ACCOUNTING POLICY
Allocated Special Drawing Rights (SDRs):
SDRs are recognised as an asset in the balance sheet. The value of SDRs is calculated on the basis of a currency basket comprising USD, EUR, GBP and JPY. The currency code for this supplementary asset and unit of account is XDR. However, it is customary to use SDR instead, and Norges Bank has chosen to follow this practice in the financial statements. The equivalent value of SDR allocations by the IMF shows Norges Bank’s total allocations of SDRs and is recognised as a liability. Norges Bank’s holdings of SDRs are measured at amortised cost.
Reserve tranche position:
Comprises Norges Bank’s allocated quota in the IMF less the IMF’s krone deposit with Norges Bank. The out-standing balance with the IMF is recognised net in the balance sheet. The quota in the IMF and the krone liabil-ity to the IMF are measured at amortised cost.
Pursuant to Section 25 of the Norges Bank Act, Norges Bank administers Norway’s financial rights and fulfils the obligations ensuing from participa-tion in the Internaparticipa-tional Monetary Fund (IMF)
The IMF works to foster global monetary coop-eration, secure financial stability, facilitate
interna-tional trade, promote high employment and sus-tainable economic growth and reduce poverty around the world. The IMF gives advice to member countries and provides temporary funding in the event of balance of payments prob-lems.
Table 16.1 Claims on and liabilities to the IMF
Amounts in NOK millions 31 Dec. 2014 Loan
resource
commit-ments*
Amounts drawn on
commit-ments
scrip- Sub-tions** SDRs
Total amount recog-nised
Internation-al reserves associated with the IMF FINANCIAL ASSETS
IMF qouta - - 20 421 - 20 421 20 421
Holdings of Special Drawing Rights (SDRs) - - - 16 064 16 064 16 064 Loans to the IMF, New Arrangements to
Borrow (NAB) 41 961 5 021 - - 5 021 5 021
Bilateral borrowing agreement with the IMF 65 041 - - - - -
Loans to the IMF's arrangements to low-income countries, Poverty Reduction and Growth Trust (PRGT)
3 252 2 535 - - 2 535 -
Claims on the IMF 110 254 7 556 20 421 16 064 44 041 41 506
FINANCIAL LIABILITIES
Krone liability to the IMF - - 17 489 - 17 489 17 489
Equivalent value of SDR allocations - - - 16 945 16 945 -
Liabilities to the IMF - - 17 489 16 945 34 434 17 489
Net positions with the IMF 110 254 7 556 2 932 -881 9 607 24 017
Amounts in NOK millions Loans to the IMF, New Arrangements to Borrow
(NAB) 36 211 4 706 - - 4 706 4 706
Bilateral borrowing agreement with the IMF 56 127 - - - - -
Loans to the IMF's arrangements to low-income countries, Poverty Reduction and Growth Trust (PRGT)
* Commitments giving the IMF a borrowing facility with Norges Bank up to an agreed amount. Only the portion drawn is recognised in the balance sheet. The change in loan resource commitments is in its entirety related to changes in foreign exchange rates.
** Net subscriptions refer to the reserve tranche position and is Norway’s quota less Norway’s krone liability to the IMF. If necessary, Norges Bank may without condition request to borrow from the IMF an amount equal to Norway’s reserve tranche position.
IMF quota
The IMF allocates quotas that determine the member country’s voting strength in the IMF, the member’s financial contribution to the IMF, the amount of financing the member can access in the event of balance of payments problems and the amount of SDRs the member is allocated.
Norway’s quota at 31 December 2014 was SDR 1 883.7m, unchanged from 2013.
When the 14th General Review of Quotas, approved in 2010 by IMF, comes into effect quotas will approximately double. Norway’s quota will increase from SDR 1 883.7m to SDR 3 754.7m. On the same date that Norway pays in the quota increase, Norway’s commitment to furnish funds for the NAB will be reduced from SDR 3 871m to SDR 1 967m.
periodically allocated to IMF member countries, most recently in 2010, on the basis of the size of member countries’ quotas. Equivalent value of SDR allocations shows total allocations of SDRs since the scheme entered into force. As at 31 December 2014, a total of SDR 1 563.1m had been allocated to Norway. Allocated SDRs are unchanged from 2013.
