Section 4. Reduction of a collective undertaking

As repayments of principal are made by the Fund with respect to borrowing on a collective undertaking, each member's undertaking shall be reduced in the proportion which the repayment represents of the outstanding balance of such borrowing by the Fund.

Article X

FINANCING OF MEMBERS' CLAIMS

Section 1. Request for financing

A member which has provided direct financing to the Fund may represent that it meets the eligibility requirements for borrowing provided for in Article V, or expects to meet such requirements within the next six months. Such member may request a loan from the Fund under this Article equal to all or part of its claim in respect of direct financing.

Section 2. Voluntary financing

Before making a request for such a loan a member shall seek, through the Fund, to obtain the consent of another member or members to take over the member's claim on the Fund in respect of the direct financing provided by it, or seek to obtain alternative financing from the Bank for International Settlements.

Section 3. Decision on financing

(a) The Governing Committee shall promptly decide on the member's request, which decision, if favorable, shall provide for the financing pursuant to Articles VII, VIII and IX of the amount required. The rate of interest to be paid on loans made under this Article shall be determined in accordance with the provisions of Article V, Section 3(f).

(b) If, for the purposes of this Section, it is decided to make calls for direct financing or on individual undertakings, under Article VIII, such calls shall be made, subject to Article VI, Section 2, on all members other than the member making the request, in proportion to their uncalled quotas; provided, however, that, in order to provide the funds needed for the financing, calls shall also be made on members exempted from the prior call under Article VI, Section 2, including, if necessary, calls on borrowers for the repayment of their loans.

(c) Decisions under this Section shall be taken by a two-thirds majority vote, excluding the votes of the member requesting the loan.

Section 4. Entitlement to borrow

A loan made to a member under this Article shall not be taken into account in determining that member's entitlement to borrow under Article V.

Section 5. Repayment schedule

The principal shall be repaid and interest shall be paid on funds made available pursuant to Section 3 of this Article on the same schedule as the claim which is financed.

Article XI

DENOMINATION, INTEREST RATES AND REPAYMENT SCHEDULES Section 1. Denomination of financing

Financing provided to the Fund, any corresponding undertakings and the repayments of principal and payments of interest in respect of such financing shall be denominated:

(a) in the case of direct financing, either in SDR or in the currency transferred to the Fund pursuant to a call, at the option of the member; and, (b) in the case of individual and collective undertakings, either in SDR or in the currency or currencies borrowed by the Fund, as decided by the Governing Committee.

Section 2. Currency of repayment of financing

Repayments of principal and payments of interest by the Fund, on financing provided to the Fund, shall be made in the currency in which the financing is denominated or, in the case of financing denominated in SDR, in an actually convertible currency acceptable to the Fund and the lender.

Section 3. Denomination and currency of repayment of loans

A loan by the Fund and the repayments of principal and payments of interest thereon shall have the same denominations as are established for the financing of the loan, pursuant to Section 1 of this Article, and the payments to the Fund on such a loan shall be made in the currencies which the Fund is obligated to pay to the lenders which provided the financing for the loan, pursuant to Section 2 of this Article.

Section 4. Utilization of currencies

The Governing Committee shall, to the extent possible and practicable, take into account the views of the monetary authorities of members regarding the utilization of their respective currencies in the operations of the Fund.

Section 5. Interest

(a) Transfers of currency to the Fund, pursuant to a call for direct financing, shall bear interest at rates to be determined by the Governing Committee, having due regard to the rates paid on, or estimated to be required for, borrowing by the Fund, in the same currency, on individual undertakings.

(b) The rate of interest on borrowing by the Fund on individual or collective undertakings shall be determined by the Governing Committee in the light of market conditions.

Section 6. Establishment of repayment schedules

The Governing Committee shall establish a schedule of repayments of principal and payments of interest on loans made by the Fund and a schedule of repayments of principal and payments of interest to lenders which provide the financing for such loans.

Article XII

DRAWINGS ON QUOTAS

Section 1. The amount drawn on a member's quota

A member's obligation to provide financing under its quota shall be drawn down to the extent of:

(a) calls on the member, as defined in Article VII, Section 3;

(b) any call, or part of a call, previously made on another member in respect of direct financing which the member consents to take over, pursuant to Article X, Section 2;

(c) calls on the member to transfer funds to the Fund under Sections 4 and 5(b) of Article XIII, to enable the Fund to meet its obligations; and

(d) repayments of any loan received by the member from the Fund under Article X, except insofar as the corresponding part of the direct financing provided by the member has been repaid.

