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2000
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
INTERNATIONAL MONETARY AGREEMENTS AMENDMENT BILL (NO. 1) 2000
EXPLANATORY MEMORANDUM
(Circulated by authority of the Treasurer,
the Hon Peter
Costello, MP)
ISBN: 0642 452873
The Bill will enable Schedule 1 of the International Monetary Agreements
Act 1947 (IMA Act) to be amended to reflect a change in the International
Monetary Fund’s (IMF’s) Articles of Agreement.
In September 1997
the Board of Governors of the IMF approved a set of amendments to the
IMF’s
Articles of Agreement, known as the Fourth Amendment. The Fourth Amendment to the IMF’s Articles of Agreement provides for a special, one-time allocation of SDR21.43 billion. Special Drawing Rights or SDRs are interest-bearing reserve assets, created by the IMF to supplement members’ existing reserve assets. They also serve as the IMF’s unit of account.
Since 1993, the Executive Board of the IMF has had concerns that there was not an equitable share of cumulative SDRs between members relative to their quotas. This is because some members, in particular those whose economies are in transition, had joined the IMF since the last general allocation of SDRs in 1981, and have not received an allocation. In particular, some East European nations have no SDRs because there have been no allocations since they became members.
The Amendment has been proposed as a means of ensuring greater equity between IMF members in terms of their cumulative SDR allocations relative to their quotas (or capital subscriptions) in the IMF, at a benchmark level of 29.32 per cent. Australia would receive SDR213.5 million, or about A$500 million of additional reserves.
Australia voted in favour of the proposed amendment. If it enters into force, the amendment would be binding on all members, including those who have not advised their view on the proposed amendment.
The Bill makes amendments to Schedule 1 which are the same as the proposed amendments to the IMF’s Articles of Agreement. The Bill will enter into force when the Fourth Amendment to the IMF’s Articles is formally accepted by the required majority of the Fund’ membership. The Fourth Amendment enters into force when three fifths of the IMF’s members, having 85 per cent of the total voting power, have accepted it.
Financial Impact Statement
This Bill will have no financial impact on the Commonwealth’s fiscal budget balance.
1. Upon enactment, the Act will be known as the International Monetary Agreements Amendment Act (No.1) 2000.
Clause 2 — Commencement
2. Clauses 1 to 3 commence on the day on which the Act receives the Royal Assent.
3. Schedule 1 commences on a day to be fixed by proclamation. The date of that proclamation cannot be earlier than the date of the entry into force of the Fourth Amendment of the IMF’s Articles of Agreement — which depends on action by other IMF members outside Australia’s control. If a proclamation is not made within 6 months after the Fourth Amendment enters into force the Schedule will commence automatically at the end of that period.
Clause 3 — Schedule(s)
4. The Bill amends the International Monetary Agreements Act 1947 (IMA Act) as set out in Schedule 1.
Item 1 — Replaces section 1 of Article XV.
5. This item replaces the text of the existing section 1 of Article XV of the Articles of Agreement of the IMF, reproduced in Schedule 1 to the IMA Act. The item substitutes a new section set out in the item.
Item 2 — Adds new Schedule M.
6. This item adds a new schedule at the end of the text of the Articles of Agreement of the IMF as reproduced in Schedule 1 to the IMA Act.
7. The new section and schedule amend the text of the Schedule to the IMA as reproduced in the IMA Act to make it consistent with changes to the IMF’s Articles of Agreement. The changes to the IMF’s Articles of Agreement provide the IMF with the authority for its special, one-time allocation of SDR21.43 billion.