Holdings amounted to SDR 1 481.8m, compared with SDR 1 486.7m at end-2013.
After being allocated SDRs, IMF members may use SDRs to pay in quota increases, for other transactions with the IMF or for purchase or sale of SDR from or to other IMF members through voluntary arrangements. SDRs cannot be used for direct purchases of goods and services. Net pur-chases and sales of SDRs in the period result in changes in the item Holdings of Special Drawing
funds in excess of quota resources. Loans to the IMF under the NAB at 31 December 2014 totalled SDR 463.1m, or NOK 5 021m. The corresponding amount for end-2013 was SDR 503m or
NOK 4 706m. Total loan resource commitments to the NAB are SDR 3 871m.
Bilateral borrowing agreement with the IMF, 2012 Borrowing Agreements.
IMF and Norges Bank have signed a bilateral bor-rowing agreement under which the IMF will be provided with a borrowing facility in the form of a drawing arrangement of up to SDR 6bn. The agreement is part of a broader international effort to ensure the IMF sufficient resources to meet the borrowing requirements of member countries in times of crisis.
Loans to the IMF’s Poverty Reduction and Growth Trust (PRGT)
The Poverty Reduction and Growth Trust (PRGT) is a separate programme aimed at boosting the IMF’s lending capacity to low-income countries.
Loans to the PRGT at 31 December 2014 totalled SDR 234m or NOK 2 532m. The corresponding amount for end-2013 was SDR 234m, or
NOK 2 191m. Total loan resource commitments to the PRGT are SDR 300m.
Krone liability to the IMF
The IMF has deposited its NOK holdings with Norges Bank. At 31 December 2014, the krone lia-bility to the IMF was SDR 1 613.2m compared with SDR 1 473.8m at end-2013.
NET INTEREST INCOME ON CLAIMS ON/LIABILITIES TO THE IMF
Table 16.2 Net interest income, claims on/liabilities to the IMF
Amounts in NOK millions 2014 Withdrawal on loan
resource commitments Capital SDR Total
Interest income, IMF 10 14 12 36
Interest expenses, IMF - -12 -13 -25
Net interest income, claims on/liabilities to the IMF 10 2 -1 11
Amounts in NOK millions 2013 Withdrawal on loan
resource commitments Capital SDR Total
Interest income, IMF 8 13 11 32
Interest expenses, IMF - -10 -11 -21
Net interest income, claims on/liabilities to the IMF 8 3 - 11
Interest on Special Drawing Rights and Interest on equivalent value of SDR allocations
Norges Bank earns interest income from the IMF on its holdings of SDRs, and is charged for interest expenses by the IMF on the equivalent value of SDR allocations. Interest is calculated monthly and netted quarterly. The interest rate is updated weekly by the IMF.
Interest on the quota in the IMF and Interest on the krone liability to the IMF
Interest on the reserve tranche position (as defined in the footnote to Table 16.1) is calculated by the IMF. Interest is calculated net by the IMF, but presented gross in Norges Bank’s financial statements as Interest on the quota in the IMF and Interest on NOK liability to the IMF. Interest is cal-culated monthly and netted quarterly. The inter-est rate is updated weekly by the IMF.
INTERNATIONAL RESERVES
Norges Bank regularly reports international reserves to Statistics Norway and the IMF. This reporting activity is a special requirement for
central banks, and has no effect on Norges Bank’s financial position for 2014 or 2013.
International reserves are defined by IMF and consist of:
Table 16.3 International reserves
Amounts in NOK millions
2014 2013
Foreign exchange reserves 448 567 328 323
Net financial items adjustments* 13 213 2 853
Net positions with the IMF** 24 017 22 450
Total international reserves 485 797 353 626
* Items adjusted in accordance with the IMF definition. Adjustment pertains primarily to unsettled trades and cash collateral received recognised in the balance sheet.
** See specification of claims on and liabilities to the IMF in Table 16.1.