Section 2. Reduction of the amount drawn on a member's quota

A member's obligation to provide financing under its quota shall be reconstituted to the extent of:

(a) repayments of direct financing provided by the member, except insofar as the corresponding part of any loan received by the member from the Fund under Article X has not been repaid;

(b) repayments of the borrowing by the Fund on the individual undertaking of the member;

(c) repayments of the borrowing by the Fund on the quota share of the member in a collective undertaking;

(d) reductions, in proportion to repayments of principal, in

(i) the allowance relating to the payment of interest and other charges, and any additional amount, under Article VIII, Section 3(b), or Article IX, Section 2, and

(ii) the provision for risk sharing under Article IX, Section 3;

(e) repayments to the member of transfers made by it to the Fund under Article XIII;

(f) any call, or part of a call, previously made on the member in respect of direct financing which is taken over by another member under Article X, Section 2; and

(g) any loan received by the member from the Fund under Article X.

Section 3. SDR value of drawings on the quota

For the purpose of calculating, in SDR, the amounts referred to in Sections 1 and 2 of this Article, these amounts shall be expressed in SDR at the SDR value of the currency concerned at the date on which the funds were transferred to the Fund or borrowed by the Fund on an undertaking.

Section 4. Limit to the amount drawn on a member's quota

The maximum cumulative amount of drawings on a member's quota referred to in Section 1 of this Article, less the reconstitutions referred to in Section 2 of this Article, shall not exceed the member's quota.

Article XIII

FULFILLMENT OF THE FUND'S OBLIGATIONS

Section 1. Procedures for meeting obligations

If the Fund does not receive on the due date a repayment of principal or payment of interest on a loan made by it, the Fund shall obtain the amount required to meet its corresponding obligations to lenders as provided in this Article; and the Governing Committee shall decide either:

(a) to prepay in full any outstanding principal, interest and other charges from funds obtained as provided in this Article, or

(b) to maintain the loan in force and, therefore, to increase as necessary the calls in order to cover all or part of the outstanding interest and other charges.

Section 2. Obligations incurred by borrowing on a collective undertaking

In the case of obligations to lenders as a result of borrowing on a collective undertaking, the Fund shall obtain the amounts required to meet its obligations:

(a) by drawing on any funds in the account referred to in Article XV; and (b) instructing all members, except the borrower which has not made the payment to the Fund on the due date, to implement their collective undertaking by making transfers in proportion to, and up to, the amounts of their undertakings under Article IX, Section 1(b).

Section 3. Obligations incurred by borrowing on individual undertakings

In the case of obligations to lenders as a result of borrowing on an individual undertaking, under Article VIII, Section 1(b), the Fund shall obtain the amounts required to meet those obligations by instructing the member concerned to transfer funds up to the amount of its individual undertaking. Section 4. Obligations as a result of individual commitments

In the case of obligations to members as a result of direct financing or of transfers under individual undertakings pursuant to Section 3 of this Article:

(a) the Fund shall obtain the amounts required to meet its obligations by calling on all members, except the borrower which has not made the payment to the Fund on the due date, to transfer funds in proportion to their quotas and to the extent of their uncalled quotas; and

(b) funds transferred by members under this Section shall be paid to members in proportion to the amounts they were otherwise scheduled to receive in respect of the repayment of the loan concerned, or the amounts transferred by members under Section 3 of this Article.

Section 5. Risk sharing

In order to ensure that risks are equitably shared among members in accordance with Article I, Section 2(c):

(a) if any of the members that receive instructions under Section 2(b) of this Article fails to transfer the funds required, the Fund shall issue further instructions to the other members that received those instructions, until the amount required has been transferred, in proportion to the amounts of their undertakings under Article IX, Section 1(b), subject to the limit fixed by those undertakings; and

(b) if any of the members on which calls are made under Section 4 of this Article fails to transfer the funds called, the Fund shall make further calls on the other members called upon, until the amount required has been transferred, in proportion to the amounts of their uncalled quotas, subject to the limit fixed by their quotas.

Section 6. Failure to meet obligations

If any member fails to meet its obligations under this Article, the amount due shall be considered in default. Any delay in payment to the Fund shall be subject to an interest and a penalty charge, to be determined by the Governing Committee.

Section 7. SDR value of the Fund's obligations to members under Sections ↳ and 5 of this Article

(a) For the purposes of the settlements under this Article, the obligations of the Fund under Sections 4 and 5 of this Article, denominated in currency, shall be calculated as if they had been denominated in SDR from the date on which the related financing was provided to the Fund. To this end, where the obligation is denominated in a currency, it shall be converted into SDR at its value in terms of the SDR on the date on which the related financing was provided to the Fund and then converted back into the currency at its current value in terms of the SDR.

