International Finance Agreements Amendment Act 1975

  • repealed
  • International Finance Agreements Amendment Act 1975: repealed, on 27 February 2013, by section 7 of the International Finance Agreements Amendment Act 2013 (2013 No 4).

Reprint
as at 27 February 2013

International Finance Agreements Amendment Act 1975

Public Act1975 No 54
Date of assent8 October 1975
  • International Finance Agreements Amendment Act 1975: repealed, on 27 February 2013, by section 7 of the International Finance Agreements Amendment Act 2013 (2013 No 4).


Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this eprint.

A general outline of these changes is set out in the notes at the end of this eprint, together with other explanatory material about this eprint.

This Act is administered in the Treasury.


BE IT ENACTED by the General Assembly of New Zealand in Parliament assembled, and by the authority of the same, as follows:

1 Short Title
  • This Act may be cited as the International Finance Agreements Amendment Act 1975, and shall be read together with and deemed part of the International Finance Agreements Act 1961 (hereinafter referred to as the principal Act).

2 Interpretation
  • In this Act, unless the context otherwise requires,—

    Asian Bank means the Asian Development Bank

    Asian Bank Agreement means the Agreement set out in Schedule 1 to the International Finance Agreements Amendment Act 1966, providing for the establishment and operation of the Asian Bank

    Financial Support Fund means the Financial Support Fund of the Organisation for Economic Co-operation and Development established under the Financial Support Fund Agreement

    Financial Support Fund Agreement means the Agreement set out in the Schedule to this Act establishing the Financial Support Fund of the Organisation for Economic Co-operation and Development.

3 Provisions for giving effect to Financial Support Fund Agreement
  • (1) There shall be paid out of such account in the Public Account as the Minister may direct, without further appropriation than this section,—

    • (a) All payments required to be made from time to time under the Financial Support Fund Agreement by reason of the Government of New Zealand being a party to that Agreement or giving any undertaking under that Agreement; and

    • (b) All amounts needed for the repayment of loans made to New Zealand under that Agreement.

    (2) The Minister may from time to time—

    • (a) Borrow on the security of and charged upon the public revenues of New Zealand such sums of money as are required to be paid by the Government of New Zealand under subsection (1) of this section:

    • (b) Borrow from the Financial Support Fund, on behalf of New Zealand, all amounts that it is entitled to borrow from that Fund under the Financial Support Fund Agreement.

    (3) The provisions of subsections (2) and (3) of section 6 of the principal Act shall extend and apply to all money borrowed under the authority of subsection (2) of this section.

    (4) [Repealed]

    (5) Sections 2 to 8 of Article XVII of the Financial Support Fund Agreement (which relate to capacity, privileges, and immunities) shall have the force of law in New Zealand.

    Subsection (4) was repealed, as from 1 April 1978, by section 163(1) Public Finance Act 1977 (1977 No 65).

    Subsections (1) and (2) were amended, as from 25 June 1997, by section 2 Treasurer (Statutory References) Act 1997 (1997 No 20) by substituting the word Minister for the words Minister of Finance.

4 Obligations under Asian Bank Agreement in respect of Cook Islands
  • (1) In the event of the Cook Islands becoming a member of the Asian Bank pursuant to Article 3 of Chapter 1 of the Asian Bank Agreement, the Minister may, without further appropriation than this section and out of such account in the Public Account as he may direct, make—

    • (a) All payments required by the undertaking that, until the Government of the Cook Islands may assume sole responsibility for its international relations, the Government of New Zealand shall be responsible for all obligations that may be incurred by the Government of the Cook Islands by reason of the admission of the Cook Islands to membership in that Bank and its enjoyment of the benefits of that membership; and

    • (b) All payments required by any undertaking given on behalf of the Government of New Zealand in respect of loans made by the Asian Bank to the Cook Islands.

    (2) The Minister may from time to time borrow on the security of and charged upon the public revenues of New Zealand such sums of money as may be required to be paid by the Government of New Zealand under subsection (1) of this section. The provisions of subsections (2) and (3) of section 6 of the principal Act shall extend and apply to all money borrowed under the authority of this subsection.

    (3) [Repealed]

    Subsection (3) was repealed, as from 1 April 1978, by section 163(1) Public Finance Act 1977 (1977 No 65).

    Subsections (1) and (2) were amended, as from 25 June 1997, by section 2 Treasurer (Statutory References) Act 1997 (1997 No 20) by substituting the word Minister for the words Minister of Finance.

5 Consequential amendment and repeal
  • [Repealed]

    Section 5 was repealed as from 1 April 1978, by section 163(1) Public Finance Act 1977 (1977 No 65).


Schedule

Section 2

Agreement Establishing a Financial Support Fund of the Organisation for Economic Co-Operation and Development

  • Preamble

    Paris, 9th April 1975

    THE GOVERNMENTS OF THE COMMONWEALTH OF AUSTRALIA, THE REPUBLIC OF AUSTRIA, THE KINGDOM OF BELGIUM, CANADA, THE KINGDOM OF DENMARK, FINLAND, THE FRENCH REPUBLIC, THE FEDERAL REPUBLIC OF GERMANY, THE HELLENIC REPUBLIC, THE REPUBLIC OF ICELAND, IRELAND, THE ITALIAN REPUBLIC, JAPAN, THE GRAND DUCHY OF LUXEMBOURG, THE KINGDOM OF THE NETHERLANDS, NEW ZEALAND, THE KINGDOM OF NORWAY, THE PORTUGUESE REPUBLIC, SPAIN, THE KINGDOM OF SWEDEN, THE SWISS CONFEDERATION, THE REPUBLIC OF TURKEY, THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND, AND THE UNITED STATES OF AMERICA,

    CONVINCED of the need to:

    • -avoid unilateral measures which would restrict international trade or other current account transactions, or which would artificially stimulate visible and current invisible exports, and

