DOCUMENT OF INTERNATIONAL MONETARY FUND AND NOT FOR PUBLIC USE

f
Jrr.George
Room
EB / CM/Ta.nganyika/ 62/2
Correction 1
June 19, 1962
To: Members of the Committee on Membership - Tanganyika
From: The Secretary
Subject: Tanganyika - Quota Calculation - Revised Recommendation
The following has been made in the paper prepared by
the staff on the revised recommendation of the Quota calculation for
Tanganyika (EB/GM/Tanganyika/62/2).. The corrected page is attached ..
Page 2, para .. 2, first sentence: for the first sentence of the
paragraph substitute the following: "The staff is nOvl informed
that the East African Currency Board, in distributing its profits
relating to 1959/60, has increased the proportion allocated to
Aden from about 7 per cent, which was the average figure during
the previous three years, to about 12 per cent, suggesting a
changed estimate of the currency circulation in Aden. The col-
lective share of Aden-and ZanZibar has increased from an average
of about 11 per cent in the preceding three years to about 15
per cent.tI
Att=(l)
Other Distribution:
Members of the Exec uti ve Board
Department Heads
Division ,Cbiefs


DOCUMENT OF INTERNATIONAL MONETARY FUND AND NOT FOR PUBLIC USE
INTERNATIONAL MONETARY FUND
Calculation of Quota for Tanganyilcu
Revised
Prepared by the African Department
(In Consul tat ion vlith the Legal Department and the
Office of the Treasurer)
Approved by Moeen A. Qureshi
June 14, 1962
The attached communication has been received from the Executive
Director for the United Kingdom who has been authorized by the Government
of Tanganyika to negotiate the terms and conditions of Tanganyika's member-
ship in the FU.11d (Attacbment 1). In the light of the nevI information
provided in the cOJ:Bnunication, vThich "HaS not available to the staff at the
time the quota paper on Tanganyika (EB/CI\1/Tanganyika/62/l) was prepared,
the calculation of Tanganyilca' s gold subscription payment 1:.:.f"..s been revised.
The procedure adopted for calculating Tanganyika J s gold subscription
payment in the It"'und 'vas based on the fact that Tanganyil\.a has no inderen-
dent currency and reserves; the reserves that support the currency in
circulation in Tanganyika are held by the East African Currency Board, the
common currency issuing authority for Tanganyika, Kenya, Uganda, Aden and
Zanzibar. If the assets of the East African Currency Board were distributed
among its constituent members, it is that this would be on the "basis
of the proportion of Board currency circulating in each constituent member's
territory. Since the Board's currency circulates freely between its various
constituent territories, there are no separate recorded figures of the cur-
rency circulation for each territory .
In the earlier quota paper (EB/C!11/Tanganyilca/62/l) the staff estimated,
on the basis of the then available data, that approximately 30 per cent of
the Board currency circulated in Tanganyika. Assuming a proportionate
distribution of the various types of assets of the East African Currency
Board, this suggested that Tanganyika I s share in the Board's total cash and
short-term convertible currencies would also amount to about 30 per cent,
or an amount of $24,202,005. Ten per cent of this amOll.11t ($2,420,000) was
the figure suggested in the recommendation regarding gold subscription
payment.
The staff estimate that the currency circulation in Tanganyika was in
the order of 30 per cent of total Board currency was reached
as follO"Hs: The first step in the calculation was to estimate the currency
in ctrculation in the three territories of Tanganyika, Kenya, and Uganda by
separating the circulation in Aden and Zanzibar, and the seccnd step '''as to
arrive at an estimate for Tanganyil:a, There is very little economic inform-
ation on and Zanzibar and the staff based its estirrate of the currency
2
EB/CM/Tangaoyika/62/2
Corrected: 6.19.62
circulation in the t"70 territories on the proportion of East Africa..'!').
Currency Board profits distributed to them in past years. The share of
these territories has been about 11 per cent in total Board profits re-
lating to the years 1956/51, 1951/58, and 1958/59. This appeared to be
a reasonable basis for estimating their currency circulation becsuse,
according to information'Bupplied to the staff by Tanganyikan authorities,
the share of Board profits allocated to Aden (which accounts for a major
proportion of the currency circulation in Aden and Zanzibar) is based on
the estimated ratio of the currency circulation in Aden to total Board
currency. In the light of these facts, it was assumed that about 11 per
cent of total Board currency circulated in Aden and Zanzibar a..'l1d the balance
of 89 per cent circulated in the three territories of Tanganyil{a, Kenya,
and Uganda.
There is considerable economic information on the three territories of
Tanganyika, Kenya, and Uganda, and on the basis of the comparative figures
of national income, trade, population" and other relevant guides, the staff
calculated that the currency circulation in Tanganyi1\.a "7as approximately
one-third of the tqtal currency circulating in the three territories. On
this basis, the share of Tanganyika amounted to about 30 per cent (one-third
of 89 per cent) of total Board currency.
The staff is now informed that the East African Currency Board, in dis-
tributing its profits relating to 1959/60, has increased the proportion
allocated to Aden from about 7 per cent, which "las the average figure during
the previous years, to about 12 per cent, sUggesting
estimate of the currency circulation in Aden. The collective shart; of Aden.and-.
Zanzibarihss increased from an average of about 11 per cent in the preceding
three years to about 15 per cent. If it is assumed that the currency circu-
lating in Aden and Zanzibar amounts to about 15 per cent rather than 11 per
cent as the staff had assumed earlier, then the currency circulation in the
three territories of Tanganyil{a, Kenya, and Uganda would amount to about 85
per cent of total Board currency, and the currency circulation in Tanganyika,
one-third of this amount, would amount to approximately 28 per oent of total
Board currency instead of 30 per cent as suggested earlier. This would
reduce the calculated .. of Ta.11ganyil(a in the Board 1 s cash and short-term
convertible currency assets from 30 per cent to 28 per cent. The revised
calculation on the basis of the latest available data relating to April 30,
1962 is shown below:
Previous
Calculation
(As of September 30, 1961)
Ne"l
Calculation
(As of April 30, 1962)
(U.s. dollars equivalent)
a. Convertible currency
holdings of East African
Currency Board 80,613,351
b. Estimated share of
Tanganyika
c. 10 per cent of (b)
24,202,005
2,420,200
80,150,016
22,442,021
2,244,200