(b) To the extent that the Fund's obligations, denominated in a currency, differ from the amount in that currency, calculated in accordance with paragraph (a) of this Section, which is to be settled under this Article, the difference shall be settled in accordance with Section 8 of this Article. Section 8. Amounts due under this Article remaining unsettled

Transfers by members pursuant to calls or instructions under this Article and the unsettled amounts referred to in Section 7(b) of this Article:

(a) shall continue to have the same denomination as the claim or obligation in respect of which the transfer was made;

(b) shall be partly or wholly settled whenever the related delay or default on a payment to the Fund is partly or wholly eliminated, the distribution of the settlements among the corresponding creditors being proportional to their claims; and

(c) shall be liquidated in accordance with Article XIX, Section 2(b) and (c), if they are still outstanding at the date of liquidation.

Article XIV

VALUE OF CURRENCIES IN TERMS OF SPECIAL DRAWING RIGHTS Section 1. Method of valuation

For the purposes of this Agreement, the value of a currency in terms of SDR shall be calculated in accordance with the method of valuation applied by the International Monetary Fund with effect from July 1, 1974.

Section 2. Change in method of valuation

(a) If the International Monetary Fund changes the method of valuation applied by it with effect from July 1, 1974, the Governing Committee may decide to adopt such changed method of valuation for the purposes of this Agreement, provided that this is compatible with the provisions of Article III, Section 2.

(b) If the Governing Committee decides to adopt such changed method of valuation, it shall apply only to the transactions carried out after that decision takes effect and to the claims and liabilities resulting from those transactions, unless the Governing Committee decides otherwise by a 90 percent majority vote.

Article XV

INCOME AND EXPENDITURE ACCOUNT

The Fund shall meet all the costs of its operations from funds received in payment of interest or other charges, including service charges, and not needed for making payments to lenders. The funds in the account drawn upon for these purposes shall be placed as the Governing Committee determines.

Article XVI

GEME

ORGANIZATION AND MANAGEMENT

Section 1. Organs of the Fund

The Fund shall have the following organs:

(a) a Governing Committee,

(b) an Advisory Board, and

(c) a Secretariat.

Section 2. The Governing Committee

(a) All powers of the Fund shall be vested in the Governing Committee which shall be responsible for the operation of the Fund.

(b) The Governing Committee shall be composed of all members of the Fund, which shall be represented by senior financial officials. Each member shall designate one representative and one alternate. Alternates may participate in meetings of the Governing Committee.

(c) The Governing Committee shall elect its Chairman and Vice-Chairmen. (d) The Governing Committee shall normally function at the headquarters of the Fund and shall meet as often as the business of the Fund may require.

(e) At least 75 percent of members shall constitute a quorum for meetings of the Governing Committee, provided such quorum includes not less than 70 percent of the total voting power of the members.

The Governing Committee shall keep the Council of the OECD informed of the activities of the Fund.

(g) The Governing Committee may establish such other procedures and regulations, required for the application of this Agreement, as it deems necessary.

Section 3. Representation of the European Economic Community

A representative of the Commission of the European Communities will participate in meetings of the Governing Committee and the Advisory Board. Section 4. Relations with other international organizations

The Governing Committee shall make appropriate arrangements for liaison with the International Monetary Fund and the Bank for International Settlements and for the participation of representatives from these institutions at meetings of the Governing Committee and the Advisory Board.

Section 5. Voting

(a) Each member shall have a number of votes in proportion to its quota, and such votes shall be cast by its representative to the Governing Committee or, in his absence, by his alternate.

(b) The result of a vote shall be determined as follows:

(i) only votes cast shall be taken into account;

(ii) except as otherwise specifically provided, all decisions of the Governing Committee shall be made by a majority of the votes;

(iii) no decision under Articles VI, X, XIV, XVI and XX shall be adopted unless the majority required includes half of the number of members casting votes.

(c) The Governing Committee may take decisions by mail ballot, or any rapid means of communication.

Section 6. The Advisory Board

(a) The Governing Committee shall designate an Advisory Board composed of financial officials, nominated by members, who shall act in their capacity as experts.

(b) The number of members of the Advisory Board shall be decided by the Governing Committee, by a two-thirds majority vote, provided that the number of such members shall not exceed half of the number of members of the Fund.

(c) The Advisory Board shall be responsible, under the supervision of the Governing Committee, for preparing the work of the Governing Committee, with the assistance of the Secretariat, and for such other duties as may be assigned to it by the Governing Committee. The Advisory Board shall report to the Governing Committee on such matters for consideration or decision by the Governing Committee.

Section 7. The Secretariat

(a) The Secretariat of the OECD shall serve as the Secretariat of the Fund and shall carry out staff functions for the Fund under the direction of the Governing Committee.

(b) All expenditure incurred by the OECD in connection with the operation of the Fund shall be reimbursed by the Fund by payments from the account referred to in Article XV.