    • -follow appropriate domestic and international economic policies, including adequate balance-of-payments policies and co-operative policies to promote increased production and conservation of energy;

    RECOGNISING the central role played by the International Monetary Fund in providing balance-of-payments financing;

    CONSIDERING that, in view of current economic conditions, it is desirable to supplement, in exceptional cases, other sources of credit to which Contracting Parties encountering serious economic difficulties have had recourse;

    CONSIDERING, therefore, that it is necessary to establish, for a limited period, a Financial Support Fund of the Organisation for Economic Cooperation and Development;

    CONSIDERING that an essential feature of this Agreement is that the risks on loans by the Financial Support Fund shall be shared equitably among all Contracting Parties;

    CONSIDERING the willingness of the Bank for International Settlements to assist the operations of the Financial Support Fund;

    CONSIDERING the Decision, adopted by the Council of the Organisation for Economic Co-operation and Development on 7th April 1975, approving the text of the present Agreement and recommending it to its Member countries for signature;

    HAVE AGREED as follows:

Article I The Financial Support Fund of the Organisation for Economic Co-operation and Development
  • The Fund

    Section 1. The Financial Support Fund of the Organisation for Economic Co-operation and Development (hereinafter called the Fund) is hereby established. The functions of the Fund shall be carried out in accordance with the provisions of this Agreement and within the framework of the Organisation for Economic Co-operation and Development (hereinafter called the OECD). Member countries of the OECD which become members of the Fund are hereinafter called members.

    Objectives

    Section 2. The objectives of the Fund are:

    • (a) to encourage and assist members to:

      • (i) avoid unilateral measures which would restrict international trade or other current account transactions, or which would artificially stimulate visible and current invisible exports, and

      • (ii) follow appropriate domestic and international economic policies, including adequate balance-of-payments policies and co-operative policies to promote increased production and conservation of energy;

    • (b) to serve for a limited period, in view of current economic conditions, to supplement, in exceptional cases, other sources of credit to which members encountering serious economic difficulties have had recourse; and

    • (c) to ensure that the risks on loans by the Fund to members are shared equitably among all members, in proportion to their quotas and subject to the limits of their quotas, however the loans are financed.

    All decisions under this Agreement shall be guided by these objectives.

Article II Membership
  • Membership of the Fund shall be open to Member countries of the OECD which become parties to this Agreement in accordance with the provisions of Article XXIII.

Article III Quotas and Liability of Members
  • Establishment of quotas

    Section 1. 

    • (a) Each member shall have a quota in the amount listed for that member in the table in the Annex to this Agreement, the total of the quotas listed being 20 billion Special Drawing Rights (hereinafter called SDR).

    • (b) Quotas shall be established in terms of SDR, the method of valuation of SDR being that provided for in Article XIV.

    Liability of members

    Section 2. A member's quota shall determine the maximum financial liability of that member to meet the obligations incurred by the Fund.

Article IV Liability of the Fund and of the OECD
  • Liability of the Fund

    Section 1. The financial liability of the Fund shall not exceed its own assets and the funds which members are obliged to provide to it pursuant to the provisions of this Agreement.

    Liability of the OECD

    Section 2. The OECD shall bear no liability for the acts or omissions of the Fund.

Article V Loans
  • Lending authority

    Section 1. Except as otherwise provided in this Agreement, the operations of the Fund shall be limited to making loans to members from funds provided under Articles VII, VIII and IX. The authority to make loans under this Article shall continue in existence for 2 years from the entry into force of this Agreement.

    Eligibility for loans

    Section 2. 

    • (a) A member that requests a loan from the Fund shall represent to the Governing Committee that it:

      • (i) is encountering serious external financial difficulties;

      • (ii) has made the fullest appropriate use of its reserves and has made best efforts to obtain capital, on reasonable terms, from other sources; and

      • (iii) has made the fullest appropriate use of other multilateral facilities.

    • (b) The Governing Committee shall satisfy itself that the member applying to the Fund for a loan meets the eligibility requirements in paragraph (a) of this Section and that such member's policies are consistent with the objectives of the Fund specified in Section 2(a) of Article I.

    Amounts, terms and conditions of loans

    Section 3. 

    • (a) The amounts of loans shall be established in accordance with the provisions of Article VI, Section 1.

    • (b) Loans shall have a maturity of not more than 7 years.

    • (c) Conditions relating to economic policies needed:

      • (i) to redress the external financial situation of the member which receives a loan from the Fund (hereinafter called the borrower) over an appropriate period, and

      • (ii) for the fulfilment of the objectives of the Fund, shall be agreed between the borrower and the Fund at the time the loan is granted.

    • (d) The Governing Committee may decide that a loan be made available in instalments and that the availability of each such instalment be subject to the agreement of the Governing Committee that conditions established under paragraph (c) of this Section have been complied with.

    • (e) The borrower shall undertake to use the funds received by it in accordance with the objectives of the Fund. The Governing Committee shall keep the economic policies of the borrower, as well as the implementation of the conditions referred to in paragraph (c) of this Section, under review.

    • (f) The rate of interest payable on loans made by the Fund shall be determined by the Governing Committee in the light of conditions at the time the loan is made, having due regard to the interest rate paid by the Fund on the related financing, and shall not be less than the latter rate.

    • (g) The Governing Committee may impose a service charge adequate to cover the cost incurred in making a loan.

    Prepayments

    Section 4. 

    • (a) If there is provision to this effect in the loan agreement between the borrower and the Fund, and to the extent that lenders to the Fund which have provided the financing of the loan accept prepayment:

      • (i) a borrower may prepay all or part of the outstanding balance of any loan;

      • (ii) a borrower whose balance-of-payments situation has substantially improved since it was granted a loan may be required under a decision of the Governing Committee, taken by a two-thirds majority vote, excluding the votes of the borrower, to prepay its loan in whole or in part.

