- International Monetary Fund
- Published Date:
- November 2000
Resolution No. 55-1 Salary of the Managing Director
The Executive Board resolved on March 29, 2000 to recommend an adjustment in the salary of the Managing Director.
In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on April 6, 2000 for a vote without meeting:
Whereas the Executive Board has endorsed a proposal to reallocate the financial elements of the Managing Director’s remuneration, such that the overall level of remuneration would remain unchanged, with the amount of the salary increase being fully offset by a reduction in the representation allowance combined with a corresponding adjustment in the calculation of retirement benefits.
Now, therefore, the Board of Governors hereby RESOLVES:
1. Effective (May 1), 2000, the annual salary of the Managing Director of the Fund shall be three hundred eight thousand, four hundred and sixty dollars ($308,460).
2. The annual salary of the Managing Director shall be adjusted effective July 1, 2000 and each July 1 thereafter by the percentage increase in the Washington metropolitan area consumer price index for the twelve months ending the preceding May. The application index for this purpose shall be the U.S. Bureau of Labor Statistics Regional (Washington, Baltimore, Maryland, Virginia, West Virginia) Consumer Price Index for All Urban Consumers, or the equivalent replacement index.
The Board of Governors adopted the foregoing Resolution, effective April 20, 2000.
Resolution No. 55-2 Direct Remuneration of Executive Directors and Their Alternates
Pursuant to Section 14(e) of the By-Laws, the 2000 Joint Committee on the Remuneration of Executive Directors and Their Alternates on June 29, 2000 directed the Secretary of the Fund to transmit its report and recommendations to the Board of Governors of the Fund. The Committee’s report contained the following proposed Resolution for adoption by the Board of Governors.
In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on June 30, 2000 for a vote without meeting:
That, effective July 1, 2000, the remuneration of the Executive Directors of the Fund and their Alternates pursuant to Section 14(e) of the By-Laws shall be paid in the form of salary without a separate supplemental allowance, and such salary shall be paid at the annual rate of $168,660 per year for Executive Directors and $145,890 per year for their Alternates.
The Board of Governors adopted the foregoing Resolution, effective August 14, 2000.
Resolution No. 55-3 2000 Regular Election of Executive Directors
The Executive Board resolved on July 17, 2000 that action in connection with the regulations for the conduct of the 2000 regular election of Executive Directors should not be postponed until the time of the next regular meeting of the Board of Governors at which the election would take place.
In accordance with Section 13 of the By-Laws, the following Resolution was submitted to the Governors on July 18, 2000 for a vote without meeting:
(a) That the proposed Regulations for the Conduct of the 2000 Regular Election of Executive Directors are hereby adopted; and
(b) That a Regular Election of Executive Directors shall take place at the Annual Meeting of the Board of Governors in 2002.
The Board of Governors adopted the foregoing Resolution, effective August 16, 2000.
Resolution No. 55-4 Financial Statements, Report on Audit, and Administrative and Capital Budgets
That the Board of Governors of the International Monetary Fund considers the Report on Audit for the Financial Year ended April 30, 2000, the Financial Statements contained therein, and the Administrative Budget for the Financial Year ending April 30, 2001 and the Capital Budget for capital projects beginning in Financial Year 2001 as fulfilling the requirements of Article XII, Section 7 of the Articles of Agreement and Section 20 of the By-Laws.
The Board of Governors adopted the foregoing Resolution, effective September 27, 2000.
Resolution No. 55-5 Amendments of the Rules and Regulations
That the Board of Governors of the Fund hereby notifies the Executive Board that it has reviewed the abrogation of Rule J-7, the redesignation of the former Rules J-8 and J-9 as Rules J-7 and J-8, respectively, and the amendment of Rule O-10, which have been made since the 1999 Annual Meeting, and has no changes to suggest.
The Board of Governors adopted the foregoing Resolution, effective September 27, 2000.
Resolution No. 55-6 Appreciation
That the Boards of Governors of the International Monetary Fund and the World Bank Group express their deep appreciation to the government and people of the Czech Republic and the city of Prague for their warm and gracious hospitality;
That they express their gratitude for the outstanding facilities of the Prague Congress Center made available for the meetings in Prague;
That they express particular appreciation to the Governors and Alternate Governors for the Czech Republic and to their associates for the many contributions which they made toward ensuring the success of the 2000 Annual Meetings; and
That all Annual Meetings participants express their gratitude to the Czech authorities for so effectively ensuring their safety and that of the residents of Prague.
