10-Nation Loan Plan To Support I.M.F.

Press, Volume CI, Issue 29716, 9 January 1962, Page 11

10-Nation Loan Plan To Support I.M.F.

(NZ.P.A .-Reuter—Copyright) WASHINGTON, January 8. Ten major industrial nations had agreed to stand ready to lend up to a total of 6000 million dollars to the International Monetary Fund in their own currencies in order to strengthen the international monetary system, it was officially announced today.

The scheme is regarded as a major development in the Western world’s effort to combat ill-effects resulting from sudden and large shifts of funds from one country to another and to overcome balance of payments difficulties.

The United States, with 2000 million dollars, and Britain and Germany, each with the equivalent in pounds sterling and marks of 1000 million dollars, will be the largest contributors. Other countries taking part and their commitments in dollars are: Belgium, 150 million; Canada, 200 million; France, 550 million: Holland, 200 million; Italy, 550 million: Japan, 250 million; and Sweden, 100 million. Opening of Programme The borrowing arrangements, the International Monetary Fund announcement said, would become effective when at least seven countries with commitments totalling the equivalent of 5500 million dollars formally ratified the scheme. The arrangements are to remain in effect for four years. The International Monetary Fund explained that the 10 countries named would stand ready to lend their currencies to the fund up to specified amounts when the Fund and the countries concerned considered that supplementary resources were needed to forestall or cope with an impairment of the international monetary system. “The general borrowing arrangements should make it possible to mobilise quickly large additional resources in

defence of the international monetary system,” the Fund said. “The need for the assurance of additional resources arises not from any failure of the monetary system, but from the broader convertibility of currencies, particularly those of the main industrial countries. "This more widespread convertibility, which is so useful for the growth of world trade, has at the same time made possible sudden and substantial shifts of funds from one country to another.

“To avoid any undesirable impact on the functioning of the international monetary system as a result of such developments, it has become imperative to strengthen the resources which may be made available, and so to enable the countries which experience difficulties to pursue appropriate policies. "Fortunately, most of the industrial countries already possess substantial reserves of their own. For its part, the International Monetary Fund has nearly 3000 million dollars in its gold account and 6500

million dollars in the currencies of the main industrial countries. “At any given time, however, some of these countries may be facing balance of payments difficulties, so that in order to promote international monetary balance it would be advisable that temporarily these currencies should not be drawn from the Fund. “Fund drawings should be made mainly in the currencies of those countries that have strong balance of payments and reserve positions,” the announcement said.