    • (b) The Fund shall use any prepayments made in accordance with paragraph (a) of this Section to make prepayment to the lenders to the Fund which accept such prepayment, in proportion to their shares in the financing of the loan concerned.

Article VI Decisions to Make Loans
  • Decision procedures

    Section 1. 

    • (a) A request from a member for a loan from the Fund shall be considered by the Governing Committee on the basis of a proposal prepared by the Advisory Board.

    • (b) The granting of a loan shall require a single decision by the Governing Committee on the following matters, taken together:

      • (i) the eligibility of the prospective borrower;

      • (ii) the conditions of the loan, referred to in Article V, Section 3(c) and (d);

      • (iii) the amount and maturity of the loan;

      • (iv) the method or methods of financing the loan; and

      • (v) the basis on which shall be determined the interest rates to be paid to members on funds to be made available through direct financing and to be charged on funds loaned to the borrower.

    • (c) If, following the granting of the loan, the outstanding balance of loans made by the Fund to the borrower would:

      • (i) not exceed the borrower's quota, the decision to grant the loan shall require a two-thirds majority:

      • (ii) exceed the borrower's quota, but amount to not more than 200 percent of that member's quota, the decision to grant the loan shall require a 90 percent majority:

      • (iii) exceed 200 percent of the borrower's quota, the decision to grant the loan shall require a unanimous vote.

    • (d) Each of the majorities specified in subparagraphs (i), (ii) and (iii) of paragraph (c) of this Section shall be fulfilled with respect to:

      • (i) all members, excluding the prospective borrower; and

      • (ii) the member called to provide financing, in the case where the financing takes the form of direct financing or the provision of individual undertakings under Article VIII.

    Exclusion from calls for balance-of-payments reasons

    Section 2. Prior to the decision under Section 1 of this Article:

    • (a) a member may represent to the Governing Committee that a call under Article VIII should not be made upon that member, because of its present or prospective balance-of-payments situation; and

    • (b) the Governing Committee shall decide, by a two-thirds majority vote, excluding the votes of the member making such representation and those of the borrower, whether the member making the representation shall be excluded from the call.

    Loan agreement

    Section 3. 

    • (a) The Governing Committee shall determine the final text of the loan agreement, specifying the precise financial terms and the date or dates on which all transfers arranged under this Article shall be made effective. This determination shall require acceptance by members with the same amount of voting power as provided under paragraphs (c) and (d) of Section 1 of this Article.

    • (b) In the event that all negotiations for market borrowing by the Fund have not been completed as of the above date or dates, such negotiations may continue until completed on satisfactory terms.

Article VII Financing
  • Methods of financing

    Section 1. The Fund may use the following 2 methods, in the light of the circumstances and conditions prevailing in financial markets at the time, to finance the loans which it grants:

    • (a) calls on members to provide individual commitments in the form, at their option, of

      • (i) direct financing; or

      • (ii) an individual undertaking for borrowing by the Fund; and

    • (b) calls on all members to provide a collective undertaking for borrowing by the Fund.

    Definition of the undertaking for borrowing by the Fund

    Section 2. For the purposes of this Agreement, the undertaking of a member for borrowing by the Fund (hereinafter called the undertaking) shall mean the commitment of the member to stand ready, upon an instruction from the Fund under Article XIII, to transfer funds to the Fund in the amount of the undertaking. By such undertaking a member shall not incur any liability to a third party.

    Definition of calls

    Section 3. A call shall mean a notice by the Fund to a member:

    • (a) requiring the member:

      • (i) to transfer an amount of funds to the Fund, in the case of calls under Article VIII, Section 1(a), and Article XIII, Sections 4 and 5(b), or

      • (ii) to provide to the Fund the undertaking referred to in Section 2 of this Article, in the case of calls under Article VIII, Sections 1(b), and 3(a), Article IX, Section 1(b), and Article XIII, Section 1(b); and

    • (b) specifying the total amount drawn on the member's quota as a result of the call, including any amount, additional to that referred to in paragraph (a) of this Section, determined under Article VIII, Section 3(b).

    Principle of proportionality

    Section 4. 

    • (a) Calls on members to provide direct financing, or an individual undertaking, or to participate in a collective undertaking, and calls to transfer funds pursuant to Article XIII shall be proportional to the quotas of the members called, subject to paragraph (b) of this Section, Article X, Section 3(b), and Article XIII, Section 5(b).

    • (b) A member may agree to provide direct financing, or an individual undertaking, or to participate in a collective undertaking, in a higher proportion than that specified in paragraph (a) of this Section, but not in excess of its uncalled quota.

    Currency of transfer

    Section 5. 

    • (a) All transfers of funds to the Fund shall be in an actually convertible currency. Such transfers may be in the form of notes or letters of credit payable by the member on demand.

    • (b) For the purposes of this Agreement, an actually convertible currency shall mean the currency of a member which the Governing Committee determines is convertible into the currencies of other members for the purposes of the Fund's operations.

    Borrowing by the Fund

    Section 6. 

    • (a) Borrowing by the Fund under the provisions of this Agreement will be done within the territories of members. Such borrowing may be in domestic financial markets, including public institutions, or in international financial markets, or from international institutions.

    • (b) When borrowing in domestic or international financial markets, the Fund shall, apart from having obtained any necessary legal authorisations, take due account of market conditions and other relevant factors. A member in whose territory the borrowing is to take place shall give favourable consideration to any proposal by the Fund to borrow in international financial markets. The Fund, before borrowing in a member's domestic market, shall have obtained the member's authorisation and, before borrowing in international financial markets, shall, if so requested, have obtained the authorisation of the member in whose currency the borrowing is to take place.

    • (c) Subject to paragraph (b) of this Section, members shall make best efforts to assure that financial institutions within their territories are eligible to purchase securities issued by the Fund.

    Statement to be placed on securities

    Section 7. Every security issued by the Fund shall bear on its face a conspicuous statement to the effect that it is not an obligation of any Government.