The Board of Governors adopted the foregoing Resolution, effective September 27, 2000.
International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund
September 24, 2000
1. The International Monetary and Financial Committee held its second meeting in Prague on September 24, 2000, under the Chairmanship of Mr. Gordon Brown, Chancellor of the Exchequer of the United Kingdom. It welcomes Mr. Horst Köhler as the new Managing Director and looks forward to working with him on the continuing reform of the Fund and the strengthening of the international financial architecture.
World Economic Outlook
2. The Committee welcomes the strengthening of global economic growth this year to the highest rate in twelve years. Economies in all major regions of the world have grown, and inflation remains generally under control.
3. While the overall outlook is positive, the Committee remains mindful of the significant remaining risks associated with the continuing economic and financial imbalances in the global economy. These potential challenges include imbalances in external accounts and the possible risk from misalignments in exchange rates and high levels of equity valuations in the major currency areas. The Committee considers that it will therefore be important to remain vigilant against inflationary pressures in the United States, and that national savings should increase; to pursue policies in Japan that are strongly supportive of self-sustained domestic demand-led recovery; and to intensify the momentum of growth-supporting structural reforms in the European Union and in other advanced countries. In almost all developing and emerging market countries, continued progress with structural reforms-in particular through strengthening their financial sectors-is required to strengthen prospects for sustained economic growth. The Committee also expresses concern that, despite the strength of the global recovery, poverty remains unacceptably high, and many poor countries continue to face serious economic problems.
4. The Committee welcomes the gradual improvement in the last year in the terms and conditions of market access for emerging market countries, reflecting the better fundamentals in these markets. However, flows remain below pre-crisis levels, at higher spreads, and continue to show significant volatility, and market access remains extremely limited for some emerging markets.
5. The Committee is concerned that current oil prices, if sustained, could hamper global growth, add to inflationary pressures, and adversely affect prospects for many countries. It notes in particular the effect on the poorest countries and those highly dependent on oil imports. The Committee agrees on the desirability of stability in oil markets around reasonable long-term prices. It notes the recent U.S. decision to mobilize reserves and notes that some other industrial countries may be in a position to examine the possibility of doing so to help achieve greater stability. The Committee welcomes the steps the oil-producing countries have taken this year to increase production and calls on them to take further steps to create conditions in oil markets conducive to healthy global growth. The Committee looks forward to improved dialogue between oil producers and consumers to promote greater oil market stability.
6. The Committee notes that, in the ten years since the launch of the transition to market economies in eastern Europe and the former Soviet Union, much has been achieved. But the process has been difficult and remains far from complete, and progress has varied across countries. The Committee underlines that a key lesson from this experience is that transition economies that have made the greatest progress in establishing macroeconomic stability and implementing structural and institutional reforms have also achieved the best economic performance.
The Future Role of the IMF
7. The Committee strongly supports the objective of making globalization work for the benefit of all. In this respect, it endorses the Managing Director’s vision of the future role of the IMF, and looks forward to working with him on continuing reform of the Fund and strengthening the international architecture. While each country’s own actions will inevitably be the most important determinant of its economic progress, all members of the international community have essential roles in supporting and facilitating these individual efforts. The international community must place renewed emphasis on promoting broadly-shared prosperity, sustained growth, and poverty reduction. With its broad mandate and universal membership, the Fund, in partnership with the World Bank, is uniquely placed to serve its members, including the poorest countries, by contributing to this global effort.
8. The Committee notes the advances in applying the lessons of recent financial crises to the work of the IMF and the policies of its members. Many concrete steps have been taken or are under way to improve the functioning of the international financial system, and to strengthen its capacity for preventing and managing financial crises. As a result, the international community has made progress toward dealing with difficult situations and managing their external repercussions.
9. But continued efforts for change will be necessary. The Committee calls upon the IMF, in particular, and the international community, as a whole, to continue to strengthen their efforts to reduce vulnerability and to avoid crises, and when crises do occur, to reduce their spillover effects. These efforts will need to focus on:
- broadening and strengthening the Fund’s surveillance of the domestic economic policies of all members and of the international financial system, including regional dimensions;
- continued promotion, development, and voluntary implementation, in a fully participatory way, of internationally agreed codes and standards, in cooperation with other bodies, as appropriate, supported by enhanced technical assistance; and
- constructive engagement of the private sector by the official sector.
