the credit arrangement established in the NAB in relation to the size of the bilateral agreement. ### Relationship between the NAB and the GAB Current NAB - NAB is specified as the first and principal recourse vis-à-vis the GAB when the Fund needs to supplement resources. - The Fund can make calls under the GAB in only two circumstances: - In the event of a request for a drawing on the Fund by a participating member, or a member whose institution is a participant, in both the NAB and the GAB, a proposal for calls may be made under either agreement. - If a proposal for a call under the NAB is not accepted by participants (Paragraph 21(a) current NAB). - Outstanding drawings and commitments under the NAB and GAB may not exceed SDR 34 billion, or such other amount of total credit arrangements as may be in effect in accordance with the NAB Decision. - The available commitment of a participant under the NAB is reduced pro tanto by any outstanding drawings under the GAB (Paragraph 21(b) current NAB). *Source: _032510c - 38. The size of individual credit arrangements under the expanded NAB are expected to* ### 60. Under the proposals discussed above, the NAB would be modified to allow for a ### _032510c - 60. Under the proposals discussed above, the NAB would be modified to allow for a ### Proposed modification to GAB calls and NAB activation - Modify the NAB to allow for a general activation for a defined period, instead of the current loan-by-loan activation (Section II.D). - Conforming modification needed for circumstances in which the Fund could make calls on the GAB to preserve the GAB’s role as a backstop to the NAB. - Proposed specific changes (Paragraph 21(a) revised NAB): - The Managing Director could make a proposal for calls under the GAB in circumstances in which participants have not accepted a proposal by the Managing Director for an activation period under the NAB. - Such proposals would be made in accordance with the provisions of the GAB Decision. - No changes proposed to other aspects of the relationship between the NAB and the GAB. - No changes proposed to the GAB itself. ### NAB as a standing backstop, size, and renewal timing - Rationale: - Maintain the NAB as a standing backstop for the Fund’s financing mechanism. - The current crisis has demonstrated financing needs can build rapidly and strain the Fund’s ability to finance lending using quota resources alone. - A standing borrowing arrangement provides a backstop for quota-based resources, including if a participant were to call on its reserve tranche position or request use of Fund resources. - Considerations for NAB size: - The appropriate size of the NAB will be considered in light of the outcome of the Fourteenth General Review of Quotas at the time of the next NAB renewal. - Experience with operation of the NAB (including procedures for activation) would be reviewed. - Timing changes (Paragraph 19(a) and 19(b) revised NAB): - Proposed amendment: current NAB period would expire on November 16, 2012 (rather than November 16, 2013). - As a result, the next NAB Renewal Decision would need to be adopted no later than November 15, 2011. ### Use of quota resources to repay NAB borrowing - Post-Fourteenth General Review issue for the Executive Board: - Whether it would be appropriate to use some part of the increased quota resources to retire borrowing from the NAB in full or in part. - Principle: - Once the Fund’s liquidity has strengthened, alleviating the need to replenish the Fund’s holdings of currencies, it would be appropriate to use quota resources to make early repayments on the Fund’s borrowings. - Decision context: - To be considered by the Executive Board in the context of the size of quotas following the Fourteenth General Review, developments in Fund liquidity, and prospective demand for Fund resources. ### Entry into effect, amendments, and adherence - Amendment requirements (consistent with Paragraph 15 of the current NAB): - Amendment of the NAB requires a decision of the Executive Board (adopted by a majority of votes cast) and the concurrence of participants representing 85 percent of total credit arrangements. - Because it is no longer proposed to modify any protected provision in the Decision, the proposed amendments do not require the agreement of all (current) NAB participants. - Changes in credit arrangements of existing participants: - Require an Executive Board decision and the agreement of participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed (Paragraph 5(b) current NAB). - Adherence of new participants: - Requires a formal notification of adherence to the revised NAB. - For new participants that are official institutions of a member, the member has to consent to their adherence to the NAB (Article 1(a)(xii)). - Package approach to NAB reform — linkage of three reform elements: - Elements: (i) amendments to make NAB more flexible; (ii) increases in credit arrangements of existing participants; (iii) adherence of new participants. - Adoption and effectiveness sequencing: - The amendments to the NAB Decision (including amendment to admit new participants outside of a renewal decision) and the changes in the credit arrangements of existing participants would be adopted in one Executive Board decision. - The amendments to the NAB Decision and the changes in credit arrangements would become effective when: - (i) existing participants representing 85 percent of current credit arrangements have concurred to the proposed amendments, and - (ii) existing participants representing 85 percent of current credit arrangements have agreed to the proposed increases in the credit arrangements of existing participants, including each participant whose credit arrangement is changed. - As credit arrangements of participants representing 96 percent of credit arrangements are being increased under the proposed decision, effectively the agreement of participants representing at least 96 percent of total current credit arrangements is required for the proposed changes in credit arrangements. - For new participants, the amended NAB Decision provides that no drawings may be made under the amended NAB until new participants representing 70 percent of the credit arrangements of new participants have adhered to the amended NAB (paragraph 24 revised NAB). - Therefore, for the expanded and more flexible NAB to become operational, new participants representing 70 percent of total credit arrangements will need to adhere. ### Proposed Executive Board decision - Proposed actions for adoption by a majority of the votes cast: 1. Decision No. 11428-(97/6), adopted January 27, 1997 on the New Arrangements to Borrow, as amended (the “NAB Decision”), shall be further amended to read as set out in Attachment I to SM/10/71, March 25, 2010 (“Attachment I”). 2. The credit arrangements of current NAB participants shall be changed as set out in Annex 1 of Attachment I. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_032510c.pdf* ### 3. The amendments to the NAB Decision and the changes in credit arrangements of ### 3. The amendments to the NAB Decision and the changes in credit arrangements of ### Definitions and scope - "amount of a credit arrangement" — maximum amount expressed in special drawing rights that a participant undertakes to make available to the Fund under a credit arrangement. - Key defined terms include: Articles, available commitment, borrowed currency, call, credit arrangement, currency actually convertible, drawer, indebtedness of the Fund, member, participant, participating institution, participating member. - Special provision for the Monetary Authority of Hong Kong (the "HKMA") specifying currency of loans/payments, applicability of balance of payments/reserve position references, voting and call eligibility, and right to request early repayment under paragraph 13(c). ### Credit arrangements, adherence, and changes - A member or institution adheres by depositing an instrument; participant status effective on deposit date or on the effective date of the amendments in Executive Board Decision No. 14577-(10/35), adopted on April 12, 2010, whichever is later. - New participants may adhere subject to agreement of participants representing 85 percent of total credit arrangements (paragraph 3(b)). - Admission of a new participant leads to a proportional reduction in credit arrangements of existing participants whose arrangements exceed the smallest participant, in aggregate equal to the new participant’s credit arrangement less any authorized increase under paragraph 4(a); no credit arrangement shall be reduced below the minimum amount set out in Annex I. - Total amount of credit arrangements may be increased with agreement of participants representing 85 percent of total credit arrangements; increase shall not exceed the amount of the new participant’s credit arrangement (paragraph 4(a)). - Review and change of individual participants’ credit arrangements require agreement of the Fund and participants representing 85 percent of total credit arrangements, including each participant whose arrangement is changed (paragraph 4(b)). This provision may be amended only with consent of all participants (paragraph 15(a)). ### Activation, voting thresholds, and timing - Managing Director may propose establishment of an activation period when Fund resources need supplementation to forestall or cope with impairment of the international monetary system; proposal follows consultations with Executive Directors and participants (paragraph 5(a)). - An activation period permits (i) commitments under Fund arrangements that may trigger calls on participants, and (ii) funding of outright purchases by