    Evidence of indebtedness

    Section 8. When a member transfers funds to the Fund as a result of a call or instruction from the Fund, the Fund shall issue to the member an instrument evidencing its indebtedness to that member in respect of the amount transferred. Such instrument shall be transferred only on terms and conditions approved by the Governing Committee.

Article VIII Financing by Individual Commitments
  • Financing obligations

    Section 1. If the Fund makes a call for an individual commitment, a member shall discharge its obligations by:

    • (a) transferring funds to the Fund, in the case of direct financing, or, at its option,

    • (b) providing an individual undertaking for borrowing by the Fund, in the name of the Fund, which shall include the allowance relating to the payment of interest and other charges determined in accordance with Section 3(a) of this Article.

    Conditions for individual undertakings

    Section 2. 

    • (a) Where a member provides an undertaking under Section 1(b) of this Article, the Fund shall seek to raise the requisite funds in international or domestic financial markets in accordance with the provisions of Article VII, Section 6(b). If the Fund is unable to raise the requisite funds on this basis within a reasonable period of time on terms reasonably comparable to those available to a borrower of good name, or otherwise acceptable to the Fund, a member offering an individual undertaking shall allow borrowing by the Fund, it having consulted the member concerned, in that member's currency and in its domestic financial market, including borrowing from public institutions, up to the amount of that undertaking.

    • (b) The Fund shall be liable for repayment of borrowing under an individual undertaking provided in accordance with Section 1(b) of this Article only to the extent of the undertaking, and neither the assets of the Fund nor the quotas of other members shall be drawn upon for the purpose of making interest payments or principal repayments as a result of such borrowing.

    Allowance relating to interest payments and other charges

    Section 3. Where the calls under this Article include calls to provide an individual undertaking:

    • (a) The Governing Committee shall determine, for each member that provides such an undertaking, an adequate allowance in respect of interest payments and other charges on the borrowing by the Fund, which shall be included in that member's undertaking:

    • (b) The Governing Committee shall determine the member, among those providing an individual undertaking, for which the allowance determined under paragraph (a) of this Section is highest in proportion to its quota share in the financing of the loan. The call on each other member shall include an amount, additional to the direct financing or individual undertaking provided by it, such that the quotas of all members called upon to provide the financing, in whatever form, shall be drawn down by an amount which represents the same proportion of their quota share in the financing of the loan as in the case of the member with the highest proportion determined above.

    Reduction of an individual undertaking

    Section 4. As repayments of principal are made by the Fund with respect to borrowing on an individual undertaking, the member's undertaking shall be reduced in the proportion which the repayment represents of the outstanding balance of such borrowing by the Fund.

    Early repayment of individual commitments

    Section 5. The Governing Committee may decide, by a two-thirds majority vote, to repay before maturity direct financing and borrowing under individual undertakings, with the agreement of all the members that provided the financing. In order to obtain the funds for such repayments, the Fund may borrow on a collective undertaking pursuant to the provisions of Article IX.

Article IX Borrowing on the Collective Undertaking of Members
  • Financing obligations

    Section 1. 

    • (a) The Fund may borrow on a collective undertaking to obtain funds required for the purposes of Article V, Article VIII, Section 5, and Article X, Section 3.

    • (b) Calls to provide a collective undertaking shall be made on all members and, except when decided otherwise under Article VII, Section 4(b), shall be made in proportion to their quotas. Such calls shall require each member to provide an undertaking in respect of:

      • (i) its quota share in the amount borrowed by the Fund;

      • (ii) the allowance relating to interest payments and other charges, under Section 2 of this Article; and

      • (iii) the provision for risk sharing, under Section 3 of this Article.

    Allowance relating to interest payments and other charges

    Section 2. The Governing Committee shall determine an adequate allowance relating to interest payments and other charges on the borrowing by the Fund which shall be the same proportion of each member's quota share in the financing of the loan.

    Provision for risk sharing

    Section 3. The Governing Committee shall determine the provision for risk sharing, the amount of which shall represent the same percentage for each member, not exceeding 50 percent, of the sum of the amounts specified in Section 1(b)(i) and (ii) of this Article. However, a member may agree to a higher amount.

    Reduction of a collective undertaking

    Section 4. As repayments of principal are made by the Fund with respect to borrowing on a collective undertaking, each member's undertaking shall be reduced in the proportion which the repayment represents of the outstanding balance of such borrowing by the Fund.

Article X Financing of Members' Claims
  • Request for financing

    Section 1. A member which has provided direct financing to the Fund may represent that it meets the eligibility requirements for borrowing provided for in Article V, or expects to meet such requirements within the next 6 months. Such member may request a loan from the Fund under this Article equal to all or part of its claim in respect of direct financing.

    Voluntary financing

    Section 2. Before making a request for such a loan a member shall seek, through the Fund, to obtain the consent of another member or members to take over the member's claim on the Fund in respect of the direct financing provided by it, or seek to obtain alternative financing from the Bank for International Settlements.

    Decision on financing

    Section 3. 

    • (a) The Governing Committee shall promptly decide on the member's request, which decision, if favourable, shall provide for the financing pursuant to Articles VII, VIII and IX of the amount required. The rate of interest to be paid on loans made under this Article shall be determined in accordance with the provisions of Article V, Section 3(f).

    • (b) If, for the purposes of this Section, it is decided to make calls for direct financing or on individual undertakings, under Article VIII, such calls shall be made, subject to Article VI, Section 2, on all members other than the member making the request, in proportion to their uncalled quotas; provided, however, that, in order to provide the funds needed for the financing, calls shall also be made on members exempted from the prior call under Article VI, Section 2, including, if necessary, calls on borrowers for the repayment of their loans.

    • (c) Decisions under this Section shall be taken by a two-thirds majority vote, excluding the votes of the member requesting the loan.

