Assessment of Strength of Member’s Balance of Payments And Gross Reserve Position For The Purposes of Designation Plans, Operational Budgets and Repurchases Under Article V, Section 7(b)

This decision sets forth guidelines for the assessment of the strength of the balance of payments and gross reserve position of a participant under Article XIX, Section 5(a)(i) (designation plans), and of the balance of payments and reserve position of a member under Article V, Section 3(d) (operational budgets) and, in accordance with Executive Board Decisions No. 5704-(78/39) and No. 6172-(79/101), under Article V, Section 7(b) (early repurchases).

• 1. Assessments of strength for the purposes of Article V, Sections 3(d) and 7(b) will be based on a member’s balance of payments and gross reserve position, and shall take into account developments in the exchange markets.

• 2. A member’s “balance of payments and gross reserve position” is a combined concept, under which strength in one element may compensate for moderate weakness in the other.

• 3. In the Fund’s assessment whether a member’s balance of payments and gross reserve position is sufficiently strong for the purposes of the designation plans, operational budgets, and early repurchases, all relevant factors and data on the member’s position shall be considered, including the following: recent and prospective movements in gross reserves, balance of payments developments, the relationship of gross reserves to a member’s imports and Fund quota, and developments in exchange markets. To the extent that recent data on changes in a member’s net reserves are available, these shall be taken into account as an indicator of the member’s balance of payments position.

• 4. If a member has outstanding purchases in the General Resources Account, the assessment of its balance of payments and gross reserve position will include judgments on whether the member’s position shows an improvement in comparison with the position at the time it made its last purchase from the Fund, on the extent of the improvement, and on whether it is likely to be sustained in the foreseeable future. Special attention will be given to the recent and prospective evolution in the various components of the member’s balance of payments, including developments in the member’s net reserves to the extent that data are available.

Decision No. 6273-(79/158) G/S,

September 14, 1979