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Former USSR: IMF May Finally Give Newer Members First SDR's

  • Robert Lyle

Washington, 24 April 1997(RFE/RL) -- Representatives from most of the countries of Central and Eastern Europe and the former Soviet Union attending the spring meetings of the International Monetary Fund are hoping that at last they may get their fair share of the equity of the global organization.

When the IMF and its sister institution, the World Bank, were formed in the late 1940s, each member country was given an allocation of the fund's currency, the SDR (Special Drawing Rights.)

In fact, any country which joined the fund before January 1, 1970, shared not only in the first parcelling-out of the currency but subsequent allocations as well.

But 39 countries which joined the IMF since that date nearly 30 years ago have received none of the organization's basic equity. Other than Hungary and Romania -- which joined before 1970 -- every member country from Central and Eastern Europe and the former Soviet Union still hold no SDR's.

For years, IMF management has pushed for what has come to be called an "equity" allocation of SDR's and last autumn the fund's policy-making Interim Committee endorsed the proposal and told the organization's Board of Executive Directors to bring a specific plan to the committee's spring meeting.

The committee is composed of 24 Finance Ministers and Central Bank Governors, including Russian First Deputy Prime and Finance Minister Anatoly Chubais. It represents all 181 nations in the fund.

It stopped short, however, of agreeing on an actual amount to be allocated, leaving that to be decided upon by the executive directors, who oversee day-to-day operations of the fund.

IMF Managing Director Michel Camdessus proposed the creation of another 26.600 billion SDR's, worth about $37 billion. But several of the fund's richer members, such as the U.S., balked at that. American officials suggested a figure of only half that amount.

Thursday, Camdessus told reporters that he hopes the Interim Committee will be able to "finalize" the allocation when it meets on Monday. But IMF sources say that while there has been agreement on the executive board on the form of the equity allocation, a final cost figure has not yet been agreed upon.

The sources say the consensus is moving toward the higher figure, but note that nothing is certain until the executive directors meet again this week-end and vote on the total amount.

The differences between the rich nations and the poorer nations are "serious," says one source, but there is optimism that they can be bridged in time to send the proposal to the Interim Committee.

There is already agreement that the allocation of new SDR's will be made to ALL member nations, but that those who joined after 1969 will get greater numbers to give them equity within the total.

The lack of an allocation of SDR's has not stopped any of these newer member countries from participating fully in IMF lending programs, but it has limited their ability to carry out a wide array of normal financial transactions within the framework of the fund, such as certain exchanges of currencies, for example.

The spring IMF/World Bank sessions are primarily the meeting of the IMF's Interim Committee and the joint fund/bank Development Committee. But the sessions draw wider attention and attendance because all of the various groupings of countries -- from the finance ministers of the G-7 major industrial nations plus Russia, to the G-24 group of poorest nations -- also meet during these days.

The finance ministers of the G-7 countries -- the U.S., Japan, Germany, France, Great Britain, Italy and Canada -- joined part of the time by Russia, will meet on Sunday.