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Thursday, 4 May 1961

1.   Annexed hereto is a letter dated April 21, 1961 from the Secretary of the Treasury of Australia and an attached Memorandum of the Australian Government which sets forth the policies and intentions which the authorities of Australia will pursue.

2.   In consideration of the policies and intentions set forth in the Memorandum attached to the annexed letter, the International Monetary Fund agrees to a stand-by arrangement for the support of those policies and intentions. The stand-by arrangement is designed to assist Australia in meeting pressures on its balance of payments while the various measures intended to restore equilibrium, as described in the Memorandum, are being implemented and take effect.

3.   For a period of one year, from May 1, 1961, Australia will have the right to purchase the currencies of other members from the Fund in exchange for its own currency in an amount equivalent to US$100 million provided that:

(i)   purchases under this stand-by arrangement shall not, without the consent of the Fund, exceed the equivalent of US$20 million in the first two months, US$40 million in the first four months and US$80 million in the first six months; and

(ii)   the amounts prescribed in this paragraph 3 shall be augmented by amount's equivalent to repurchases in respect of purchases under this stand-by arrangement or in respect of the drawing made at or about the same date when this stand-by arrangement takes effect', unless when any such repurchase is made the member informs the Fund that it does not wish the stand-by arrangement to be augmented by the amount of that' repurchase.

4.   Australia and the Fund will remain in close consultation during the period this stand-by arrangement is in effect. This consultation may take (he form of correspondence and visits of officials of the Fund to Australia or of representatives of Australia to Washington, D.C. In particular, Australia will keep the Fund informed of development's in the exchange, trade, credit and fiscal situation through reports at intervals or dates re quested by the Fund during the period this standby arrangement is in effect.

5.   Australia will pay charges for this stand-by arrangement' in accordance with the decisions of the Fund of December 23, 1953 and April 27, 1959.

6.   Subject to paragraph 3 of this stand-by arrangement, Australia will have the right to engage in the transactions covered by this stand-by arrangement without further review by the Fund. This right can be suspended only with respect to requests received by the Fund after (a) a formal declaration of ineligibility, or (b) a decision by the Executive Board to suspend transactions, either generally under Article XVI, Section 1 (a) (ii), or in order to consider a proposal made by an Executive Director or the Managing Director formally to suppress or limit the eligibility of Australia. When notice of a decision of formal ineligibility or of a decision to consider a proposal is given pursuant to this paragraph 6, purchases under this stand-by arrangement will be resumed only after consultation has taken place between the Fund and Australia and agreement has been reached on the terms for the resumption of such purchases.

7.   Not latex than three years after each purchase of exchange by Australia under this arrangement, Australia will repurchase an equivalent amount of Australian pounds from the Fund; provided that if the pounds held by the Fund as a result of transactions under this stand-by arrangement are reduced by repurchases under Article V, Section 7, or otherwise, such reductions shall be credited against the earliest amounts that become payable under this paragraph 7. Repurchases shall be made in gold or convertible currencies acceptable to the Fund.







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