    Entitlement to borrow

    Section 4. A loan made to a member under this Article shall not be taken into account in determining that member's entitlement to borrow under Article V.

    Repayment schedule

    Section 5. The principal shall be repaid and interest shall be paid on funds made available pursuant to Section 3 of this Article on the same schedule as the claim which is financed.

Article XI Denomination, Interest Rates and Repayment Schedules
  • Denomination of financing

    Section 1. Financing provided to the Fund, any corresponding undertakings and the repayments of principal and payments of interest in respect of such financing shall be denominated:

    • (a) in the case of direct financing, either in SDR or in the currency transferred to the Fund pursuant to a call, at the option of the member; and

    • (b) in the case of individual and collective undertakings, either in SDR or in the currency or currencies borrowed by the Fund, as decided by the Governing Committee.

    Currency of repayment of financing

    Section 2. Repayments of principal and payments of interest by the Fund, on financing provided to the Fund, shall be made in the currency in which the financing is denominated or, in the case of financing denominated in SDR, in an actually convertible currency acceptable to the Fund and the lender.

    Denomination and currency of repayment of loans

    Section 3. A loan by the Fund and the repayments of principal and payments of interest thereon shall have the same denominations as are established for the financing of the loan, pursuant to Section 1 of this Article, and the payments to the Fund on such a loan shall be made in the currencies which the Fund is obligated to pay to the lenders which provided the financing for the loan, pursuant to Section 2 of this Article.

    Utilisation of currencies

    Section 4. The Governing Committee shall, to the extent possible and practicable, take into account the views of the monetary authorities of members regarding the utilisation of their respective currencies in the operations of the Fund.

    Interest

    Section 5. 

    • (a) Transfers of currency to the Fund, pursuant to a call for direct financing, shall bear interest at rates to be determined by the Governing Committee, having due regard to the rates paid on, or estimated to be required for, borrowing by the Fund, in the same currency, on individual undertakings.

    • (b) The rate of interest on borrowing by the Fund on individual or collective undertakings shall be determined by the Governing Committee in the light of market conditions.

    Establishment of repayment schedules

    Section 6. The Governing Committee shall establish a schedule of repayments of principal and payments of interest on loans made by the Fund and a schedule of repayments of principal and payments of interest to lenders which provide the financing for such loans.

Article XII Drawings on Quotas
  • The amount drawn on a member's quota

    Section 1. A member's obligation to provide financing under its quota shall be drawn down to the extent of:

    • (a) calls on the member, as defined in Article VII, Section 3;

    • (b) any call, or part of a call, previously made on another member in respect of direct financing which the member consents to take over, pursuant to Article X, Section 2;

    • (c) calls on the member to transfer funds to the Fund under Sections 4 and 5(b) of Article XIII, to enable the Fund to meet its obligations; and

    • (d) repayments of any loan received by the member from the Fund under Article X, except insofar as the corresponding part of the direct financing provided by the member has been repaid.

    Reduction of the amount drawn on a member's quota

    Section 2. A member's obligation to provide financing under its quota shall be reconstituted to the extent of:

    • (a) repayments of direct financing provided by the member, except insofar as the corresponding part of any loan received by the member from the Fund under Article X has not been repaid;

    • (b) repayments of the borrowing by the Fund on the individual undertaking of the member;

    • (c) repayments of the borrowing by the Fund on the quota share of the member in a collective undertaking;

    • (d) reductions, in proportion to repayments of principal, in

      • (i) the allowance relating to the payment of interest and other charges, and any additional amount, under Article VIII, Section 3(b), or Article IX, Section 2, and

      • (ii) the provision for risk sharing under Article IX, Section 3;

    • (e) repayments to the member of transfers made by it to the Fund under Article XIII;

    • (f) any call, or part of a call, previously made on the member in respect of direct financing which is taken over by another member under Article X, Section 2; and

    • (g) any loan received by the member from the Fund under Article X.

    SDR value of drawings on the quota

    Section 3. For the purpose of calculating, in SDR, the amounts referred to in Sections 1 and 2 of this Article, these amounts shall be expressed in SDR at the SDR value of the currency concerned at the date on which the funds were transferred to the Fund or borrowed by the Fund on an undertaking.

    Limit to the amount drawn on a member's quota

    Section 4. The maximum cumulative amount of drawings on a member's quota referred to in Section 1 of this Article, less the reconstitutions referred to in Section 2 of this Article, shall not exceed the member's quota.

Article XIII Fulfilment of the Fund's Obligations
  • Procedures for meeting obligations

    Section 1. If the Fund does not receive on the due date a repayment of principal or payment of interest on a loan made by it, the Fund shall obtain the amount required to meet its corresponding obligations to lenders as provided in this Article; and the Governing Committee shall decide either:

    • (a) to prepay in full any outstanding principal, interest and other charges from funds obtained as provided in this Article, or

    • (b) to maintain the loan in force and, therefore, to increase as necessary the calls in order to cover all or part of the outstanding interest and other charges.

    Obligations incurred by borrowing on a collective undertaking

    Section 2. In the case of obligations to lenders as a result of borrowing on a collective undertaking, the Fund shall obtain the amounts required to meet its obligations:

    • (a) by drawing on any funds in the account referred to in Article XV; and

    • (b) instructing all members, except the borrower which has not made the payment to the Fund on the due date, to implement their collective undertaking by making transfers in proportion to, and up to, the amounts of their undertakings under Article IX, Section 1(b).

    Obligations incurred by borrowing on individual undertakings

    Section 3. In the case of obligations to lenders as a result of borrowing on an individual undertaking, under Article VIII, Section 1(b), the Fund shall obtain the amounts required to meet those obligations by instructing the member concerned to transfer funds up to the amount of its individual undertaking.