making calls; an activation period shall not exceed 6 months (paragraph 5(a)). - Proposal for activation must specify: overall size of possible Fund arrangements, balance between expected drawn and precautionary arrangements, additional financing needs that may arise during the activation period, and mix of quota and NAB resources for purchases; information updated quarterly during activation period (paragraph 5(a)). - If participants are not unanimous, acceptance of an activation proposal is decided by poll; favorable decision requires an 85 percent majority of total credit arrangements of participants eligible to vote (paragraph 5(b)). - A participant is ineligible to vote on activation if, based on present and prospective balance of payments and reserve position, the member is not included in the financial transactions plan for transfers of its currency at the time of the decision (paragraph 5(c)). - An activation period becomes effective only if accepted by participants pursuant to paragraph 5(b) and approved by the Executive Board (paragraph 5(d)). ### Resource mobilization plans and calls - Calls to fund outright purchases and commitments during an activation period are made on the basis of resource mobilization plans approved by the Executive Board normally on a quarterly basis in conjunction with the quarterly financial transactions plan (paragraph 6(a)). - Resource mobilization plans specify for each participant the maximum amount for which calls may be made during the applicable period; Executive Board may amend such plans at any time (paragraph 6(a)). - Allocation in resource mobilization plans shall normally establish an allocation that would result in available commitments of participants being of equal proportion relative to their credit arrangements (paragraph 6(a)). - A participant shall not be included in the resource mobilization plan if, based on present and prospective balance of payments and reserve position, the member is not included and is not being proposed to be included in the list of countries in the quarterly financial transactions plan for transfers of its currency (paragraph 6(b)). - Calls during a resource mobilization plan period are made by the Managing Director with due regard to achieving available commitments of participants that are of equal proportion relative to their credit arrangements; no call shall be made on a participant whose currency is not being used in transfers under the financial transactions plan at the time of such call (paragraph 6(c)). - Calls under paragraphs 11(e) and 23 may be made at any time and are not subject to procedures in paragraphs 5 or 6 (paragraphs 7(a), 7(b)); participants must promptly transfer in accordance with such calls (paragraphs 6(d), 7(c)). ### Notes, indebtedness, interest, and repayment - Participant’s claim arising from calls is in the form of a loan; at participant request the Fund shall issue Notes (promissory notes) up to the amount of any call, subject to General Terms and Conditions for NAB Notes (Annex II) (paragraph 8(a)). - GTC may be amended by Fund decision with agreement of participants representing 85 percent of total credit arrangements; amendments apply upon effectiveness to all outstanding Notes (paragraph 8(a)). - Fund issues instruments evidencing indebtedness at participant request; instruments returned on repayment and cancelled or substituted as applicable (paragraph 8(b)-(c)). - Interest rate: equal to the combined market interest rate computed by the Fund for determining the rate at which it pays interest on holdings of special drawing rights, or any higher rate agreed between the Fund and participants representing 85 percent of total credit arrangements (paragraph 9(a)). - Interest accrues daily and is paid as soon as possible after each July 31, October 31, January 31, and April 30 (paragraph 9(b)). - Interest may be paid in special drawing rights, participant’s currency, currency borrowed, freely usable currencies, or with agreement, other currencies that are actually convertible (paragraph 9(c)). - Repayment by the Fund: generally five years after a transfer in response to a call; if a drawer repurchases earlier, Fund shall repay participants an equivalent amount during the quarterly period in which repurchase is made (paragraph 11(a)). - Repayments may be in currency borrowed whenever feasible, in participant’s currency, in special drawing rights (subject to Article XIX, Section 4 limit unless participant agrees), in freely usable currencies, or with agreement in other actually convertible currencies (paragraph 11(a)-(b)). - Repayments shall be allocated among participants with due regard to achieving available commitments that are of equal proportion relative to their credit arrangements; repayments applied first to the longest outstanding claim under each participant’s credit arrangement (paragraph 11(d)). - Participant may request early repayment on balance of payments grounds; Fund shall give the overwhelming benefit of any doubt to the participant’s representation and repay promptly after consultation, in freely usable currencies or in special drawing rights, or with agreement in other actually convertible currencies (paragraph 11(e)). - When repayment is made on a claim from a call, the available commitment under the participant’s credit arrangement is restored pro tanto (paragraph 11(f)). ### Transferability, restrictions, and prohibitions - Claims to repayment under a credit arrangement are transferable only in accordance with paragraph 13 or with prior consent of the Fund (paragraph 13(a)). - Transfers may be made to a participant or to non-participants that are (i) members, (ii) central bank or other fiscal agency designated by any member, or (iii) an official entity prescribed as a holder of special drawing rights (paragraph 13(b)). - Transferee rights vary by status: right to request early repayment under paragraph 11(e) applies to transferee only if transferee’s balance of payments and reserve position at time of transfer makes its currency usable in transfers under Fund’s financial transactions plan; special treatment for HKMA (paragraph 13(c)). - Price for transfer agreed between transferee and transferor; transfer registered by Fund and effective as of agreed value date (paragraphs 13(d)-(f)). - Derivative transactions in respect of any claim and transfer of participation interests in any claim are prohibited (paragraph 13(l)). ### Rates of exchange, interpretation, and relationship with other borrowing arrangements - Value of any transfer calculated as of date of dispatch of transfer instructions; calculation in terms of special drawing right in accordance with Article XIX, Section 7(a) (paragraph 12(a)). - For all purposes of decision, value of a currency in terms of SDR calculated in accordance with Rule O-2 of Fund’s Rules and Regulations (paragraph 12(b)). - New Arrangements to Borrow (NAB) are facility of first and principal recourse relative to the General Arrangements to Borrow (paragraph 21(a)). - Outstanding drawings and available commitments under NAB and General Arrangements to Borrow shall not exceed SDR 367,467.36 million, or such other amount as may be in effect under this decision (paragraph 21(b)). ### Period, renewal, amendments, withdrawal, and suspension - Decision continues in existence until November 16, 2012 (paragraph 19(a)). - In considering renewal, Fund and participants shall review functioning, including experience with activation procedures and impact of the Fourteenth General Review of Quotas on overall size of quotas (paragraph 19(a)). - Fund shall adopt decision on renewal and modification, if any, not later than twelve months before end of period in paragraph 19(a); any participant may advise Fund not less than six months before end of period that it will withdraw adherence to the decision as renewed; absence of such notice deemed continued adherence (paragraph 19(b)). - Amendment of decision during prescribed period and any renewal periods requires decision of Fund and concurrence of participants representing 85 percent of total credit arrangements, except as provided in paragraphs 4(b), 15(b) and 16 (paragraph 15(a)). - Participant may withdraw adherence in accordance with paragraph 19(b); may not withdraw within the period prescribed in paragraph 19(a) except with agreement of Fund and all participants (paragraph 16). - Right of Fund to make calls under paragraphs 6, 11(e), and 23 and obligation to make repayments under paragraph 11 suspended during any suspension of exchange transactions under Article XXVII (paragraph 18(a)). - In event of liquidation, credit arrangements cease and Fund’s indebtedness constitutes liabilities under Schedule K; currency order of payment specified (paragraph 18(b)). ### Transitional and special provisions - Transitional arrangements (paragraph 23): at request of participant holding claims under bilateral borrowing agreements prior to amendments in Decision No. 14577-(10/35) (adopted April 12, 2010), Managing Director shall make calls under that participant’s credit arrangement to fund repayment of such claims; maturity date of claims under credit arrangements arising from such calls shall be the maturity date of the bilateral borrowing agreement claim. - No drawings until participants representing at least 70 percent of total credit arrangements of new participants listed in Annex I have adhered (paragraph 24). ### Key numeric thresholds and schedules (preserved exactly) - Activation acceptance and many amendment/change decisions require concurrence or majority of participants representing 85 percent of total credit arrangements. - Resource mobilization plans typically