7 September 1982 Original: ENGLISH
ECONOMIC COMMISSION FOR AFRICA
Interim Secretariat of the Preferential Trade Area for Eastern and Southern Africa (PTA)
Meeting of Clearing and Payments Committee of the Preferential Trade Area for Eastern and Southern African States
1-5 November 1982 Lusaka, Zambia
DRAFT RULES AND REGULATIONS FOR THE OPERATIONS OF THE CLEARING HOUSE OF THE PREFERENTIAL TRADE ARSA
FOR EASTERN AND SOUTHERN AFRICAN STATES PREPARED BY THE
AFRICAN CENTRE FOR MONETARY STUDIES
ECA/MULPOC/Lusaka/PTA/TC/I/O
IN EXERCISE of the powersconferred on the Clearing and Payments Committee of the Preferential Trade Area for Eastern and Southern African States by
Article 12 of the Protocol on Clearing and Payments annexed to the Treaty on the establishment of the Preferential Trade Area for Eastern and Southern Africa, the
following Rules and Regulations are hereby made:
Rule 1. Title
These Rules and Regulations may be cited as the Rules and Regulations for the operations of the Clearing House of the Preferential Trade Area for Eastern and Southern African States.
Rule 2. Definitions
"Clearing House"
"Committee"
"Council11
"Member State"
"monetary authority"
"national currency"
"Preferential Trade Area1'
"Protocol"
'"settlement period"
"transaction period"
means the Clearing House established by the Protocol;
means the Clearing and Payments Committee
established by Article 10 of the Treaty and shall consist of Governors of the Monetary authorities of the Member States;
means the Council of Ministers established by Article 7 of the Treaty?
means a Member State of the Preferential Trade Area;
means a Central Bank or any other institution authorized by a Member State to issue currency within its territory;
means any currency issued by a Member State and which is legal tender within its territory;
means the Preferential Trade Area for Eastern and Southern African States established by Article 2 of the Treaty?
means the Protocol on Clearing and Payments annexed to the Treaty ;
means the period immediately following the end of each transaction period during which settlement of outstanding debit balances arising from multilateral clearing shall be established for settlement to be made by the debtor monetary authority;
means the period between any two consecutive dates fixed by the Clearing House and at the end of which the debit and credit positions arising from multilateral clearing shall be established for
settlement to be made by debtor monetary authorities;
«.„««»« ' mearis the Preferential "Trade Area Unit of account
; established under Article 5 of the Protocol. ^ ;
Rule 3. Application
These Rules and Regulations shall apply to all transactions that may be underteJcc/i through the Clearing House in pursuance of the Protocol.
Rule 4. Unit of Account .
(a) For the purpose of the Protocol, the unit of account for the PTA shall be the UAPTA which shall be equivalent to the 3pecial Drawing Right (SDR) of the International Monetary Fund (IMF) (b) All transactions undertaken in pursuance of the provision of
Article 3 of the Protocol shall be expressed and recorded in
terms of the UAPTA.
Rule 5. Exchanoe Rate
(a) The exchange rate of each national currency shall be its representative rate as communicated by the International Monetary Fund, b«t if such a rate is not available on current basis, the exchange rate shall be determined by the Clearing House after consultation with the
International Monetary Fund, provided that for a national currency of a Meinber State which is not a member of the International Monetary Fund'the exchange rate shall be calculated by the Clearing House on the basis of an appropriate exchange rate relationship between that currency and the national currency of a Member State which is a meinber
of the international Monetary Fund.
(b) rue Clearing House shall determine a weekly arithmetical average exchange zute for each national currency which, subject to (c) shall be used for all transactions undertaken through the Clearing
House for ths subseauent week.
(c) Whenever the exchange rate of a national currency changes by^more than 2 p— ~e^t up or down from the average determined for it in a^c^C^ia - with the provisions of sub-rule (b) of this Rule, that .. exchange rate shall be used. ^ ' 1
Rule 6^ Convertibles currencies
The following convertible currencies may be used for settlement:
ths TJS Dollar,
"■*'> the Deutsche Mark, ■■ . ■ ■■■ : ■ -the Japanese Yen,
' : the French Franc, and the Pound Sterling.
Rule 7. wgtDeb^t_aad_Net Credit Limits
(a) The limit of the net debit position of each monetary authority during a transaction period shall be 10 per cent of the sum of
its total annual trade in goods and services within the Preferential
Trade Area.
ECA/MULP0C/Lusaka/PTA/TC/I/8 Page 3
(b) The limit of the net credit position of each monetary authority during a. transaction oeriod shall be 20 per cent of the sum of its total,: annual trade in goods and services within the
Preferential Trade Area.
(c) The Clearing House shall determine the net credit and debit . limits; on the basis of the most recent information available
on annual trade in goods and services within the Preferential Trade Area.
(d) The Clearing House shall notify each monetary authority of any increase in the net credit limit by any monetary authority in accordance vjith the provisions of paragraph 3 of Article 6 of the Protocol.
Rule 8. List of Transactions
(a) The Clearing House shall communicate a list of transactions that may be undertaken through the Clearing House to all monetary authorities.