    Obligations as a result of individual commitments

    Section 4. In the case of obligations to members as a result of direct financing or of transfers under individual undertakings pursuant to Section 3 of this Article:

    • (a) the Fund shall obtain the amounts required to meet its obligations by calling on all members, except the borrower which has not made the payment to the Fund on the due date, to transfer funds in proportion to their quotas and to the extent of their uncalled quotas; and

    • (b) funds transferred by members under this Section shall be paid to members in proportion to the amounts they were otherwise scheduled to receive in respect of the repayment of the loan concerned, or the amounts transferred by members under Section 3 of this Article.

    Risk sharing

    Section 5. In order to ensure that risks are equitably shared among members in accordance with Article I, Section 2(c):

    • (a) if any of the members that receive instructions under Section 2(b) of this Article fails to transfer the funds required, the Fund shall issue further instructions to the other members that received those instructions, until the amount required has been transferred, in proportion to the amounts of their undertakings under Article IX, Section 1(b), subject to the limit fixed by those undertakings; and

    • (b) if any of the members on which calls are made under Section 4 of this Article fails to transfer the funds called, the Fund shall make further calls on the other members called upon, until the amount required has been transferred, in proportion to the amounts of their uncalled quotas, subject to the limit fixed by their quotas.

    Failure to meet obligations

    Section 6. If any member fails to meet its obligations under this Article, the amount due shall be considered in default. Any delay in payment to the Fund shall be subject to an interest and a penalty charge, to be determined by the Governing Committee.

    SDR value of the Fund's obligations to members under Sections 4 and 5 of this Article

    Section 7. 

    • (a) For the purposes of the settlements under this Article, the obligations of the Fund under Sections 4 and 5 of this Article, denominated in currency, shall be calculated as if they had been denominated in SDR from the date on which the related financing was provided to the Fund. To this end, where the obligation is denominated in a currency, it shall be converted into SDR at its value in terms of the SDR on the date on which the related financing was provided to the Fund and then converted back into the currency at its current value in terms of the SDR.

    • (b) To the extent that the Fund's obligations, denominated in a currency, differ from the amount in that currency, calculated in accordance with paragraph (a) of this Section, which is to be settled under this Article, the difference shall be settled in accordance with Section 8 of this Article.

    Amounts due under this Article remaining unsettled

    Section 8. Transfers by members pursuant to calls or instructions under this Article and the unsettled amounts referred to in Section 7(b) of this Article:

    • (a) shall continue to have the same denomination as the claim or obligation in respect of which the transfer was made;

    • (b) shall be partly or wholly settled whenever the related delay or default on a payment to the Fund is partly or wholly eliminated, the distribution of the settlements among the corresponding creditors being proportional to their claims; and

    • (c) shall be liquidated in accordance with Article XIX, Section 2(b) and (c), if they are still outstanding at the date of liquidation.

Article XIV Value of Currencies in Terms of Special Drawing Rights
  • Method of valuation

    Section 1. For the purposes of this Agreement, the value of a currency in terms of SDR shall be calculated in accordance with the method of valuation applied by the International Monetary Fund with effect from 1st July 1974.

    Change in method of valuation

    Section 2. 

    • (a) If the International Monetary Fund changes the method of valuation applied by it with effect from 1st July 1974, the Governing Committee may decide to adopt such changed method of valuation for the purposes of this Agreement, provided that this is compatible with the provisions of Article III, Section 2.

    • (b) If the Governing Committee decides to adopt such changed method of valuation, it shall apply only to the transactions carried out after that decision takes effect and to the claims and liabilities resulting from those transactions, unless the Governing Committee decides otherwise by a 90 percent majority vote.

Article XV Income and Expenditure Account
  • The Fund shall meet all the costs of its operations from funds received in payment of interest or other charges, including service charges, and not needed for making payments to lenders. The funds in the account drawn upon for these purposes shall be placed as the Governing Committee determines.

Article XVI Organisation and Management
  • Organs of the Fund

    Section 1. The Fund shall have the following organs:

    • (a) a Governing Committee,

    • (b) an Advisory Board, and

    • (c) a Secretariat.

    The Governing Committee

    Section 2. 

    • (a) All powers of the Fund shall be vested in the Governing Committee which shall be responsible for the operation of the Fund.

    • (b) The Governing Committee shall be composed of all members of the Fund, which shall be represented by senior financial officials. Each member shall designate one representative and one alternate. Alternates may participate in meetings of the Governing Committee.

    • (c) The Governing Committee shall elect its Chairman and Vice-Chairmen.

    • (d) The Governing Committee shall normally function at the headquarters of the Fund and shall meet as often as the business of the Fund may require.

    • (e) At least 75 percent of members shall constitute a quorum for meetings of the Governing Committee, provided such quorum includes not less than 70 percent of the total voting power of the members.

    • (f) The Governing Committee shall keep the Council of the OECD informed of the activities of the Fund.

    • (g) The Governing Committee may establish such other procedures and regulations, required for the application of this Agreement, as it deems necessary.

    Representation of the European Economic Community

    Section 3. A representative of the Commission of the European Communities will participate in meetings of the Governing Committee and the Advisory Board.

    Relations with other international organisations

    Section 4. The Governing Committee shall make appropriate arrangements for liaison with the International Monetary Fund and the Bank for International Settlements and for the participation of representatives from these institutions at meetings of the Governing Committee and the Advisory Board.

    Voting

    Section 5. 

    • (a) Each member shall have a number of votes in proportion to its quota, and such votes shall be cast by its representative to the Governing Committee or, in his absence, by his alternate.

    • (b) The result of a vote shall be determined as follows:

      • (i) only votes cast shall be taken into account:

      • (ii) except as otherwise specifically provided, all decisions of the Governing Committee shall be made by a majority of the votes:

      • (iii) no decision under Articles VI, X, XIV, XVI and XX shall be adopted unless the majority required includes half of the number of members casting votes.

    • (c) The Governing Committee may take decisions by mail ballot, or any rapid means of communication.