approved on a quarterly basis. - Activation period shall not exceed 6 months. - Interest accrues daily and paid as soon as possible after each July 31, October 31, January 31, and April 30. - Standard repayment timing: five years after a transfer in response to a call. - Outstanding drawings and available commitments under NAB and General Arrangements to Borrow shall not exceed SDR 367,467.36 million. - No drawings until participants representing at least 70 percent of the total credit arrangements of new participants listed in Annex I have adhered. - Minimum credit arrangement: SDR 340 million (footnote 1). ### Annex I — Participants and amounts of credit arrangements (in Millions of Special Drawing Rights) - Current Participants (Current Credit Arrangements / New Credit Arrangements where shown): - Australia 801.29 4,370.41 - Austria 407.57 3,579.24 - Banco Central de Chile 340.00 1,360.00 - Belgium 956.60 7,861.85 - Canada 1,380.99 7,624.43 - Danmarks Nationalbank 367.01 3,207.78 - Deutsche Bundesbank 3,518.75 25,370.81 - Finland 340.00 2,231.76 - France 2,549.29 18,657.38 - Hong Kong Monetary Authority 340.00 340.00 - Italy 1,752.95 13,578.03 - Japan 3,518.75 65,953.20 - Korea 340.00 6,583.44 - Kuwait 341.29 341.29 - Luxembourg 340.00 970.59 - Malaysia 340.00 340.00 - Netherlands 1,301.85 9,043.72 - Norway 378.88 3,870.94 - Saudi Arabia 1,760.86 11,126.03 - Singapore 340.00 1,276.52 - Spain 664.77 6,702.18 - Sveriges Riksbank 849.76 4,439.74 - Swiss National Bank 1,540.26 10,905.42 - Thailand 340.00 340.00 - United Kingdom 2,549.29 18,657.38 - United States 6,639.83 69,074.27 - New Participants (New Credit Arrangements listed): - Bank of Israel 500.00 - Brazil 8,740.82 - China 31,217.22 - Cyprus 340.00 - Greece 1,654.51 - India 8,740.82 - Ireland 1,885.52 - Mexico 4,994.76 - New Zealand 624.34 - Philippines 340.00 - Portugal 1,542.13 - Russian Federation 8,740.82 - South Africa 340.00 - Total 367,467.36 ### Annex II — General Terms and Conditions for Notes (selected procedural and financial points) - Notes issued at participant request up to amount of Fund’s call; Notes denominated in the special drawing right (Paragraphs 1–2). - Notes issued in book entry form; Fund maintains book entry account recording number, issue date, principal amount, maturity date; registered Notes may be issued at holder request (Paragraph 2). - Interest rate: combined market interest rate computed by the Fund for SDR holdings or higher rate agreed by participants representing 85 percent of total credit arrangements; interest accrues daily and paid as soon as possible after each July 31, October 31, January 31, and April 30 (Paragraph 3). - Notes have a maturity of five years except where a Note issued pursuant to paragraph 13(k) has the maturity of the loan claim for which it was exchanged (Paragraph 4(a)). - Transferability of Notes limited to participants or certain non-participants (members, central banks/other fiscal agencies, official SDR holders); transfers subject to terms mirroring rules for credit arrangement claims; transferee conditions for early repayment rights parallel those for claims (Paragraph 6). *Source: Executive Board Decision text and Annexes as presented in the supplied NAB Decision extract.* ### references in paragraph 11 of the NAB Decision to the participant’s currency shall be ### _032510c - references in paragraph 11 of the NAB Decision to the participant’s currency shall be ### Transfers of Notes (paragraph 6; excerpts) - References in paragraph 11 of the NAB Decision to the participant’s currency shall be deemed to refer: - (A) if the transferee is a member, to the transferee’s currency, - (B) if the transferee is an institution of a member, to the currency of that member, and - (C) in other cases, to a freely usable currency as determined by the Fund; - Notes transferred in accordance with this paragraph 6 shall be considered drawn balances of the first transferor participant for purposes of determining the available commitment under its credit arrangement. - Notes obtained by a transferee participant shall not be considered drawn balances of such participant for purposes of determining the available commitment under its credit arrangement. - The price for the Note transferred shall be as agreed between the transferee and the transferor. - Transferor obligations: - The transferor of a Note shall inform the Fund promptly of: - the Note that is being transferred, - the name of the transferee, - the amount of the Note that is being transferred, - the agreed price for transfer of the Note, and - the value date of the transfer. - Registration and effectiveness: - The transfer shall be registered by the Fund and the transferee shall become the holder of the Note only if such transfer is in accordance with the terms and conditions of the NAB Decision and these General Terms and Conditions. - Upon registration, the transfer shall be effective as of the value date agreed between the transferee and the transferor. - Optional exchange on transfer: - The transferee of a Note may request at the time of transfer that the Note be exchanged by the Fund for a loan claim pursuant to paragraph 13(k) of the NAB Decision to be held by the transferee on the same substantive terms as the transferred Note. - Notice provisions for non-participant transferees: - Notice to or by a transferee that is a non-participant shall be in writing or by rapid means of communication and shall be given to or by: - the fiscal agency designated by the transferee in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund if the transferee is a member, or - the transferee itself if the transferee is not a member. - Interest on transferred Notes: - If all or part of a Note is transferred during a quarterly period as described in paragraph 3(b) of these General Terms and Conditions, the Fund shall pay interest to the transferee holder on the relevant interest payment date on the amount of the Note transferred for the whole of that period. - Fund assistance: - If requested, the Fund shall assist in seeking to arrange transfers. - Cancellation and reissuance: - For all transfers under this paragraph 6, the Fund will cancel the Note that has been transferred in whole or in part. - If the Note is a registered Note, the transferor shall, as a condition for the transfer, surrender for cancellation any such registered Note that is not already in the custody of the Fund. - Upon cancellation of the relevant Note, the Fund will issue a new Note in the name of the transferee for the principal amount transferred and, where appropriate, a new Note in the name of the transferor for any part of the principal amount retained by it. - The issue date of each new Note will be the issue date of the cancelled Note, and the new Note will have the same maturity date (including any maturity date resulting from extensions of a previous maturity date) that is applicable to the cancelled Note. - The form and delivery of each new Note will be as specified in paragraph 2 of these General Terms and Conditions. - Prohibitions: - Derivative transactions in respect of any Note, and transfers of participation interests in any Note, are prohibited. ### Notices (paragraph 7) - Notice to or by a holder who is a participating member: - Shall be in writing or by rapid means of communication and shall be given to or by the fiscal agency of the participating member designated in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund. - Notice to or by a holder who is a participating institution: - Shall be in writing or by rapid means of communication and shall be given to or by the participating institution. ### Interpretation (paragraph 8) - Any question of interpretation raised in connection with any Note which does not fall within the purview of Article XXIX of the Articles shall be settled to the mutual satisfaction of: - the Fund, - the holder raising the question, and - all participants in the NAB. - For the purpose of this paragraph 8, "holder" shall be deemed to include those former participants in the NAB to which paragraphs 8 through 14, 17 and 18(b) of the NAB Decision continue to apply pursuant to paragraph 19(c) of the NAB Decision to the extent that any such former participant is affected by a question of interpretation that is raised. ### NAB Decision and Changes in the General Terms and Conditions (paragraph 9) - Notes subject to these General Terms and Conditions, and any claims thereunder or with respect thereto, are subject to the terms and conditions of the NAB Decision as in effect from time to time. - Any amendments to these General Terms and Conditions adopted in accordance with paragraph 8(a) of the NAB Decision shall apply to all outstanding Notes issued under the NAB Decision. ### Form of Registered NAB Note (model text; excerpts) - Header fields include Number, SDR amount, Issue Date, Maturity Date. - The Fund promises to pay the registered holder an amount equivalent to a stated Special Drawing Rights sum on the maturity date and to pay interest as set forth. - The Note is issued in accordance with the New Arrangements to Borrow (the “NAB”) and the General Terms and Conditions for Notes Issued by the International Monetary Fund under the New Arrangements to Borrow (the “General Terms and Conditions”). - Holders are deemed to have agreed to the General Terms and Conditions and relevant terms of the NAB, including without limitation: - the maturity date, - the interest rate, - the terms and conditions of early payment at the request of the Fund or the holder, and - the terms and conditions of transfer of this Note or any part thereof. - Restriction on transfer: - 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, - (II) THE