Selected Decisions and Selected Documents of the IMF, Thirty- Eighth Issue -- The Chairmanís Summing Up at the Conclusion of the Discussion on Overdue Financial Obligations to the Fund, Executive Board Meeting 85/170, November 25, 1985

Prepared by the Legal Department of the IMF
As updated as of February 29, 2016

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ARTICLE XXVI
Remedial Measures on Overdue Financial Obligations to the Fund

The Chairman’s Summing Up at the Conclusion of the Discussion on Overdue Financial Obligations to the Fund

Executive Board Meeting 85/170, November 25, 1985

…[M]ember countries in arrears should be induced to give priority to actions that are designed specifically to enable them to repay the Fund. In addition, they should introduce corrective measures at an early stage to improve their economic policies and to avoid the emergence and further accumulation of arrears to the Fund.

…[T]he Fund should keep open its channels of communication with countries in arrears in order to help them formulate adjustment policies and to catalyze external assistance so that these concerted efforts can ultimately be supported by Fund assistance and lead prior to the Fund’s formal commitment to providing such assistance to settlement of the arrears.

…[I]ntervals between Board reviews should be put to good use; they should never be seen as grace periods or as periods in which a member is excused from making every effort to settle its arrears to the Fund…

A majority of Directors favor reducing the period between the emergence of arrears and the first substantive consideration of a complaint. These Directors felt that the present five-month period was too long, as it has tended to coincide with a buildup of arrears that has made it more difficult to tackle the matter; earlier involvement by the Board would have been helpful. Although some Directors favor taking a flexible approach to this period, a majority clearly supports limiting the period to three months. Issuing the complaint two months after arrears have arisen instead of three months would certainly be consistent with today’s discussion. The review period following the first substantive consideration would remain three months, but the three months would be considered an outer limit: the decision on the actual timing in each case should take into account the particular circumstances and the performance of the member…

A majority of Directors felt that once a member has been declared ineligible to use the Fund’s resources the Board should not wait as long as the next Article IV consultation to discuss the member’s arrears situation. The majority of Directors would like to review the member’s situation every six months.

BUFF/85/206

December 6, 1985

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