1. ‘Tranche’ means ‘slice’ and is the term used to describe the divisions into which ordinary drawings on the Fund fall. The issue of conditionality is discussed later in this paper.

2. Details of the various IMF facilities may be found in IMF Survey, 18 September 1978.

3. Quotas are approximately based on the level of national income, the level of reserves, the variability of exports and the level of imports. Quotas bear a positive relationship with these variables.

4. UNDP/UNCTAD Report, ‘The Balance of Payments Adjustment Process in Developing Countries’ (January, 1979), New York.Google Scholar

5. These calculations are drawn from Lewis, W. A., ‘The Less Developed Countries and Stable Exchange Rates’, Third World Quarterly, i (1979), pp. 18–29CrossRefGoogle Scholar and Joshi, V., ‘Exchange Rates, International Liquidity and Economic Development’, The World Economy, ii (1979), pp. 243–275.CrossRefGoogle Scholar

6. Under a further decision adopted by the IMF in August 1979 the trend value of export earnings is to be calculated as a geometric average, see IMF Survey, 20 August 1979.

7. For confirmation of this see J. de Vries, ‘Compensatory Financing: A Quantitative Analysis’, World Bank Staff Working Paper No. 228 (December, 1975).

8. Goreux, L. M., ‘Compensatory Financing: The Cyclical Pattern of Export Shortfalls’, IMF Staff Papers, xxiv (1977), pp. 613–641CrossRefGoogle Scholar and ‘Report on Compensatory Financing’, IMF Survey (7 March 1977), shows that price movements in only eleven commodities accounted for over half the export shortfalls experienced in 1976. Goreux notes that of 52 members that had used the CFF since the 1975 decision 48 had experienced export shortfalls on account of one or several of twelve commodities, namely, copper, wool, beef and veal, cotton, rubber, timber, sugar, tin, alumina and bauxite, phosphates, jute, and coconut products. Exports earnings from these commodities experienced an average shortfall of 17 per cent below trend. Of the total export shortfall (SDR 3,183 million) experienced over these commodities almost two thirds (SDR 2,067 million) was covered by CFF drawings. The fact remains, however, that a shortfall of over SDR 1,000 millions was not covered by the CFF, and that in certain LDCs such as Tanzania, Cameroon and Jamaica a relatively small proportion of the export shortfall and related balance of payments deficit was covered by the CFF. In the clear majority of cases drawings under the liberalized CFF have been effectively constrained by the quantitative provisions of the facility.

9. Kapur, I., ‘An Analysis of the Supply of Eurocurrency Finance to Developing Countries’, Oxford Bulletin of Economics and Statistics, xxxix (1977), pp. 171–188Google Scholar, shows that a potential borrower's credit worthiness seems to depend on its level of international reserves, rate of economic growth, external debt situation, export performance and the existing level of private banking exposure.

10. For a fuller discussion of the problems associated with private finance for LDCs see Graham Bird, ‘Commercial Borrowing and the Developing Countries’, Third World Quarterly (forthcoming).

11. As noted earlier this has now been done, see IMF Survey, (20 August 1979).

12. See Goreux, op. cit.

13. See Goreux, op. cit.

14. A discussion of commodity buffer stocks is deemed to lie outside the scope of this paper. However, for an analysis of the way in which the IMF might make a contribution towards financing them see Bird, Graham, ‘The Role of SDRs in Financing Commodity Stabilization’, Journal of World Trade Law, x (1916), pp. 371–379.Google Scholar

15. For a rather fuller discussion and an empirical investigation of the ways in which the extended role of the IMF advocated this paper might be financed see Graham Bird, ‘Some Proposals for Increasing the Size and Improving the Nature of Financial Flows to Developing Countries’, mimeographed. An alternative strategy of establishing a new International Development Organization to fill some of the financing gaps which LDCs encounter is presented in Bird, Graham, ‘An Integrated Programme for Finance and Aid’, The Banker, cxxxix, pp. 87–93.Google Scholar