Organisation for Economic Co-operation and Development (Financial Support Fund)(Agreement) Act , 1976

1 Definitions.

1.—In this Act—

“the Agreement” means the agreement establishing a Financial Support Fund of the Organisation for Economic Co-operation and Development, the text of which is set out in the Schedule to this Act;

“the Central Bank” means the Central Bank of Ireland;

“the Fund” means the Financial Support Fund of the Organisation for Economic Co-operation and Development established by the Agreement;

“the Minister” means the Minister for Finance.

2 Approval of acceptance.

2.—Acceptance by the State of the Agreement is hereby approved.

3 Central Bank to be single monetary authority for certain purpose of Agreement.

3.—For the purpose of section 9 of Article XVI of the Agreement, the Central Bank shall act as the single monetary authority responsible for transactions between the State and the Fund.

4 Provision for certain transactions in relation to the Fund.

4.—(1) Any payment requiring to be made or undertaking requiring to be provided by the State to the Fund under the Agreement, other than a payment or undertaking under Article XIX of the Agreement, shall, as and when it becomes appropriate to be made or provided, be made or provided on behalf of the State by the Central Bank.

(2) All moneys receivable by the State from the Fund under the Agreement, other than under Article XIX of the Agreement, shall be paid to the Central Bank on behalf of the State.

5 Power of Central Bank to create and issue certain obligations for purposes under section 4.

5.—(1) For the purpose of making a payment or providing an undertaking under section 4 of this Act, the Central Bank may create and issue, in such form as it thinks fit, such notes or other obligations as may be required for that purpose and may, in such manner as it thinks fit, enter into such commitments as may be required for that purpose.

(2) Any payments in respect of any notes or obligations created or issued under this section or in respect of any commitments entered into under this section shall be made by the Central Bank.

6 Provisions regarding liquidation of Fund.

6.—(1) Any payment by the State under Article XIX of the Agreement shall be made by the Minister from the Central Fund or the growing produce thereof.

(2) All moneys receivable by the State under Article XIX of the Agreement shall be paid to the Minister and shall be disposed of for the benefit of the Exchequer as the Minister may direct.

(3) Any unsettled amount due to the Central Bank on the liquidation of the Fund in respect of a payment made under section 4 of this Act by the Central Bank shall be duly paid to the Central Bank by the Minister from the Central Fund or the growing produce thereof.

7 Commencement.

7.—This Act shall come into operation on such day or days as the Minister, after consultation with the Central Bank, appoints by order or orders, either generally or with reference to a particular purpose or provision, and different days may be so appointed for different purposes and different provisions of this Act.

8 Expenses.

8.—Any expenses incurred by the Minister in the administration of this Act shall be paid out of moneys provided by the Oireachtas.

9 Short title.

9.—This Act may be cited as the Organisation for Economic Co-operation and Development (Financial Support Fund) (Agreement) Act, 1976.

SCHEDULE AGREEMENT ESTABLISHING A FINANCIAL SUPPORT FUND OF THE ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

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 Co-operation 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

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

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

(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

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

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

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

Article V

LOANS

Lending authority

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 two years from the entry into force of this Agreement.

Eligibility for Loans

(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

(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 seven 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

(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 repay 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

(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 per cent of that member's quota, the decision to grant the loan shall require a 90 per cent majority;

(iii) exceed 200 per cent 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 members 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

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

(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

The Fund may use the following two 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

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

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

(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

(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

(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