Press Release No. 07/245

1.

Your duties as Managing Director of the International Monetary Fund will be those at present or in the future set forth in the Articles of Agreement and supplemented by the By-Laws and Resolutions adopted by the Board of Governors and by the Rules and Regulations and decisions adopted by the Executive Board.

2.

Subject to the provisions of this agreement, you shall observe the standards of conduct applicable to staff members of the International Monetary Fund. In that regard, you shall avoid any conflict of interest, or the appearance of such a conflict. Moreover, the following shall apply:

(a)

It is understood that you have resigned from any public or private position that you may have held. It is further understood that you will not, without the approval of the Executive Board, apply for or accept any public or private employment or position, whether or not you would receive any compensation for such employment or position, or engage in any business activity.

(b)

You may manage your private investments and those of members of your immediate family to the extent that the management of those investments does not involve the operation of a business or create a conflict of interest, or the appearance of such a conflict, with the performance of your duties. You shall provide the annual financial certification and disclosure required of senior (B-level) staff members.

(c)

In view of the international character of your position, it is expected that, in respect of services rendered during your tenure with the Fund, you will not accept any gift, fee or favor from any government or from any authority external to the Fund. In addition, you will not, without the approval of the Executive Board, accept any honor, decoration or award during your tenure with the Fund.

(d)

While you may be a member of a political party and contribute funds to the party or to individual candidates, you will not otherwise engage in partisan political activity, as this would not be compatible with your duties as Managing Director of the Fund.

If you need clarification regarding the meaning of the above requirements or their application in a particular circumstance, you should consult with the Executive Board.

3.

a)

Your salary as Managing Director of the Fund shall be $420,930 per annum. As explained in Section 14(b) of the By-Laws, this salary shall be net of income taxes.

b)

You will receive an allowance in the aggregate amount of $75,350 per annum, similarly net of any income taxes, payable in equal monthly installments, without any certification or justification by you, to enable you to maintain, in the interests of the Fund, a scale of living appropriate to your position as Managing Director and to the Fund's need for representation. In addition, you will be reimbursed for reasonable expenses actually incurred for entertainment directly related to the business of the Fund.

c)

The Fund will reimburse you per diem at the rate applicable to Executive Directors plus reasonable vouchered expenses not covered by the per diem, including all hotel expenses, incurred by you for travel in the interest of the Fund. Such expenses shall include travel and hotel expenses of your spouse in attending Annual Meetings of the Board of Governors held outside the Washington, D.C. area, and in accompanying you on official travel in circumstances where this is in the interest of the Fund.

d)

Both your salary and your general representational allowance will be adjusted on July 1 of each year beginning in 2008 by the percentage increase in the Washington metropolitan-area Consumer Price Index¹ for the twelve months ending the preceding May.

4.

a)

(i) You will participate in the Staff Retirement Plan, with effect from the date of your appointment.

(ii) In addition to the pension which you will receive under the Staff Retirement Plan, you will receive, as from the commencement of this pension and continuing for the duration of your life, an annual supplemental retirement allowance equal in the amount to a percentage of the total pension payments you receive each year on account of your participation in the Staff Retirement Plan, determined according to years of completed service as indicated in the table in Annex I; provided, however, that the amount of that supplemental retirement allowance each year would be reduced to the extent that you receive income from regular and continuous employment of not less than six months' duration.²

(iii) In any event and regardless of any regular and continuous employment, no reduction will apply to the supplement retirement allowance after you reach 67 years of age.

(iv) This supplemental retirement allowance will be payable in equal monthly installments along with the monthly payments from the Staff Retirement Plan. Should you elect either to receive a withdrawal benefit or to commute a portion of your pension under the Staff Retirement Plan, an amount equal to the percentage applicable to the number of years of completed service set forth in the table in Annex I, of the amount paid in commutation would be paid to you at the same time under the supplemental retirement allowance scheme. In addition, any other elections or options selected by you that apply to benefits under the Staff Retirement Plan will likewise apply to the corresponding benefits applicable under the supplemental retirement allowance. All payments will be subject to any necessary adjustments, including recovery for overpayments, at the end of each year.

b)

Should you predecease your spouse after leaving the Fund, the Fund will pay to your spouse for the duration of your spouse's life and children an annual supplemental retirement allowance equal to a percent of the pension payments and children's benefits they will receive each year under Sections 4.10 and 4.9(c) of the Staff Retirement Plan, determined according to years of completed service as indicated in the table in Annex I.

c)

In the event of your retirement due to disability or of your death during your period of service as Managing Director, the Fund will pay to your surviving spouse for the duration of your spouse's life and children an annual supplemental retirement allowance, equal in amount to 100 percent of the pension payments and children's benefits they will receive each year under Section 4.9 and 4.10, respectively, of the Staff Retirement Plan.

5.

You will be entitled to a reasonable vacation, and in matters of personnel policy, including home leave, benefits equivalent to those applying to the Executive Directors shall, except as otherwise provided, be applicable to you (without regard to any transitional rules currently applying to Executive Directors). Your travel on official Fund business and upon your appointment and separation (as well as that of any family members eligible for such travel) shall be in first class. Financial arrangements equivalent to those prescribed in General Administrative Order No. 22, Rev. 6 shall be available to you.

6.

a)

It is our understanding that, although you have been appointed for a term of five years, either you or the Executive Board shall be free to terminate your connection with the Fund at any time. It is expected, however, that, should you desire to resign, you will give the Fund reasonable advance notice of your decision.

b)

At the end of your term or terms of service, or if your service is terminated by the Executive Board after more than one year of service, or if you resign after having served for at least two years, you will be paid a Separation Allowance equal to a percent of the total salary paid to you during your last year of service, according to years of completed service, as indicated in the table in Annex I. The amount of the Separation Allowance will be reduced by the amount of any non-taxable income, and by two-thirds of any taxable income, you receive from regular and continuous employment of not less than six months' duration, as explained in footnote 2, during the year following the end of your service. In addition, the Separation Allowance will be reduced by the amount, if any, of the supplemental retirement allowance paid for the period covering the first year following your separation from service. All payments will be subject to any necessary adjustment including recovery for overpayments, at the end of the first year. The Separation Allowance would be net of income tax in the same manner as your salary.

7.

Upon your acceptance of the understandings set forth in this letter, this letter will be publicly disclosed by the Fund.