CENTRAL BANK OR OTHER 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) AN ENTITY IN RESPECT OF WHICH THE FUND HAS CONSENTED IN WRITING TO THE TRANSFER PURSUANT TO PARAGRAPH 6(A) OF THE GENERAL TERMS AND CONDITIONS. - Prohibition reiterated: - ANY DERIVATIVE TRANSACTIONS IN RESPECT OF THIS NOTE, AND TRANSFERS OF PARTICIPATION INTERESTS IN THIS NOTE, ARE PROHIBITED. - Interest provisions: - The Fund shall pay interest on this Note at a rate equal to the combined market interest rate computed by the Fund from time to time for the purpose of determining the rate at which it pays interest on holdings of special drawing rights or any such higher rate as may be agreed between the Fund and participants representing 85 percent of the total credit arrangements under the NAB. - Interest shall accrue daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest due to a holder shall be paid, as determined by the Fund in consultation with the holder, in special drawing rights, in the holder’s currency if the holder is a member, in the currency borrowed, or in other currencies that are actually convertible. ### Model Communications (selected templates) - Consent Letter - Existing participants: - Template informs the Managing Director/Secretary that [Participant], as a participant to the NAB, consents to the amendments of the NAB Decision and the increases of credit arrangements of participants as approved by the Executive Board on April, 12 2010 (Executive Board Decision No. 14577-(10/35)). - Instrument of Adherence: New Participant – Member: - Template notifies deposit by [member] of adherence to Decision No. 11428-(97/6) as amended by Decision No. 14577-(10/35), adopted on April 12, 2010, and that [member] has taken all steps necessary to enable it to carry out the terms and conditions of that Decision. - Instrument of Adherence: New Participant – Institution: - Analogous template for institutions adhering to Decision No. 11428-(97/6) as amended by Decision No. 14577-(10/35). - Communication of Consent by Member Regarding New Participating Institution: - Template by which a member notifies the Fund that the member consents to the participation of an official institution in the NAB under Decision No. 11428-(97/6) as amended by Decision No. 14577-(10/35). ### Preamble, Definitions, and Key procedural paragraphs (selected provisions) - Preamble: - States purpose: enable the Fund to fulfill more effectively its role in the international monetary system by having countries with financial capacity make available provide resources to the Fund in the form of loans up to specified amounts in accordance with the terms and conditions of this decision. - Notes that credit arrangements shall only be drawn upon when supplementaryquota resources are neededneed to be supplemented. - Adopts terms and conditions under Article VII, Section 1(i) of the Fund’s Articles of Agreement. - Selected definitions (paragraph 1): - “amount of a credit arrangement” means the maximum amount expressed in special drawing rights that a participant undertakes to lend make available to the Fund under a credit arrangement; - “available commitment” means a participant’s credit arrangement less any committed or drawn and outstanding balances; - “borrowed currency” or “currency borrowed” means currency transferred to the Fund’s account under a credit arrangement; - “call” means a notice by the Fund to a participant to make a transfer under its credit arrangement to the Fund’s account; - “credit arrangement” means an undertaking to lend provide resources to the Fund on the terms and conditions of this decision; - “currency actually convertible” means currency included in the Fund’s quarterly operational budget financial transactions plan for transfers; - “drawer” means a member that purchases borrowed currency from the Fund in an exchange transaction, including an exchange transaction under a standby or extended arrangement General Resources Account of the Fund; - “indebtedness of the Fund” means the amount itthe Fund is committed to repay under a credit arrangement; - “participant” means a participating member or a participating institution; - “participating institution” means an official institution of a member that has entered into a credit arrangement with the Fund with the consent of the member, or an official institution of a nonmember that has entered into a credit arrangement with the Fund;; and - “participating member” means a member that has entered into a credit arrangement with the Fund. - Special provision for Hong Kong Monetary Authority (paragraph 1(b)): - HKMA shall be regarded as an official institution of the member whose territories include Hong Kong, provided that: - (i) loans by the HKMA and payments by the Fund to the HKMA under this decision shall be made in principle in the currency of the United States of America, unless the currency of another member is agreed between the Fund and the HKMA; - (ii) the participation of the HKMA shall not give rise to the application of paragraph 6 A to the member whose territories include Hong Kong; - (iii) the references to the balance of payments and reserve position in paragraphs 7 A5(c), 7 B6(b)), 6(c), 7(a), and 11(e) shall be understood to refer to the balance of payments and reserve position of Hong Kong. - Additional HKMA rights and exclusions: - The HKMA shall not be eligible to vote on a proposal for activation under paragraph 5(c), included in a resources mobilization plan under paragraph 6(b), or subject to calls under paragraph 7(a), and shall be excluded from calls in accordance with paragraph 6(c), if, at the time of voting on any such proposal, approval of any such resource mobilization plan, or making of any such call, the HKMA notifies the Fund that Hong Kong’s present and prospective balance of payments and reserve position does not allow it to meet calls under its credit arrangement; and - the HKMA shall have the right to request early repayment in accordance with paragraph 13(c) with respect to claims transferred to the HKMA if at the time of the transfer the balance of payments position of Hong Kong is, in the opinion of the Fund, sufficiently strong to justify such a right. - Credit arrangements (paragraph 2): - A member or institution that adheres to this decision undertakes to make loansprovide resources to the Fund on the terms and conditions of this decision up to the amount in special drawing rights set forth in the Annex to this decision or established in accordance with paragraph 3Annex I to this decision (“Annex I”), which may be amended from time to time in order to take into account changes in credit arrangements resulting from the application of paragraphs 3(b), 4, 15(b), 16, 17 and 19(b). - Unless Except as set forth in paragraph 1(b)(i) or otherwise agreed with the Fund, loansresources provided to the Fund under this decision shall be made in the currency of the participant. - Adherence (paragraph 3): - Any member or institution specified in the Annex I as a new participant may adhere in accordance with paragraph 3(c). - Any member or institution not specified in the Annex, including an institution of a nonmember I, may apply to become a participant at theany time of renewal of this decision in accordance with paragraph 19.. - Admission of new participant requires agreement of the Fund and participants representing 80 85 percent of total credit arrangements under the renewed decision shall so agree. - When giving notice of willingness to adhere under paragraph 3(b), a member or institution shall specify the amount, expressed in special drawing rights, of the credit arrangement which it is willing to enter into, provided that the amount shall not be less than the credit arrangement of the participant with the smallest credit arrangement. - The admission of a new participant shall lead to a proportional reduction in the credit arrangements of all existing participants whose credit arrangements are above that of the participant with the smallest credit arrangement: such proportional reduction in the credit arrangements of participants shall be in an aggregate amount equal to the amount of the new participant’s credit arrangement less any increase in total credit arrangements decided in accordance with paragraph 5 4(a), provided that no participant’s credit arrangement shall be reduced below the minimum amount set out in the Annex I. - A member or institution shall adhere to this decision by depositing with the Fund an instrument setting forth that it has adhered in accordance with its law and has taken all steps necessary to enable it to carry out the terms and conditions of this decision. - On the deposit of the instrument the member or institution shall be a participant as of the date of the deposit or of the effective date of this decision, the amendments to this decision set out in Executive Board Decision No. 14577-(10/35), adopted on April 12, 2010, whichever is later. - Entry into Force (paragraph 4): - This decision shall become effective when it has been adhered to by members or institutions included in the Annex with credit arrangements amounting to not less than SDR *Source: _032510c - references in paragraph 11 of the NAB Decision to the participant’s currency shall be* ### 28.9 billion, including the five members or institutions with the largest credit arrangements ### 28.9 billion, including the five members or institutions with the largest credit arrangements ### Changes in amounts of credit arrangements - The total amount of credit arrangements may be increased by the Fund with the agreement of participants representing 85 percent of total credit arrangements; the increase