b) Uncalled Capital
As part of the Crown's commitment to a multilateral approach to ensure global financial and economic stability, New Zealand, and as a member country of these organisation, contributes capital by subscribing to shares in certain institutions:
- World Bank: International Bank for Reconstruction and Development
- European Bank for Reconstruction and Development
- International Monetary Fund (IMF), and
- Asian Development Bank (ADB).
The capital (when called) is typically used to raise additional funding for loans to member countries, or in the case of the quota contributions to directly finance lending to members. For New Zealand and other donor countries, capital contributions comprise both “paid-in” capital and “callable capital or promissory notes”.
| Note | Actual | ||
|---|---|---|---|
|
30 June 2012 $m |
30 June 2011 $m |
||
| Asian Development Bank | i | 2,988 | 2,995 |
| International Monetary Fund - promissory notes | ii | 1,174 | 1,254 |
| International Monetary Fund - arrangements to borrow | iii | 1,081 | - |
| International Bank for Reconstruction and Development | iv | 1,039 | 991 |
| Bank for International Settlements | v | 23 | 23 |
| European Bank for Reconstruction and Development | vi | 11 | 12 |
| Other uncalled capital | 11 | 12 | |
| Total uncalled capital | 6,327 | 5,287 | |
i) Asian Development Bank (ADB)
New Zealand was a founding-regional member of the ADB, their aim is to accelerate economic development in developing countries in Asia and the South Pacific. New Zealand is a regional member but as a donor is not entitled to borrow from the Bank. Accordingly, New Zealand is in a similar position to a non-regional member, and contributes to the ADB's resources only and as when required by ADB.
ii) IMF Promissory Notes
New Zealand's subscription to the IMF is partly paid in cash and partly in promissory notes (being uncalled capital). The respective levels of called and uncalled capital change when calls are made by the IMF under the Financial Transactions plan to provide loan packages to borrowing countries. Even though promissory notes are technically “at call”, they are treated as contingent liabilities, as there are significant restrictions on the actual ability to call them, and there is no realistic estimate of either the amount or the timeframe of any call.
iii) IMF's arrangements to borrow
The Crown has agreed to make funds available to the IMF to support international financial systems in the event of a significant crisis. This is a contingent liability as it will depend upon uncertain trigger events occurring and the IMF calling the funds. In previous years this arrangement has been considered remote.
iv) International Bank for Reconstruction and Development (IBRD)
The IBRD is the main lending organisation of the World Bank Group. Each member state is a shareholder and the percentage of ownership share is determined by the size of its economy and the amount of capital contributed to support the Bank's borrowing activities among international capital markets.
v) Bank for International Settlements
The Reserve Bank of New Zealand has uncalled and unpaid capital in respect of its shareholding in the Bank for International Settlement, the timing of which is dependent upon the Bank for International Settlement calling the funds.
vi) European Bank for Reconstruction and Development (EBRD)
The EBRD fosters transition to market economies in countries from central and eastern Europe to central Asia and north Africa. New Zealand has uncalled and unpaid capital in respect of its shareholding in the EBRD, the timing of which is dependent upon the funds being called.
