310 Government Finance Statistics Manual 2014
IMF’s sale (repurchase) of the member’s currency to
meet the demand for use of IMF resources by other
members in need of balance of payments fi nancing. A
member’s reserve position in the IMF constitutes part
of its reserve assets (external fi nancial assets).
A3.85 To utilize its reserve tranche in the IMF, a
member must present a declaration of a balance of
payments need and purchase foreign exchange from
the IMF with its own currency. Th e domestic cur-
rency, equal to the value of the foreign exchange, is
paid into the IMF’s No. 1 Account with the member’s
depository or through the issuance to the IMF of a
noninterest-bearing promissory note recorded in the
IMF’s Securities Account. Th e transaction is recorded
in the public sector unit’s accounts as a reduction in
the member’s external fi nancial assets in the form of
currency and deposits (i.e., the reserve tranche po-
sition in the IMF), which is off set by an increase in
the member’s external fi nancial assets (i.e., foreign
exchange).Credit and loans from the IMF
A3.86 A member may make use of IMF credit or
concessional loans under the trusts administered by
the IMF (for fi nancing for low-income countries) to
acquire additional foreign exchange from the IMF.
Th e use of IMF credit and concessional loans results
in the same outcome—that is, the member entering
into these agreements has access to foreign exchange
in return for agreeing to meet a set of conditions. Both
IMF credit and concessional loans are classifi ed in the
public sector unit’s accounts as external liabilities in
the form of loans, although the two types of arrange-
ments are executed in diff erent ways:- When a member country uses IMF credit, it
“purchases” foreign exchange from the IMF in
return for its domestic currency deposited in the
IMF No. 1 Account (or backed by the issuance of
a promissory note). Use of IMF credit is shown
as the member’s loan liability (denominated in
SDRs) in the accounts of the public sector unit,
refl ecting the economic nature of the transac-
tion. Liabilities under IMF credit arrangements
are extinguished when the member uses foreign
exchange to “repurchase” its domestic currency. - Th e concessional loans, also denominated in
SDRs, result in the member borrowing foreign
exchange with a commitment to repay. Such
loans do not aff ect the IMF No. 1 Account. Re-
payments must be made in SDRs or freely use-
able currencies.
A3.87 If the value of the member’s domestic cur-
rency changes in relation to the SDR, “maintenance
of value payments” are made once a year in the No. 1,
No. 2, and Securities Accounts in domestic currency
to maintain a constant SDR liability. Because the li-
ability is denominated in SDRs, the maintenance of
value payments are not entered as transactions in the
central bank’s accounts, but as holding gains/losses
(revaluations) when the domestic currency is used as
the unit of account.
A3.88 When the central bank passes on proceeds
from IMF borrowing to a general government unit:- Th e central bank has a domestic fi nancial claim
(loan) on the general government unit and the
general government unit has a domestic debt li-
ability to repay (principal and interest). - Th e central bank has an external debt liability
to repay, and may use the debt service payments
received from the general government unit to
do so.
Remuneration
A3.89 Th e IMF pays its members “remunera-
tion” quarterly (in SDRs) on the basis of their reserve
tranche position, except for a small portion related
to prior quota payments in gold that are interest-free
resources to the IMF. Th is remuneration should be
recorded on an accrual basis as interest income (rev-
enue) of the public sector unit, which is realized as an
increase in its external fi nancial assets in the form of
currency and deposits.IMF No. 2 Account
A3.90 As discussed in paragraph A3.82, the IMF
No. 2 Account is used by the IMF for administrative
payments and is refl ected as a liability in the public
sector unit’s accounts. Transactions involving the
No. 2 Account are recorded as increases or decreases
in this liability and are off set by the source of funds
(in the case of an increase) or the use of funds (in the
case of a decrease). When the IMF transfers funds
from the No. 1 Account to the No. 2 Account, the
public sector unit’s accounts will show an increase in
its reserve tranche (i.e., currency and deposits). Th e