shall not exceed the amount of the new participant’s credit arrangement. - Participants’ individual credit arrangements may be reviewed and changed with the agreement of the Fund and of participants representing 85 percent of total credit arrangements, including each participant whose credit arrangement is changed. This provision may be amended only with the consent of all participants. ### Initiation of activation procedure (Participants and Nonparticipants) - The Managing Director may initiate the procedure in paragraph 7A when: - a participating member or a member whose institution is a participant approaches the Fund on an exchange transaction or a stand-by or extended arrangement and, after consultation, the Managing Director considers that the Fund’s resources available for financing from the General Resources Account need to be supplemented to forestall or cope with an impairment of the international monetary system. - For nonparticipants, the Managing Director may initiate paragraph 7A for exchange transactions requested by members that are not participants if: - (a) the exchange transactions are (i) transactions in the upper credit tranches, (ii) transactions under stand-by arrangements extending beyond the first credit tranche, (iii) transactions under extended arrangements, or (iv) transactions in the first credit tranche in conjunction with a stand-by or an extended arrangement, and - (b) after consultation, the Managing Director considers the Fund’s resources need to be supplemented to meet actual and expected requests reflecting an exceptional situation associated with balance of payments problems of members of a character or aggregate size that could threaten the stability of the international monetary system. - In making proposals for calls pursuant to paragraph 6B, the Managing Director shall pay due regard to potential calls pursuant to paragraph 6A. ### Proposals for calls; activation periods; voting and eligibility - Managing Director actions: - Shall make proposals for calls only after consultations with Executive Directors and participants. - Shall identify the prospective drawer, the amount, and may propose establishment of an activation period during which the requested resources may be called. - Participant constraints and notifications: - A participant that determines it will not be able to meet calls because of present and prospective balance of payments and reserve position shall so notify the Fund and other participants; institutions of nonmembers must consult the Fund on the nonmember’s position before determining inability to meet calls. - Participants must exercise restraint and consider views of the Fund and other participants in making such determinations. - Proportionality and exceptions: - Unless otherwise specified under paragraph 7A(e), proposals shall be for calls proportional to each participant’s credit arrangement. - The Managing Director may propose non-proportional calls in specified circumstances, including insufficient available commitments or insufficient amounts of the type of currency needed for proposed exchange transactions. The Managing Director may ask participants able to provide required amounts to cover shortfalls up to their available commitments and, if necessary, ask for additional amounts from participants whose available commitments exceed the proportional amounts. - An activation period shall not exceed 6 months. - The proposal for an activation period shall include information on (i) the overall size of possible Fund arrangements on which discussions are advanced, (ii) the balance between arrangements expected to be drawn upon and arrangements expected to be precautionary, (iii) additional financing needs that may arise during the activation period, and (iv) the mix of quota and NAB resources for purchases from the General Resources Account in the period following approval of an activation period. This information will be updated quarterly during an activation period. - Concurrence and voting: - The concurrence of every participant that would undertake to provide proportionately more resources than at least one other participant is required before the proposal can be accepted under Paragraph 7A(g). - If unanimity is not achieved, acceptance of the Managing Director’s proposal for an activation period will be decided by a poll of participants. A favorable decision requires an 8085 percent majority of total credit arrangements of participants eligible to vote. The decision shall be notified to the Fund. - The prospective drawer, its participating institution, and participants that have notified they will not meet calls under a proposal are not eligible to vote on the proposal. - A participant shall not be eligible to vote if, based on its present and prospective balance of payments and reserve position, the member is not included in the financial transactions plan for transfers of its currency at the time of decision on a proposal for an activation period. - An activation period becomes effective only if accepted by participants pursuant to paragraph 7A(g5(b) and then approved by the Executive Board. - After a proposal has been accepted, commitments and drawings are not affected by subsequent changes in credit arrangement amounts. ### Calls; resource mobilization plans; timing and allocation - Calls generally: - Unless otherwise provided in an approved proposal, each call shall be made in proportion to the amounts in the proposal. - Resource mobilization plans (Paragraph 6): - To fund outright purchases during an activation period and commitments under arrangements approved during an activation period, calls under individual credit arrangements of participants may be made on the basis of resource mobilization plans approved by the Executive Board normally on a quarterly basis in conjunction with the quarterly financial transactions plan for the General Resources Account. - Resource mobilization plans shall specify for each participant the maximum amount for which calls may be made during the applicable period. - The Executive Board may at any time amend such a plan to change maximum amounts and period for calls. - Allocation objective: the resource mobilization plan shall normally establish an allocation that would result in available commitments of participants being of equal proportion relative to their credit arrangements. - A participant shall not be included in the resource mobilization plan when, based on its present and prospective balance of payments and reserve position, the member is not included and is not being proposed by the Managing Director to be included in the list of countries in the quarterly financial transactions plan for transfers of its currency. - Calls during the period of a resource mobilization plan shall be made by the Managing Director with due regard to achieving available commitments of participants that are of equal proportion relative to their credit arrangements. - No call shall be made on a participant included in the resource mobilization plan if, at the time of such call, the member’s currency is not being used in transfers under the financial transactions plan because of the member’s balance of payments and reserve position. - When the Fund makes a call under paragraph 6, the participant shall promptly make the transfer in accordance with the call. - Special calls (Paragraph 7 procedures for special calls): - Calls pursuant to paragraph 11(e) may be made at any time with due regard to achieving available commitments of equal proportion relative to credit arrangements, provided the participant is included in the quarterly financial transactions plan for transfers of its currency. - Calls pursuant to paragraph 23 may be made at any time and are not subject to procedures in paragraph 5 or paragraph 6. - When the Fund makes a call pursuant to paragraph 7, the participant shall promptly make the transfer. ### Nature and evidence of indebtedness (Notes and loans) - Participant claims on the Fund arising from calls shall be in the form of a loan to the Fund; at the request of a participant, the Fund shall issue one or more promissory notes (“Note” or “Notes”) up to the amount of any call on that participant. - Notes shall have the same substantive terms as loans extended under this decision and are subject to the General Terms and Conditions for NAB Notes set forth in Annex II (the “GTC”). - The GTC may be amended by decision of the Fund with agreement of participants representing 85 percent of total credit arrangements; amended GTC shall apply upon effectiveness to all outstanding Notes issued under this decision. - For loan claims, the Fund shall issue nonnegotiable instruments evidencing indebtedness; form agreed between Fund and participant. - Upon repayment of an instrument or Note and all accrued interest, the instrument/Note shall be returned for cancellation; if less than amount repaid, a new instrument/Note for remainder will be substituted with same maturity date. - Notes shall be issued in book entry form; registered Notes available on request in the form set out in Appendix to the GTC. ### Interest - Interest rate: - The Fund shall pay interest on its indebtedness under this decision at a rate equal to the combined market interest rate computed by the Fund from time to time for the purpose of determining the rate at which it pays interest on holdings of special drawing rights or any such higher rate as may be agreed between the Fund and participants representing 80 85 percent of the total credit arrangements. - Changes in calculation method: - A change in method of calculating the combined market interest rate shall apply to the Fund’s indebtedness under