Section 4-Chairman of the Governing Council

The Governing Council shall elect a Chairman from among the Governors, who shall serve for two years.

Section 5-Executive Board

(a) The Executive Board shall be composed of 18 Members of the Fund, elected at the annual session of the Governing Council. The Governors from the Members of each category shall, in accordance with procedures set out or established as provided in Schedule II for that category, elect six members of the Executive Board from among the Members in that category, and may similarly elect (or, in respect of category I, provide for the appointment of) up to six alternates, who may vote only in the absence of a member.

(b) Members of the Executive Board shall serve for a term of three years. However, unless otherwise provided in or in accordance with Schedule II, at the first election two members in each category shall be designated to serve for one year, and two to serve for two years.

(c) The Executive Board shall be responsible for the conduct of the general operations of the fund, and for this purpose shall exercise the powers given to it by this Agreement or delegated to it by the Governing Council.

(d) The Executive Board shall meet as often as the business of the Fund may require.

(e) The representatives of a member or of an alternate member of the Executive Board shall serve without remuneration from the Fund. However, the Governing Council may decide the basis on which reasonable travel and subsistence expenses may be granted to one such representative of each member and of each alternate member.

(f) A quorum for any meeting of the Executive Board shall be constituted by members exercising two thirds of the total votes of all its members, provided that members exercising one half of the total votes of the members in each of categories I, II and III are present.

Section 6-Voting in the Executive Board

(a) The total number of votes in the Executive Board shall be 1,800, distributed equally among categories I, II and III. The votes of each category shall be distributed among its members in accordance with the formula set out for that category in Schedule II.

(b) Except as otherwise specified in this Agreement, decisions of the Executive Board shall be taken by a majority of three fifths of the votes cast, provided that such majority is more than one half of the total number of votes of all members of the Executive Board.

Section 7-Chairman of the Executive Board

The President of the Fund shall be the Chairman of the Executive Board and shall participate in its meetings without the right to vote.

Section 8-President and staff

(a) The Governing Council shall appoint the President by a twothirds majority of the total number of votes. He shall be appointed for a term of three years and shall be eligible for reappointment for only one further term. The appointment of the President may be terminated by the Governing Council by a two-thirds majority of the total number of votes.

(b) The President may appoint a Vice-President, who shall perform such duties as shall be assigned to him by the President.

(c) The President shall head the staff and, under the control and direction of the Governing Council and the Executive Board, shall be responsible for conducting the business of the Fund. The President shall organize the staff and shall appoint and dismiss members of the staff in accordance with regulations adopted by the Executive Board.

(d) In the employment of the staff and in the determination of the conditions of service consideration shall be given to the necessity of securing the highest standards of efficiency, competence and integrity as well as to the importance of observing the criterion of equitable geographical distribution.

(e) The President and the staff, in the discharge of their functions, owe their duty exclusively to the Fund and shall neither seek nor receive instructions in regard to the discharge thereof from any authority external to the Fund. Each Member of the Fund shall respect the international character of this duty and shall refrain from any attempt to influence them in the discharge of their duties.

(f) The President and the staff shall not interfere in the political affairs of any Member. Only development policy considerations shall be relevant to their decisions and these considerations shall be weighed impartially in order to achieve the objective for which the Fund was established.

(g) The President shall be the legal representative of the Fund. (h) The President, or a representative designated by him, may participate, without the right to vote, in all meetings of the Governing Council.

Section 9-Seat of the Fund

The Governing Council shall determine the permanent seat of the Fund by a two-thirds majority of the total number of votes. The provisional seat of the Fund shall be in Rome.

Section 10-Administrative budget

The President shall prepare an annual administrative budget which he shall submit to the Executive Board for transmission to the Governing Council for approval by a two-thirds majority of the total number of votes.

Section 11-Publication of reports and provision of information

The Fund shall publish an annual report containing an audited statement of its accounts and, at appropriate intervals, a summary statement of its financial position and of the results of its oper

ations. Copies of such reports, statements and other publications connected therewith shall be distributed to all Members.

ARTICLE 7

OPERATIONS

Section 1-Use of resources and conditions of financing

(a) The resources of the Fund shall be to achieve the objective specified in Article 2.

(b) Financing by the Fund shall be provided only to developing States that are Members of the Fund or to intergovernmental organizations in which such Members participate. In the case of a loan to an intergovernmental organization, the Fund may require suitable governmental or other guarantees.

(c) The Fund shall make arrangements to ensure that the proceeds of any financing are used only for the purposes for which the financing was provided, with due attention to considerations of economy, efficiency and social equity.

(d) In allocating its resources the Fund shall be guided by the following priorities:

(i) the need to increase food production and to improve the nutritional level of the poorest populations in the poorest food deficit countries;

(ii) the potential for increasing food production in other developing countries. Likewise, emphasis shall be placed on improving the nutritional level of the poorest populations in these countries and the conditions of their lives.

Within the framework of the above-mentioned priorities, eligibility for assistance shall be on the basis of objective economic and social criteria with special emphasis on the needs of the low income countries and their potential for increasing food production, as well as due regard to a fair geographic distribution in the use of such re

sources.

