From The Hindu, September 3, 1975: India’s concern over IMF’s new move on gold

Washington, Sept. 2: India to-day told Finance Ministers and central bankers assembled here for the annual meeting of the International Monetary Fund and the World Bank that as the serious balance of payment deficits faced by developing countries were not likely to disappear or diminish in the next few years, there was an imperative need to extend the life of the Oil Facility created by the IMF last year beyond 1975.

The Finance Minister, Mr. C. Subramaniam, said that the Oil Facility which was set up with a target of five billion SDRs in funds, should have suitable concessions built into it and should continue in operation until a proper substitute for it was found.

One such substitute is the proposal for a Trust Fund with about 1.5 billion SDRs, realised through the sale of one sixth of the gold held by the IMF. Mr. Subramaniam felt that this was much too modest a sum and that the target should be at least four billion SDRs. “If this earmarking of IMF gold for the benefit of the developing countries is not to be reduced to an empty gesture, it must be accompanied by more effective arrangements to meet both the liquidity and resource needs of the poor countries.” The multiplicity of uses which different countries have in mind for this modest sum of gold was also surprising, he said. “Some see it as a substitute for the Oil Facility; others visualise it as a source of funds for the third window of the World Bank; yet others want to use it for an export stabilisation fund.

Mr. Subramaniam who spoke to Washington the day after Dr. Kissinger’s plan for a $10 billion “Development Security Facility” was unveiled before the special U.N. session in New York, did not comment on that proposal because he had not yet studied it in detail.