§ Mr. Alan Clarkasked the Chancellor of the Exchequer if he will make a statement about the meeting of the interim committee of the International Monetary Fund held in Washington on 10 and 11 February.
§ Sir Geoffrey HoweThe meeting was convened to consider the world economic outlook and to reach96W decisions on a replenishment of the resources of the fund. It had been brought forward, at my suggestion, from its scheduled date in April.
It was decided that the total of fund quotas should be increased from the present figure of some SDR 61 billion to SDR 90 billion—equivalent to about US $98.5 billion. This decision followed the recent agreement of participants in the general arrangements to borrow to increase commitments under those arrangements from some SDR 6½ billion to SDR 17 billion—equivalent to about US $19 billion. This latter amount will also be available for on-lending to non-participants if required by a threat to the stability of the international monetary system. Saudi Arabia announced its readiness to provide resources to the fund in association with the GAB.
These decisions taken together amount to a major addition to fund resources in the 1980s. The technical position is that while about half of the fund's quota subscriptions represent useable currencies, a higher proportion—some two thirds—is the case in relation to GAB resources. On that basis the total of effectively available fund resources has been almost doubled.
Member countries agreed to take the necessary action to bring these proposals into effect by the end of 1983. The acceleration of the quota decision and its planned date of implementation means that increased resources will be available some two years earlier than previously envisaged.
The committee considered the question of allocation of SDRs. It asked the executive board to review the latest trends in growth, inflation and international liquidity in order to establish, not later than the committee's next meeting on 25 September, whether a proposal for a new SDR allocation would command broad support among members of the fund.
In my statement of 31 January to the Treasury and Civil Service Select Committee I outlined the global strategy which, speaking as chairman of the interim committee, I thought it desirable should be followed over the coming months. The aim is to manage global recovery without rekindling inflation, and to ensure that countries with particularly severe debt problems are restored to economic health. In that context I said that I regarded it as essential that the fund should have adequate resources to enable it to perform its central role in the process of global adjustment. The decisions now taken meet this need.
I have arranged for a copy of the communiqué from the meeting to be placed in the Library.