this decision only if the Fund and participants representing 80 percent of the total credit arrangements agree; if a participant requests at time agreement is reached, the change shall not apply to the Fund’s indebtedness to that participant outstanding at the date the change becomes effective. - Accrual and payment: - Interest shall accrue daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest due to a participant shall be paid, as determined by the Fund in consultation with the participant, in special drawing rights, in the participant’s currency, in the currency borrowed, in freely usable currencies, or, with the agreement of the participant, in other currencies that are actually convertible. ### Use of borrowed currency - The Fund’s policies and practices under Article V, Sections 3 and 7 of the Articles on use of its general resources and stand-by and extended arrangements, including period of use, shall apply to purchases of currency borrowed by the Fund. - Nothing in this decision affects the Fund’s authority regarding requests for use of its resources by individual members; access to these resources shall be determined by the Fund’s policies and practices and shall not depend on whether the Fund can borrow under this decision. ### Repayment by the Fund - Standard repayment timing and options: - Subject to paragraph 11, the Fund shall repay the participant five years after a transfer by a participant in response to a call; repayment amount equivalent to the transfer calculated in accordance with paragraph 12. - If a drawer for whose purchase participants make transfers is committed to repurchase at a fixed date earlier than five years after its purchase, the Fund shall repay participants at that date. - Repayment may be in the currency borrowed whenever feasible, in the participant’s currency, in special drawing rights in an amount that does not increase the participant’s holdings of special drawing rights above the limit under Article XIX, Section 4 of the Articles of Agreement unless the participant agrees to accept SDRs above that limit, in freely usable currencies, or, with agreement of the participant, in other currencies that are actually convertible. - Repayments under paragraphs 11(a) second sentence, 11(b) and 11(c) shall be allocated among participants with due regard to achieving available commitments that are of equal proportion relative to credit arrangements. For each participant, repayments applied first to the longest outstanding claim under its credit arrangement. - Early and partial repayments: - Before the five-year date, the Fund, after consultation with participants, may make repayment in part or in full to one or several participants in accordance with paragraph 11(d). - Whenever a reduction in the Fund’s holdings of a drawer’s currency is attributed to a purchase of currency borrowed under this decision, the Fund shall promptly repay an equivalent amount to participants; if the Fund used resources under this decision to finance a reserve tranche purchase and the Fund’s holdings of the drawer’s currency not subject to repurchase are reduced as a result of net sales during a quarterly period covered by an operational budget a financial transactions plan, the Fund shall repay at the beginning of the next quarterly period an amount equivalent to that reduction, up to the amount of the indebtedness to the participant. - Repayment under paragraph 11(c) shall be made in proportion to the Fund’s indebtedness to the participants that made transfers in respect of which repayment is being made. - Balance of payments request for repayment: - Before the prescribed date, a participant may give notice representing that there is a balance of payments need for repayment of part or all of the Fund’s indebtedness and requesting such repayment; the participant seeking repayment shall consult with the Managing Director and with other participants before giving notice. - The Fund shall give the overwhelming benefit of any doubt to the participant’s representation. Repayment shall be made promptly after consultation in freely usable currencies or in SDRs, as determined by the Fund, or, with agreement of the participant, in currencies of other members that are actually convertible. - If the Fund’s holdings of currencies in which repayment should be made are not wholly adequate, the Managing Director shall make calls on individual participants to provide necessary balances under their credit arrangements subject to the limit of available commitments. - At the time of such call, if requested by the participant obtaining repayment, (i) a participant providing balances under its credit arrangement that are not balances of a freely usable currency shall ensure such balances can be exchanged for a freely usable currency of its choice, and (ii) a participant providing balances that are balances of a freely usable currency shall collaborate with the Fund and other members to enable such balances to be exchanged for another freely usable currency. - Restoration of callable amount: - When a repayment is made on a claim arising from a call, the amount that can be called under the participant’s credit arrangement shall be restored pro tanto. - Deemed discharge to participating institutions: - Unless otherwise agreed, the Fund shall be deemed to have discharged its obligations to a participating institution to make repayment or to pay interest in special drawing rights if the Fund transfers an equivalent amount in special drawing rights to the member in which the participating institution is established. ### Rates of exchange; valuation date - The value of any transfer shall be calculated as of the date of the dispatch of the instructions for the transfer. - Calculation shall be made in terms of the special drawing right in accordance with Article XIX, Section 7(a) of the Articles, and the Fund shall be obliged to repay an equivalent value. - For all purposes of this decision, the value of a currency in terms of the special drawing right shall be calculated by the Fund in accordance with Rule O-2 of the Fund’s Rules and Regulations. ### Transferability of claims and Notes - General rules: - No participant or non-participant holder may transfer all or any part of its claim to repayment under a credit arrangement except in accordance with paragraph 13 or with prior consent of the Fund on such terms and conditions as the Fund may approve. - All or part of any claim may be transferred at any time to a participant or to a non-participant that is either (i) a member of the Fund, (ii) the central bank or other fiscal agency designated by any member for purposes of Article V, Section 1 of the Articles, or (iii) an official entity prescribed as a holder of SDRs pursuant to Article XVII, Section 3 of the Articles. - Terms upon transfer: - As from the value date of transfer, the transferred claim shall be held by the transferee on the same terms and conditions as claims originating under its credit arrangement (if transferee is participant) or as the claim was held by the transferor (if transferee is non-participant), except: - (i) the transferee may request early repayment on balance of payments grounds pursuant to paragraph 11(e) only if the transferee is a member, or an institution of a member, whose balance of payments and reserve position at the time of transfer is considered sufficiently strong for its currency to be usable in transfers under the Fund's financial transactions plan; - (ii) if the transferee is a non-participant, references to the participant’s currency shall be deemed to refer (A) if transferee is a member, to the transferee’s currency, (B) if transferee is an institution of a member, to that member’s currency, and (C) otherwise, to a freely usable currency as determined by the Fund; - (iii) claims transferred shall be considered drawn balances of the first transferor participant for purposes of determining available commitment under its credit arrangement, and claims obtained by a participant under a transfer shall not be considered drawn balances of the transferee for determining available commitment under its credit arrangement. - Price and registration: - Price for transferred claim shall be as agreed between transferee and transferor. - Transferor shall inform the Fund promptly of the claim being transferred, name of transferee, amount, agreed price, and value date. - The Fund shall register the transfer and the transferee becomes holder if transfer is in accordance with terms and conditions; transfer effective as of agreed value date. - Notices, interest, assistance, and prohibitions: - Notice to or by a transferee that is a non-participant shall be in writing or by rapid means and given to or by the fiscal agency designated by the transferee if the transferee is a member, or to the transferee directly if not a member. - If a claim is transferred during a quarterly period as described in paragraph 9(b), the Fund shall pay interest to the transferee on the transferred amount for the whole of that period. - The Fund shall assist in seeking to arrange transfers if requested. - The transferee may request at time of transfer that a loan claim be exchanged for a Note subject to the GTC, or that a Note be exchanged for a loan claim on same substantive terms. - Derivative transactions in respect of any claim under this decision, and transfer of participation interests in any claim, are prohibited. ### Notices, amendments, withdrawals, suspension, liquidation, period and renewal - Notices: - Notice to or by a participating member under this decision shall be in writing or by rapid means and given to or by the fiscal agency designated in accordance