    The Advisory Board

    Section 6. 

    • (a) The Governing Committee shall designate an Advisory Board composed of financial officials, nominated by members, who shall act in their capacity as experts.

    • (b) The number of members of the Advisory Board shall be decided by the Governing Committee, by a two-thirds majority vote, provided that the number of such members shall not exceed half of the number of members of the Fund.

    • (c) The Advisory Board shall be responsible, under the supervision of the Governing Committee, for preparing the work of the Governing Committee, with the assistance of the Secretariat, and for such other duties as may be assigned to it by the Governing Committee. The Advisory Board shall report to the Governing Committee on such matters for consideration or decision by the Governing Committee.

    The Secretariat

    Section 7. 

    • (a) The Secretariat of the OECD shall serve as the Secretariat of the Fund and shall carry out staff functions for the Fund under the direction of the Governing Committee.

    • (b) All expenditure incurred by the OECD in connection with the operation of the Fund shall be reimbursed by the Fund by payments from the account referred to in Article XV.

    Headquarters

    Section 8. The headquarters of the Fund shall be located at the headquarters of the OECD in Paris, France.

    Designated authority

    Section 9. Each member shall designate a single monetary authority, which shall be the Treasury, stabilisation fund, central bank or any other monetary authority, to be responsible for transactions between that member and the Fund.

    The Agent

    Section 10. 

    • (a) The Fund may enter into an agreement with the Bank for International Settlements for the purpose of allowing the Bank to act as agent for the Fund for administrative purposes, including:

      • (i) maintaining books of account;

      • (ii) receiving monies due to the Fund;

      • (iii) making payments due from the Fund; and

      • (iv) depositing the assets of the Fund.

    • (b) The agreement provided for in paragraph (a) of this Section may also include arrangements concerning borrowing by the Fund pursuant to Article VIII, Section 1(b), or Article IX.

    • (c) The Agent shall submit a periodic report to the Governing Committee, including an account of the Fund's assets and liabilities and an income and expenditure account.

    Independent audit

    Section 11. The Governing Committee shall arrange for an independent audit of the accounts of the Fund and shall send a report on the audit, together with a description of the operations of the Fund, to each member.

Article XVII Capacity, Privileges and Immunities
  • Purpose of Article

    Section 1. The capacity, privileges and immunities set out in this Article shall be accorded to the Fund in the territory of each member to such extent as is necessary to enable the Fund to fulfil the functions with which it is entrusted.

    Capacity of the Fund

    Section 2. The Fund shall possess juridical personality and, in particular, the capacity to contract and to institute legal proceedings.

    Immunity from judicial proceedings

    Section 3. 

    • (a) The Fund shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of any of its powers to borrow money, or to buy and sell securities, in which cases actions may be brought against the Fund in a court of competent jurisdiction in the territory of a member in which the Fund has its headquarters, or has borrowed or issued securities. In such cases the Governing Committee shall, and in any other cases the Governing Committee may, appoint an agent for the purpose of accepting service or notice of process in accordance with the domestic law of the member.

    • (b) Notwithstanding the provisions of paragraph (a) of this Section, no action shall be brought against the Fund by any member, or any agency of a member, or any person acting for or deriving claims from a member or agency of a member. Members shall have recourse to such special procedures for the settlement of controversies between the Fund and its members as may be set out in the contracts entered into with the Fund, or in the regulations of the Governing Committee established under Article XVI, Section 2(g).

    • (c) The assets of the Fund, wherever located and by whomsoever held, shall be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Fund.

    Assets of the Fund

    Section 4. Assets of the Fund, wherever located and by whomsoever held, shall be immune from search, requisition, confiscation, expropriation or any other form of seizure by executive, legislative or administrative action.

    Archives of the Fund

    Section 5. The Archives of the Fund shall be inviolable.

    Exchange control

    Section 6. To the extent necessary to carry out the operations of the Fund, its assets shall be free from financial restrictions, regulations, controls and moratoria of any nature.

    Taxation

    Section 7. 

    • (a) Within the scope of its official activities, the Fund and its assets and income shall be exempt from all direct taxes, but not from charges for public utility services.

    • (b) No taxation of any kind shall be levied on any obligation or security issued by the Fund, including any dividend or interest thereon, by whomsover held:

      • (i) which discriminates against such obligation or security solely because of its origin; or,

      • (ii) If the sole jurisdictional basis for such taxation is the place or currency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the Fund.

    Representatives and officials

    Section 8. With respect to privileges and immunities:

    • (a) representatives of members to the Governing Committee and the members of the Advisory Board shall be regarded as representatives to an organ of the OECD; and

    • (b) officials of the OECD shall, in respect of things done or omitted to be done by them on behalf of the Fund, be regarded as acting as officials of the OECD.

    Waiver of immunity

    Section 9. The Governing Committee shall have the right and the duty to waive any immunity accorded by this Article in any case where, in its opinion, the immunity would impede the course of justice and can be waived without prejudice to the interests of the Fund.

Article XVIII Period Following Lapse of Lending Authority
  • During the period after lapse of authority to make loans referred to in Article V, Section 1, and before liquidation of the Fund, all provisions of this Agreement necessary for the purpose of meeting all obligations of and claims on the Fund contracted prior to the lapse of authority to make loans shall remain in force. The Governing Committee may decide, by a unanimous vote, that any other provision of this Agreement shall not be applied during this period.

Article XIX Liquidation
  • Date of liquidation

    Section 1. Following the lapse of authority for the Fund to grant loans, the Fund shall remain in existence until it has discharged all its obligations to third parties and the last repayment of any loan made by it has fallen due. At that time, the Fund shall be liquidated unless the Governing Committee decides otherwise by a 70 percent majority.