(e) Subject to the provisions of this Agreement, financing by the Fund shall be governed by broad policies, criteria and regulations laid down, from time to time, by the Governing Council by a twothirds majority of the total number of votes.

Section 2-Forms and terms of financing

(a) Financing by the Fund shall take the form of loans and grants, which shall be provided on such terms as the Fund deems appropriate, having regard to the economic situation and prospects of the Member and to the nature and requirements of the activity concerned.

(b) The proportion of the Fund's resources to be committed in any financial year for financing operations in either of the forms referred to in subsection (a) shall be decided from time to time by the Executive Board with due regard to the long-term viability of the Fund and the need for continuity in its operations. The proportion of grants shall not formally exceed one-eighth of the resources committed in any financial year. A large proportion of the loans shall be provided on highly concessional terms.

(c) The President shall submit projects and programmes to the Executive Board for consideration and approval.

(d) Decisions with regard to the selection and approval of projects and programmes shall be made by the Executive Board. Such decisions shall be made on the basis of the broad policies, criteria and regulations established by the Governing Council.

(e) For the appraisal of projects and programmes présented to it for financing, the Fund shall, as a general rule, use the services of international institutions and may, where appropriate, use the services of other competent agencies specialized in this field. Such institutions and agencies shall be selected by the Executive Board after consultations with the recipient concerned and shall be directly responsible to the Fund in performing the appraisal.

(f) The loan agreement shall be concluded in each case by the Fund and the recipient, which shall be responsible for the execution of the project or programme concerned.

(g) The Fund shall entrust the administration of loans, for the purposes of the disbursement of the proceeds of the loan and the supervision of the implementation of the project or programme concerned, to competent international institutions. Such institutions shall be of a world-wide or regional character and shall be selected in each case with the approval of the recipient. Before submitting the loan to the Executive Board for approval, the Fund shall assure itself that the institution to be entrusted with the supervision agrees with the results of the appraisal of the project or programme concerned. This shall be arranged between the Fund and the institution or agency in charge of the appraisal as well as with the institution to be entrusted with the supervision.

(h) For the purposes of subsections (f) and (g) above, references to "loans" shall be deemed to include "grants".

(i) The Fund may extend a line of credit to a national development agency to provide and administer subloans for the financing of projects and programmes within the terms of the loan agree ment and the framework agreed to by the Fund. Before the Executive Board approves the extension of such a line of credit, the national development agency concerned and its programme shall be appraised in accordance with the provisions of subsection (e). Implementation of the said programme shall be subject to supervision by the institutions selected in accordance with the provisions of subsection (g).

(i) The Executive Board shall adopt suitable regulations for procuring goods and services to be financed from the resources of the Fund. Such regulations shall, as a general rule, conform to the principles of international competitive bidding and shall give appropriate preference to experts, technicians and supplies from developing countries.

Section 3-Miscellaneous operations

In addition to the operations specified elsewhere in this Agree ment, the Fund may undertake such ancillary activities and exercise such powers incidental to its operations as shall be necessary in furtherance of its objective.

ARTICLE 8

RELATIONS WITH THE UNITED NATIONS AND WITH OTHER
ORGANIZATIONS, INSTITUTIONS AND AGENCIES

Section 1-Relations with the United Nations

The Fund shall enter into negotiations with the United Nations with a view to concluding an agreement to bring it into relationship with the United Nations as one of the specialized agencies referred to in Article 57 of the Charter of the United Nations. Any agreements concluded in accordance with Article 63 of the Charter require the approval of the Governing Council, by a two-thirds majority of the total number of votes, upon the recommendation of the Executive Board.

Section 2-Relations with other organizations, institutions, and agencies

The Fund shall cooperate closely with the Food and Agriculture Organization of the United Nations and other organizations of the United Nations system. It shall also cooperate closely with other intergovernmental organizations, international financial institutions, nongovernmental organizations and governmental agencies concerned with agricultural development. To this end, the Fund will seek the collaboration in its activities of the Food and Agriculture Organization of the United Nations and the other bodies referred to above, and may enter into agreements or establish working arrangements with such bodies, as may be decided by the Executive Board.

ARTICLE 9

WITHDRAWAL, SUSPENSION OF MEMBERSHIP, TERMINATION OF
OPERATIONS

Section 1-Withdrawal

(a) Except as provided in section 4(a) of this Article, a Member may withdraw from the Fund by depositing an instrument of denunciation of this Agreement with the Depositary.

(b) Withdrawal of a Member shall take effect on the date specified in its instrument of denunciation, but in no event less than six months after deposit of such instrument.

Section 2-Suspension of Membership

(a) If a Member fails to fulfill any of its obligations to the Fund, the Governing Council may, by a three-fourths majority of the total number of votes, suspend its membership. The Member so suspended shall automatically cease to be a Member one year from the date of its suspension, unless the Council decides by the same majority of the total number of votes to restore the Member to good standing.

(b) While under suspension, a Member shall not be entitled to exercise any rights under this Agreement except the right of withdrawal, but shall remain subject to all of its obligations.