with Article V, Section 1 and Rule G-1. Notice to or by a participating institution shall be in writing or by rapid means and given to or by the participating institution. - Amendment (Paragraph 15): - Except as provided in paragraphs 54(b), 15(b) and 16, the decision may be amended during the period prescribed in paragraph 19(a) and any subsequent renewal periods only by a decision of the Fund with concurrence of participants representing 85 percent of total credit arrangements. Such concurrence not necessary for modification on renewal under paragraph 19(b). - If an amendment materially affects the interest of a participant that voted against it, that participant has right to withdraw adherence by giving notice within 90 days from the date the amendment was adopted. This provision may be amended only with consent of all participants. - Withdrawal of adherence (Paragraph 16): - A participant may withdraw its adherence in accordance with paragraph 19(b) but may not withdraw within the period prescribed in paragraph 19(a) except with agreement of the Fund and all participants. This provision may be amended only with consent of all participants. - Withdrawal from membership (Paragraph 17): - If a participating member or a member whose institution is a participant withdraws from membership, the participant’s credit arrangement ceases when withdrawal takes effect. The Fund’s indebtedness under the relevant credit arrangement shall be treated as an amount due from the Fund for the purpose of Article XXVI, Section 3, and Schedule J of the Articles. - Suspension of exchange transactions and liquidation (Paragraph 18): - The right of the Fund to make calls under paragraphs 6, 11(e), and 23 and the obligation to make repayments under paragraph 11 shall be suspended during any suspension of exchange transactions under Article XXVII of the Articles. - In event of liquidation of the Fund, credit arrangements shall cease and the Fund’s indebtedness shall constitute liabilities under Schedule K of the Articles. For paragraph 1(a) of Schedule K, the currency in which the liability of the Fund shall be payable shall be first the currency borrowed, then the participant’s currency and finally the currency of the drawer for whose purchases transfers were made by participants in connection with calls under paragraph 6. - Period and renewal (Paragraph 19): - This decision shall continue in existence for five years from its effective date.until November 16, 2012. - When considering renewal following the five-year period, the Fund and participants shall review functioning of decision and, in particular, (i) experience with procedures for activation and (ii) impact of the Fourteenth General Review of Quotas on overall size of quotas, and shall consult on possible modifications. - The decision may be renewed for such period(s) and with such modifications, subject to paragraphs 54(b), 15(b) and 16, as the Fund may decide. The Fund shall adopt a decision on renewal and modification, if any, not later than twelve months before end of period prescribed in paragraph 19(a). - Any participant may advise the Fund not less than six months before the end of the period prescribed in paragraph 19(a) that it will withdraw its adherence to the decision as renewed. In absence of such notice, participant deemed to continue to adhere to decision as renewed. Withdrawal of adherence in accordance with paragraph 19(b) does not preclude subsequent adherence in accordance with paragraph 3(b). - If decision is terminated or not renewed, paragraphs 8 through 14, 17 and 18(b) continue to apply in connection with any indebtedness under credit arrangements in existence at date of termination until repayment completed. If a participant withdraws adherence in accordance with paragraph 15(b), 16, or 19(b), it ceases to be a participant under the decision, but paragraphs 8 through 14, 17 and 18(b) of the decision as of date of withdrawal continue to apply to any indebtedness under such former credit arrangement until repayment completed. ### Interpretation and relationship with other borrowing arrangements - Interpretation (Paragraph 20): - Any question of interpretation raised in connection with this decision (including the GTC) not falling within purview of Article XXIX shall be settled to mutual satisfaction of the Fund, the participant or transferee raising the question, and all other participants. Participants include former participants to which paragraphs 8 through 14, 17 and 18(b) continue to apply pursuant to paragraph 19(c) to the extent they are affected by the question. - Relationship with the General Arrangements to Borrow (Paragraph 21): - The Fund shall be guided by principle that the New Arrangements to Borrow (NAB) shall be facility of first and principal recourse, except that: - if a proposal for establishment of an activation period under the NAB is not accepted under paragraph 5(a), a proposal for calls may be made under the General Arrangements to Borrow. - where a drawing on the Fund by a participating member or a member whose institution is a participant involves both the General Arrangements to Borrow and the NAB, a proposal for calls may be made under either arrangement. - Outstanding drawings and available commitments under the New Arrangements to Borrow and the General Arrangements to Borrow shall not exceed SDR 34 billion367,467.36 million, or such other amount of total credit arrangements as may be in effect in accordance with this decision. - The available commitment of a participant under the NAB shall be reduced pro tanto by any outstanding drawings on, and commitments of, the participant under the General Arrangements to Borrow. The available commitment under the General Arrangements to Borrow shall be reduced pro tanto by the extent to which its credit arrangement under the General Arrangements to Borrow exceeds its available commitment under the NAB. - References to drawings and commitments under the General Arrangements to Borrow include drawings and commitments under Associated Borrowing Arrangements referred to in paragraph 23 of the General Arrangements to Borrow. - Other borrowing arrangements: - Nothing in this decision precludes the Fund from entering into any other types of borrowing arrangements. ### Transitional arrangements (Decision No. 14577-(10/35) amendments) - At request of a participant holding claims under bilateral borrowing agreements entered into prior to effectiveness of amendments set forth in Decision No. 14577-(10/35), adopted on April 12, 2010, the Managing Director shall make calls under the participant’s credit arrangement to fund repayment of such claims. - At request of relevant participant, calls shall be made on a participant that is a participating institution for repayment of such claims held by the member of which it is an official institution or by the central bank or fiscal agency designated by the member, or on a participant that is a member for repayment of such claims held by the designated central bank or fiscal agency. - Notwithstanding paragraph 11(a), maturity date of claims under credit arrangements arising from such calls shall be the maturity date of the bilateral borrowing agreement claim for whose repayment the call was made. ### Delay in drawings and activation condition - No drawings shall be made under this decision until participants representing at least 70 percent of the total credit arrangements of new participants listed in Annex I have adhered to this decision in accordance with paragraph 3(c). ### Annex I — Participants and amounts of credit arrangements (in Millions of Special Drawing Rights) - Current Participants (Current Credit Arrangements / New Credit Arrangements): - Australia 801.29 4,370.41 - Austria 407.57 3,579.24 - Banco Central de Chile 340.00 1,360.00 - Belgium 956.60 7,861.85 - Canada 1,380.99 7,624.43 - Danmarks Nationalbank 367.01 3,207.78 - Deutsche Bundesbank 3,518.75 25,370.81 - Finland 340.00 2,231.76 - France 2,549.29 18,657.38 - Hong Kong Monetary Authority 340.00 340.00 - Italy 1,752.95 13,578.03 - Japan 3,518.75 65,953.20 - Korea 340.00 6,583.44 - Kuwait 341.29 341.29 - Luxembourg 340.00 970.59 - Malaysia 340.00 340.00 - Netherlands 1,301.85 9,043.72 - Norway 378.88 3,870.94 - Saudi Arabia 1,760.86 11,126.03 - Singapore 340.00 1,276.52 - Spain 664.77 6,702.18 - Sveriges Riksbank 849.76 4,439.74 - Swiss National Bank 1,540.26 10,905.42 - Thailand 340.00 340.00 - United Kingdom 2,549.29 18,657.38 - United States 6,639.83 69,074.27 - New Participants: - Bank of Israel 500.00 - Brazil 8,740.82 - China 31,217.22 - Cyprus 340.00 - Greece 1,654.51 - India 8,740.82 - Ireland 1,885.52 - Mexico 4,994.76 - New Zealand 624.34 - Philippines 340.00 - Portugal 1,542.13 - Russian Federation 8,740.82 - South Africa 340.00 - Total367,467.36 - Note: Credit arrangements are subject to a minimum of SDR 340 million. ### Annex II — General Terms and Conditions for NAB Notes (summarized highlights) - Issuance and denomination: - At participant request under paragraph 8(a) of the NAB Decision, the Fund will issue Notes up to amount of the Fund’s call on the participant. Notes shall be denominated in the special drawing right. - Form, delivery and custody: - Notes issued in book entry form; Fund maintains book entry account recording details. Registered Notes may be issued on request in form set out in Appendix; Fund will keep registered Notes in custody unless otherwise agreed. - Interest: - Fund pays interest on Notes at combined market interest rate or any higher rate agreed between Fund and participants representing 85 percent of total credit arrangements. - Interest accrues daily and is paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest