ARTICLE VIII AND ARTICLE XIV
Payments Restrictions
ARTICLES VIII AND XIV
There has been in recent years a substantial improvement in the balance
of payments and the reserve positions of a number of Fund members which has
led to important and widespread moves to the external convertibility of
many currencies. Most international transactions are now carried on with
convertible currencies, and many countries have progressed far with the
removal of restrictions on payments. In consequence of these developments,
it seems likely that a number of members of the Fund either have reached or
are nearing a position in which they can consider the feasibility of formally
accepting the obligations of Article VIII, Sections 2, 3, and 4. Previous
decisions taken by the Fund, such as those on multiple currency practices,
bilateral arrangements, discriminatory restrictions maintained for balance
of payments purposes, and payments restrictions for security reasons,
indicate the Fund’s attitude on these matters. The present decision has
been adopted as an additional guide to members in pursuance of the purposes
of the Fund as set forth in Article I of the Articles of Agreement.
1. Article VIII provides in Sections 2 and 3 that members shall not
impose or engage in certain measures, namely restrictions on the making of
payments and transfers for current international transactions,
discriminatory currency arrangements, or multiple currency practices,
without the approval of the Fund. The guiding principle in ascertaining
whether a measure is a restriction on payments and transfers for current
transactions under Article VIII, Section 2, is whether it involves a direct
governmental limitation on the availability or use of exchange as such.
Members in doubt as to whether any of their measures do or do not fall
under Article VIII may wish to consult the Fund thereon.
2. In accordance with Article XIV, Section 3,1 members may at any time notify
the Fund that they accept the obligations of Article VIII, Sections 2, 3,
and 4, and no longer avail themselves of the transitional provisions of
Article XIV. Before members give notice that they are accepting the
obligations of Article VIII, Sections 2, 3, and 4, it would be desirable
that, as far as possible, they eliminate measures which would require the
approval of the Fund, and that they satisfy themselves that they are not
likely to need recourse to such measures in the foreseeable future. If members,
for balance of payments reasons, propose to maintain or introduce measures
which require approval under Article VIII, the Fund will grant approval
only where it is satisfied that the measures are necessary and that their
use will be temporary while the member is seeking to eliminate the need for
them. As regards measures requiring approval under Article VIII and
maintained or introduced for nonbalance of payments reasons, the Fund
believes that the use of exchange systems for nonbalance of payments
reasons should be avoided to the greatest possible extent, and is prepared
to consider with members the ways and means of achieving the elimination of
such measures as soon as possible. Members having measures needing approval
under Article VIII should find it useful to consult with the Fund before
accepting the obligations of Article VIII, Sections 2, 3, and 4.
3. If members at any time maintain measures which are subject to
Sections 2 and 3 of Article VIII, they shall consult with the Fund with
respect to the further maintenance of such measures. Consultations with the
Fund under Article VIII are not otherwise required or mandatory. However,
the Fund is able to provide technical facilities and advice, and to this
end, or as a means of exchanging views on monetary and financial
developments, there is great merit in periodic discussions between the Fund
and its members even though no questions arise involving action under
Article VIII. Such discussions would be planned between the Fund and the
member, including agreement on place and timing, and would ordinarily take
place at intervals of about one year.
4. Fund members which are contracting parties to the GATT and which
impose import restrictions for balance of payments reasons will facilitate
the work of the Fund by continuing to send information concerning such
restrictions to the Fund. This will enable the Fund and the member to join
in an examination of the balance of payments situation in order to assist
the Fund in its collaboration with the GATT. The Fund, by agreement with
members which are not contracting parties to the GATT and which impose
import restrictions for balance of payments reasons, will seek to obtain
information relating to such restrictions.
Decision No. 1034-(60/27),
June 1, 1960
1 Ed. Note: Corresponds to Article XIV, Section 1 of the Articles of
Agreement after the Second Amendment.
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