    Liquidation procedures

    Section 2. At the date of liquidation the Fund's assets and liabilities shall be liquidated in accordance with the following rules:

    • (a) Any balance in the account referred to in Article XV shall be distributed among the members which have claims pursuant to Article XIII, in proportion to those claims. Any sum remaining in the account after the foregoing distribution shall be distributed to all members in proportion to quotas, provided that no distribution shall be made to a member that has an outstanding financial obligation to the Fund:

    • (b) Any outstanding claims on, or obligations to, the Fund of members in respect of repayment of principal and payments of interest not made to the Fund on the due date and all claims or obligations of members arising under Sections 1, 2, 4 and 5 of Article XIII shall, if denominated in a currency, be converted into SDR at the current value of the currency in terms of SDR and shall be cancelled and replaced by bilateral claims and debts calculated as follows:

      • (i) each member shall have a bilateral debt to each of the members which has a claim on the Fund, equivalent to that fraction of that claim which is equal to the fraction which the quota of the first member represents of the sum of the quotas of all members; and

      • (ii) each member which has an obligation to the Fund shall have a bilateral debt to each of the other members, equivalent to that fraction of that obligation to the Fund which is equal to the fraction which the quota of the latter member represents of the sum of the quotas of all the members:

    • (c) Any unsettled amount arising under Section 7(b) of Article XIII shall be cancelled and replaced by a bilateral claim on, or debt to, the member in respect of which the unsettled amount arose:

    • (d) The bilateral debts arising under paragraphs (b) and (c) of this Section shall bear interest and shall be repaid on terms and conditions to be agreed between the bilateral parties. Such terms and conditions shall, in the case of debts arising under paragraph (b), include the denomination of the debt.

Article XX Interpretation
  • Any question of interpretation of the provisions of this Agreement, arising between any member and the Fund, or between members, shall be referred to an ad hoc committee of 3 experts designated by the Governing Committee upon the proposal of its Chairman. The opinion of the majority of the ad hoc committee shall be accepted by the Governing Committee, unless the Governing Committee decides otherwise.

Article XXI Amendment
  • The Governing Committee may propose amendments to this Agreement by unanimous decision of the members voting. The conditions for entry into force of an amendment shall be specified in the proposal of the Governing Committee, making provision for members to comply with their constitutional procedures.

Article XXII Implementation of the Agreement
  • Each member shall take the necessary measures, including any necessary legislative measures, to implement this Agreement. In particular, each member, upon entry into force of this Agreement for that member, shall have fulfilled all requirements to meet its obligations in accordance with a notice or instruction from the Fund under Article VII or Article XIII, by having taken all necessary legislative or other action that would permit immediate payment to the Fund and shall inform the Fund accordingly.

Article XXIII Final Provisions
  • Signature

    Section 1. This agreement shall be open for signature by any Member country of the OECD at the headquarters of the OECD from 9th April until 31st May 1975. Signatures shall be subject to ratification, acceptance or approval by the Signatory countries.

    Entry into force

    Section 2. 

    • (a) On the tenth day following the day on which Member countries of the OECD holding at least 90 percent of the quotas, having complied with constitutional procedures and having fulfilled the requirements under Article XXII, have deposited with the Secretary-General of the OECD an instrument of ratification, acceptance or approval, or a notification of consent to be bound, this Agreement shall enter into force for such Member countries.

    • (b) If the conditions of paragraph (a) of this Section have not been fulfilled, but at least 15 Member countries of the OECD holding at least 60 percent of the quotas have deposited an instrument of ratification, acceptance or approval, or a notification of consent to be bound, such Member countries may decide, by unanimous agreement, to bring this Agreement into force for themselves.

    Adherence after entry into force

    Section 3. After the entry into force of this Agreement in accordance with paragraphs (a) or (b) of Section 2 of this Article:

    • (a) For each Signatory country which deposits an instrument of ratification, acceptance or approval, or a notification of consent to be bound, within 12 months from the closing date for signature, this Agreement shall enter into force for that country on the tenth day following the day of deposit. The Governing Committee shall establish, in agreement with each such country, conditions regarding any financial obligations or claims associated with whatever loans the Fund may have made:

    • (b) Member countries of the OECD may become parties to this Agreement later than 12 months after the closing date for signature, in accordance with such terms and conditions as may be established by the Governing Committee.

    Notification

    Section 4. The Secretary-General of the OECD shall notify all Member countries of the OECD of the deposit of each instrument of ratification, acceptance, approval or accession, or a notification of consent to be bound, and of the entry into force of this Agreement or any amendment thereto.

    Authentic texts

    Section 5. The original of this Agreement, of which the English, French, German, Italian, Japanese, Netherlands and Spanish texts are equally authentic, shall be deposited with the Secretary-General of the OECD, and a certified copy thereof shall be furnished by him to each Member country of the OECD.

Annex
Quotas established under Article III of this Agreement

MembersAmounts of quotas in millions of Special Drawing Rights
Australia300
Austria200
Belgium480
Canada840
Denmark240
Finland160
France1 700
Germany, Federal Republic of2 500
Greece120
Iceland20
Ireland120
Italy1 400
Japan2 340
Luxembourg20
Netherlands600
New Zealand160
Norway200
Portugal120
Spain500
Sweden300
Switzerland400
Turkey120
United Kingdom1 600
United States5 560
Total20 000

Contents

  • 1General

  • 2About this eprint

  • 3List of amendments incorporated in this eprint (most recent first)


Notes
1 General
  • This is an eprint of the International Finance Agreements Amendment Act 1975. The eprint incorporates all the amendments to the Act as at 27 February 2013. The list of amendments at the end of these notes specifies all the amendments incorporated into this eprint since 3 September 2007.

    Relevant provisions of any amending enactments that contain transitional, savings, or application provisions that cannot be compiled in the eprint are also included, after the principal enactment, in chronological order.

2 About this eprint
3 List of amendments incorporated in this eprint (most recent first)
  • International Finance Agreements Amendment Act 2013 (2013 No 4): section 7