The International Monetary Fund has secured tentative agreement with several industrial nations as well as with members of the oil cartel to borrow about 8 billion SDR (Special Drawing Rights), the equivalent of about $9.4 billion.
This so-called "supplementary facility" will be used by the IMF to make loans to countries with large balance of payments deficits in the next year or two.
In effect, the "supplementary facility" will nearly double resources available to the IMF, prior to the next quota review in 1978, when an effort will be made to substantially increase the regular deposits available to the international lending agency.
The IMF announced yesterday that a meeting will be held in Paris on Aug. 6 with those members of the IMF and Switzerland who are in position to lend to the new loan kitty, which has been dubbed the "Witteveen facility," after IMF Managing Director H. J. Witteveen. There was no official announcement on the projected total.
Final details, including the exact contributions and the interest rates to be charged will be discussed at that session. Formal approval of the arrangement will then be a matter for the IMF Executive Board.
It was learned that the size of the fund was determined, in effect, by the decision of Saudi Arabia to contribute a maximum of $2.5 billion to the Witteveen facility. Originally, Witterveen had hoped to collect 14 billion SDR (about $165.5 billion), equally shared between OPEC and industrial nations.
The Western nations originally agreed to a 7 million SDR share (about $8.25 billion), but the Saudis balked Witteveen's suggestion that they put up ($4.75 billion) because of other commmitments they have for assistance, especially to Arab nations.
At the Paris meeting, which one source said will place "everbody in one room to see the color of each other's money," it is possible that the original 50-50 sharing ration might be amended slightly, with the Western nations putting up slightly more than half.
The interest rates are expected to be set at some market-related level, in much the same manner that was the basis for the "oil facility" created by the IMF in 1974.
Sources stressed that the few facility is strictly a one-time affair, and that further additions to the IMF resources will have to come via the seventh quota review. This will be discussed at the IMF Annual meeting here in September.
SDRs, a special credit created by the IMF, are also the unit of account used by the agency. As of yesterday, one SDR was worth $1.18.