payable in SDRs, holder’s currency if member, currency borrowed, freely usable currencies, or other convertible currencies with holder agreement. - Maturity and repayment: - Notes have a maturity of five years, except Notes issued pursuant to paragraph 13(k) shall have maturity of the loan claim for which exchanged. Repayment made in accordance with paragraph 11 of the NAB Decision. - Fund will cancel a Note upon payment of principal and all accrued interest, or if transferred or exchanged for a loan claim; early partial repayment leads to cancellation and issuance of a new Note for remainder. - Rates of exchange: - Value of a currency in terms of the SDR calculated in accordance with Rule O-2 of the Fund’s Rules and Regulations. - Transferability: - Holders may not transfer Notes except in accordance with paragraph 6 or with prior consent of Fund. Notes may be transferred to participants or eligible non-participants (members, fiscal agencies, or official SDR holders). - On transfer, Notes held by transferee on same terms as Notes originating under its credit arrangement (if transferee is participant) or as held by transferor (if transferee non-participant), with specified exceptions (early repayment rights, currency references). - Derivative transactions in respect of any Note and transfer of participation interests in any Note are prohibited. *Source: _032510c - 28.9 billion, including the five members or institutions with the largest credit arrangements* ### references in paragraph 11 of the NAB Decision to the participant’s currency shall be ### _032510c - references in paragraph 11 of the NAB Decision to the participant’s currency shall be ### Transfer mechanics and conditions (Paragraph 6) - References in paragraph 11 of the NAB Decision to the participant’s currency shall be deemed to refer: - (A) if the transferee is a member, to the transferee’s currency, - (B) if the transferee is an institution of a member, to the currency of that member, and - (C) in other cases, to a freely usable currency as determined by the Fund. - Notes transferred in accordance with paragraph 6: - shall be considered drawn balances of the first transferor participant for purposes of determining the available commitment under its credit arrangement, - and Notes obtained by a transferee participant shall not be considered drawn balances of such participant for purposes of determining the available commitment under its credit arrangement. - The price for the Note transferred shall be as agreed between the transferee and the transferor. - Transferor obligations at transfer: - The transferor of a Note shall inform the Fund promptly of: - the Note that is being transferred, - the name of the transferee, - the amount of the Note that is being transferred, - the agreed price for transfer of the Note, - and the value date of the transfer. - Registration and effectiveness: - The transfer shall be registered by the Fund and the transferee shall become the holder of the Note only if such transfer is in accordance with the terms and conditions of the NAB Decision and these General Terms and Conditions. - Upon registration, the transfer shall be effective as of the value date agreed between the transferee and the transferor. - Optional conversion at transfer: - The transferee of a Note may request at the time of transfer that the Note be exchanged by the Fund for a loan claim pursuant to paragraph 13(k) of the NAB Decision to be held by the transferee on the same substantive terms as the transferred Note. - Notice rules for non-participant transferees: - Notice to or by a transferee that is a non-participant shall be in writing or by rapid means of communication and shall be given to or by the fiscal agency designated by the transferee in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund if the transferee is a member, or to or by the transferee itself if the transferee is not a member. - Interest on transfers within a quarterly period: - If all or part of a Note is transferred during a quarterly period as described in paragraph 3(b) of these General Terms and Conditions, the Fund shall pay interest to the transferee holder on the relevant interest payment date on the amount of the Note transferred for the whole of that period. - Assistance and cancellation: - If requested, the Fund shall assist in seeking to arrange transfers. - For all transfers under paragraph 6, the Fund will cancel the Note that has been transferred in whole or in part. - If the Note is a registered Note, the transferor shall, as a condition for the transfer, surrender for cancellation any such registered Note that is not already in the custody of the Fund. - Upon cancellation, the Fund will issue a new Note in the name of the transferee for the principal amount transferred and, where appropriate, a new Note in the name of the transferor for any part of the principal amount retained by it. - The issue date of each new Note will be the issue date of the cancelled Note, and the new Note will have the same maturity date (including any maturity date resulting from extensions of a previous maturity date) that is applicable to the cancelled Note. - The form and delivery of each new Note will be as specified in paragraph 2 of these General Terms and Conditions. - Prohibitions: - Derivative transactions in respect of any Note, and transfers of participation interests in any Note, are prohibited. ### Notices (Paragraph 7) - Notice to or by a holder who is a participating member: - shall be in writing or by rapid means of communication and shall be given to or by the fiscal agency of the participating member designated in accordance with Article V, Section 1 of the Articles and Rule G-1 of the Rules and Regulations of the Fund. - Notice to or by a holder who is a participating institution: - shall be in writing or by rapid means of communication and shall be given to or by the participating institution. ### Interpretation (Paragraph 8) - Any question of interpretation raised in connection with any Note which does not fall within the purview of Article XXIX of the Articles shall be settled to the mutual satisfaction of: - the Fund, - the holder raising the question, - and all participants in the NAB. - For purposes of paragraph 8, "holder" shall be deemed to include those former participants in the NAB to which paragraphs 8 through 14, 17 and 18(b) of the NAB Decision continue to apply pursuant to paragraph 19(c) of the NAB Decision to the extent that any such former participant is affected by a question of interpretation that is raised. ### NAB Decision and Changes in the General Terms and Conditions (Paragraph 9) - Notes subject to these General Terms and Conditions, and any claims thereunder or with respect thereto, are subject to the terms and conditions of the NAB Decision as in effect from time to time. - Any amendments to these General Terms and Conditions adopted in accordance with paragraph 8(a) of the NAB Decision shall apply to all outstanding Notes issued under the NAB Decision. ### Form of Registered NAB Note (Attachment III, Annex II, Appendix) - Note header fields included in the form: - Number _______________ - SDR ____________________ - Issue Date: _______________ - Maturity Date: - Principal and payment promise: - The Fund promises to pay to the registered holder an amount equivalent to ______________________________ Special Drawing Rights (SDR ___________________) on the maturity date specified above and to pay interest thereon as set forth below. - Agreement to terms: - This Note is issued in accordance with the New Arrangements to Borrow (the "NAB") and the General Terms and Conditions for Notes Issued by the International Monetary Fund under the New Arrangements to Borrow (the "General Terms and Conditions"). - Each holder of this Note is deemed to have agreed to the General Terms and Conditions and relevant terms of the NAB, as they may be amended in accordance with the NAB Decision, including without limitation the maturity date, the interest rate, the terms and conditions of early payment at the request of the Fund or the holder hereof, and the terms and conditions of transfer of this Note or any part thereof. - Transfer restrictions: - 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, - (II) THE CENTRAL BANK OR OTHER 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) AN ENTITY IN RESPECT OF WHICH THE FUND HAS CONSENTED IN WRITING TO THE TRANSFER PURSUANT TO PARAGRAPH 6(A) OF THE GENERAL TERMS AND CONDITIONS. - Prohibition reiterated: - ANY DERIVATIVE TRANSACTIONS IN RESPECT OF THIS NOTE, AND TRANSFERS OF PARTICIPATION INTERESTS IN THIS NOTE, ARE PROHIBITED. - Interest rate and payment mechanics: - The Fund shall pay interest on this Note at a rate equal to the combined market interest rate computed by the Fund from time to time for the purpose of determining the rate at which it pays interest on holdings of special drawing rights or any such higher rate as may be agreed between the Fund and participants representing 85 percent of the total credit arrangements under the NAB. - Interest shall accrue daily and shall be paid as soon as possible after each July 31, October 31, January 31, and April 30. - Interest due to a holder shall be paid, as determined by the Fund in consultation with the holder, in: - special drawing rights, - in the holder’s currency if the holder is a member, - in the currency borrowed, - or in other currencies that are actually convertible. *International Monetary Fund — _032510c - references in paragraph 11 of the NAB Decision to the participant’s currency shall be* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2010/_032510c.pdf_