International Fund Refuses Approval

Wanganui Chronicle, 27 January 1948, Page 5

International Fund Refuses Approval

Washington, Jan. 26 The International Monetary Fund announced today that it has refused to approve the new par value announced by the French Government for the franc and called it “discriminatory.” M. Gamille Gutt, managing-direc-tor of the fund, said he feared the French devaluation “would encourage trade distortions and might cause unwarranted doubt on the real strength of many currencies.” M. Gutt said the French Government’s action would reflect on the entire field of international economic co-operation among the nations. He added that France will remain a member qf the fund, despite the franc devaluation action, but under present conditions will not be permitted to use the fund’s resources. M. Gutt said the French Government had notified him that it did not contemplate withdrawing any further money from the fund. The French Government already had withdrawn 125,000,000 dollars of its 525,000,000 dollars quota, thus practically exhausting tne funds it was entitled to for many months. No member of the fund could draw more than 25 per cent, of its quota within any 12 month period. M. Gutt said the French Government had informed him the step was transitory and that as soon as feasible it intended to come to a more stable system. Under questioning, M. Gutt said that each country now could decide for itself what rate it should pay for the new franc in trading with the French. No other member country in the fund had indicated any intention of following France's example, but there was nothing to prevent others from devaluing tneir currency. He added that the fund had offered to meet France’s desires halfway, but France had insisted that its original plan for the creation of an export franc be approved.