(b) The list shall include all transactions that may be undertaken through the Clearing House in pursuance of the provisions of paragraph 2 of Article 3 of the Protocol.
Rule 9. Transaction period and settlement period >
(a) The transaction period shall be one calendar month.
(b) The settlement period shall be the period ending not later than the tenth day of the month following the month to which
-settlement relates.
Rule 10. Payment of Excess Debits
(a) The Clearing House shall advise a monetary authority that
exceeds the agreed limit of its net debit position forthwith.
<b) itet debit positions in excess of the agreed limits shall be settled within three business days from the date of
notification by the Clearing House.
Rule 11. Interest Rates i . • . ■
(a) Interest shall be paid by a debtor monetary authority to a creditor monetary authority with respect to debit balances that remain outstanding after the due date for settlement.
(b) For the first week after the due date the rate of interest shall be based oh the interest rate on Special Drawing Rights. Thereafter,
for each week or part thereof until the following settlement or payment date, that interest rate shall be increased by one - 'percentage point.
Rule 12. Default
(a) If a debit balance resulting from an obligation to make settlement of payment remains outstanding beyond the next settlement or
payment date, the debtor monetary authority shall fortwith cease
to use the credit facilities provided for by the Protocol but shall continue to channel through the Clearing House
all its revenues from the transactions that may be undertaken through the clearing House. The Executive Secretary of the Clearing House shall immediately inform all monetary
authorities of any cessation of the use of credit facilities referred to in this sub-rule, and such debtor monetary
authorities affected by it shall immediately begin negotiations with the Committee on when and how the outstanding debit balance
shall be paid.
(b) If, after the expiration of a reasonable period to be determined by the Committee, no agreement is reached on when and how an outstanding debit balance is to be paid and such outstanding debit balance remains unpaid, the Committee shall report thereon to the Council with appropriate recommendation for consideration
by the Council. '
<c) If a default by a debtor monetary authority results in a loss to a creditor monetary, any such loss shall be borne by all monetary authorities in proportion to their credit limits.
Rule 13. Clearing Operations
(a) Payments in respect of transactions that are undertaken by the Clearing House shall be made to the extent feasible through correspondent banking relationship which each monetary authority
shall endeavour to promote.
(b) Each monetary authority shall authorize banks in its territories to maintain clearing accounts with correspondent banks m the
other Member States.
(c) All payments for transactions undertaken through the Clearing
House shall be settled by the banks concerned through such accounts (d) Each monetary authority shall make arrangements to sell and to buy
from banks in its territories the national currencies of the other Member States to the extent necessary to give effect to the
provisions of the Protocol.
(e) Such sales and purchases of currency shall be based on rates of
exchange in terms of the UAPTA.
(f) A Monetary authority selling the national currency of another monetary authority shall request that other monetary authority
■ to make available the currency to the correspondent of the
purchasing bank and claim reiinbursement through the Clearing House.
(g) A monetary authority buying the national currency of another
monetary authority shall arrange to have the currency delivered
through the correspondent of the selling bank to that other
monetary authority, for credit to the buying monetary authority.
ECA/MULP0C/Lusaka/PTA/TC/I/8 Page 5
(h) Each monetary authority shall immediately inform the Clearing
House of all sales and purchases of currency made by it under these Rules and Regulations.
(i) Reimbursement under (f) shall be made, and credit under (g) shall
be given, upon advice from the Clearing House.Rule 14. Organization and Administration
The Clearing House will be administered by:
(i) The Committee
(ii) The Executive Secretary.
Rule 15. Sanctions
A monetary authority in default of its obligations under Rule 12 may participate in the meetings of the Committee without the right to vote.
Rule 16. The Executive Secretary
(a) The Executive Secretary shall be appointed by the Committee for a period of five years. He shall be eligible for reappointment once.
(b) The Executive Secretary shall be in charge of the day to day
operations of the Clearing House and shall implement the decisions of the Committee.
(c) The Executive Secretary shall be the head of the staff of the Clearing House, and shall, subject to such directions as the Committee may give, be responsible for the appointment and dismissal of staff.
(d) The Executive Secretary shall prepare the draft annual report and the draft budget of the Clearing House, and undertake such
studies and other activities as may from time to time be determined by the Committee.
(e) The Executive Secretary shall keep under constant review the operation of the Clearing House and shall from time to time make proposals thereon to the Committee for the purpose of promoting the achievement of the objectives of the Protocol.
Rule 17. Staff
(a) In the performance of their duties, the Executive Secretary and the staff of the Clearing House shall not seek or receive
instructions from any monetary authority of a Member State or from any other authority external to the Clearing House. They shall refrain from any action which might reflect on their position as international officials responsible only to the Clearing House.
(b) See page 10 of the Dakar Draft.
Rule 18. External Audit
The Coranittee shall appoint two external auditors each year. Each auditor shall be nominated by a monetary authority requested by the Committee in rotation. The external auditors shall examine all documents and books of accounts relating to the operations and administration of the Clearing House and report thereon to the Committee.
Rul3 19. Amendments
These Rules and Regulations may be amended by the Committee at any time.
