india becomes IMF creditor

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India selected by IMF to provide Credit underthe Financial Transactions Plan (FTP)

In view of its strong balance of payments (BoP) and comfortable foreign exchange

reserves position, the International Monetary Fund (IMF) has selected India to

become a member of its Financial Transaction Plan (FTP) from the quarter

September-November, 2002. The IMF selects countries with strong BoP and foreign

exchange reserves position for contributing to the FTP. These countries help the

IMF finance the balance of payments needs of other countries. Selection of India

as member of the FTP, for the first time by IMF, sends strong signals regarding

the country’s strength and resilience of its external sector to the

international community.

India's subscription to FTP so far: SDR 205 million

The first transfer of SDR 5 million under India’s participation in FTP was

effected on May 07, 2003. The second transfer of SDR 200 million was effected on

June 17, 2003. With this development, India has now become a creditor to the

IMF.

To effect these transfers of SDR 5 million and SDR 200 million to the IMF, the

Government of India bought equivalent foreign exchange (US $ 6.96 million and

US $ 284.21 million)) from the Reserve Bank of India on those dates from its

foreign currency reserves. Foreign assets held in the form of Reserve Tranche

Position (RTP) are akin to other components of foreign exchange reserves and

are given a rate of return by the IMF. They can also be used by India, when

required, to deal with any balance of payments needs entirely at India’s

discretion.

Data on FTP and Foreign Exchange Reserves in Weekly Statistical Supplement (WSS)

To impart full transparency, the Reserve Tranche Position (RTP) of the

Government of India (GoI) with the IMF was introduced as a memo item in the

Table on Foreign Exchange Reserves in the Weekly Statistical Supplement to the

Reserve Bank of India Bulletin, from the week ending May 23, 2003 (published on

May 31, 2003). The Weekly Statistical Supplement for the current week (released

today), i.e., June 28, 2003, shows an increase in India’s FTP by US $

291.17 million. An equivalent amount has been drawn from the Foreign Currency

Assets (FCA), which is also reflected in the figures for the current week.

Changes in Foreign Currency Assets

It may be mentioned that a change in the foreign currency assets (FCA) as shown

in the Weekly Supplement can occur on account of any of the following three

reasons:

Net purchases/receipts/sales of foreign currency assets by the Reserve Bank;

Valuation changes because of changes in exchange rate of rupee with dollar or

that of dollar with other foreign currencies which form part of India’s

foreign currency assets; and

Changes in India’s contribution to IMF’s FTP.

Alpana KillawalaGeneral Manager

Press Release:2002-2003/1328