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Thursday, 21 August 1980
Page: 633

Mr MACPHEE (Balaclava) (Minister for Immigration and Ethnic Affairs and Minister Assisting the Treasurer) I move:

That the Bill be now read a second time.

The purpose of this brief and simple Bill is to allow Australia to consent to an increase in its quota' in the International Monetary Fund, and to make the consequent payment. A country's quota in the IMF determines its subscription to the Fund, its rights to draw from the Fund, its voting power in the Fund, and its share in allocations of special drawing rights - SDRs- by the Fund. From time to time the Fund reviews the levels of quotas in the light of developments in particular economies, the world economy and the international monetary system. The seventh general review of quotas was approved by the Fund's Board of Governors in December 1978 and provided for a 50 per cent increase in the quotas of all

Fund members and additional increases for eleven rapidly growing member countries. This followed a period when Fund quota increases had lagged behind growth in world trade and international reserves and Australia voted in favour of the resolution which provided for the increase. The increase will come into effect when members accounting for 75 per cent of existing quotas have consented to the increase. As at 12 August 1980 members holding 40.33 per cent of total Fund quotas had consented to the increase, which is expected to become effective by early 1981. Once the increase does come into effect, members will have a limited period in which to consent to the increases in their quotas and to pay the additional amount to the Fund. It is thus appropriate for Parliament to consider the matter now.

The increase in Australia's quota proposed under the review is from SDR790 million to SDR 1,1 85 million, an increase of 50 per cent, and section 4 of the Bill approves consent to this increase. Section 5 allows part of the quota subscription to be paid in the form of a non-negotiable, non-interest bearing security as provided in section 7 of the principal Act. As provided for in the Fund's articles of agreement, the additional quota subscription will be paid 25 per cent in SDRs and 75 per cent in the form of a non-interest bearing, non-negotiable promissory note. The SDRs will be purchased from the Reserve Bank under the standing appropriation of section 5 (6) of the principal Act. Provision for this purchase has been made in the Budget Estimates, but it is a below-the-line' transaction and does not affect the Budget deficit. The issue of the promissory note has no effect on the Consolidated Revenue Fund until such time as the Fund's use of Australian dollars exceeds its current holdings of Australian dollars.

The increase under the seventh general review of quotas will augment the financial resources available to the fund to carry out its functions - basically, the provision of temporary assistance to countries facing balance of payments difficulties and promoting a stable international monetary system. From Australia's point of view, it will increase our drawing rights and our entitlement to allocations of SDRs, as well as sustaining our voting power in the fund. I commend the Bill to honourable members.

Debate (on motion by Mr West) adjourned.

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