10. The Committee reiterates that the Fund has a central role to play in bringing together the efforts of other global institutions to strengthen the international financial system in helping to ensure that all countries can benefit from globalization. It agrees that the Fund can best contribute to this global effort and strengthen its overall effectiveness by:
- continuing to deepen its collaboration with other agencies and bodies. In that regard, it welcomes the initiatives of the Managing Director and the President of the World Bank to strengthen cooperation and complementarity between the two institutions;
- promoting, within the context of the Fund’s mandate, international financial and macroeconomic stability and growth of member countries, the Fund must sharpen the focus of work in its core areas of responsibility: macroeconomic stabilization and adjustment; monetary, exchange rate, and fiscal policies and their associated institutional and structural aspects; and financial sector issues, especially systemic issues relating to the functioning of domestic and international financial markets.
11. The Committee stresses the importance of national ownership of Fund-supported programs for their sustained implementation. The Committee urges the Executive Board to take forward its review of all aspects of the policy conditionality associated with Fund financing in order to ensure that, while not weakening that conditionality, it focuses on the most essential issues; enhances the effectiveness of Fund supported programs; and pays due respect to members’ specific circumstances and their implementation capacities.
The Poverty Reduction and Growth Facility (PRGF) and the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC)
12. The Committee affirms the Fund’s enhanced role in poor countries. It considers that a lasting breakthrough in combating world poverty can only be achieved if the poorest countries are able, with the support of the international community, to build the fundamentals for sustained growth. Macroeconomic stability and structural reform will provide the conditions for private sector investment and growth and will, over time, allow countries to access international capital markets. The Committee also considers that international trade is critical for development and poverty reduction. To help ensure that the fruits of globalization are shared by all, it will be crucial that access of developing countries, particularly the poorest, to industrial country markets continues to improve. Industrial countries should increase their official development assistance. The Committee encourages developing countries, for their part, to follow policies consistent with domestic macroeconomic stability and competitiveness in international markets; continue to reduce trade barriers; and implement other appropriately sequenced outward-oriented reforms that promote poverty reducing growth, investment in human capital, particularly health and education, and development.
13. The PRGF provides an essential framework, together with complementary assistance from the World Bank, for supporting countries’ own growth strategies and for enabling HIPC debt relief to be translated into poverty reduction.
14. The Committee endorses the Progress Reports on the HIPC Initiative and Poverty Reduction Strategy Papers (PRSPs). It welcomes the progress made in developing country-owned poverty reduction strategies, including through the preparation of PRSPs, which now underpin the work of the Fund and World Bank in low-income countries. It also welcomes the progress in implementing the enhanced HIPC Initiative, and the commitment of the Fund and the Bank to do everything possible to bring 20 countries to their Decision Point by the end of 2000 to ensure that debt relief is provided in the context of a strong commitment to growth and poverty reduction. Recent shocks in terms of trade must not jeopardize this objective. The Fund, through its facilities, may need to respond flexibly to the needs of members that arise from a sustained period of high oil prices. Our efforts should be supported by increased technical assistance. The Committee urges members to work together and meet their commitments to full financing of the HIPC Initiative and the PRGF as soon as possible. It also urges all creditors to participate in the HIPC framework, while recognizing the special needs of particular creditors. The Committee looks forward to a productive discussion of the enhanced HIPC Initiative and the PRSP process at its joint meeting with the Development Committee.
Strengthening the International Financial Architecture and Reform of the Fund
Review of Fund Facilities
15. Following the Executive Board’s wide-ranging review of the IMF’s nonconcessional financial facilities, the Committee welcomes the agreement reached on modifications that are intended to enhance the precautionary nature of the Contingent Credit Line (CCL) and to preserve the revolving nature of the Fund’s resources.
- The CCL has been modified, within its existing eligibility criteria, to make it a more effective instrument for preventing crises and resisting contagion for countries pursuing sound policies.
- The terms of stand-by arrangements and the Extended Fund Facility (EFF) have been adapted to encourage countries to avoid reliance on Fund resources for unduly long periods or in unduly large amounts.
- It has been reaffirmed that the EFF should be confined to cases where longer-term financing is clearly required.
- It has been agreed that enhanced post-program monitoring could be useful, especially when credit outstanding exceeds a certain threshold level.
Enhancing Fund Surveillance, and Promoting Stability and Transparency in the Financial Sector
16. The Committee considers that Fund surveillance should be strengthened further and welcomes the recent initiatives in a range of areas. It reaffirms the role of the Article IV process as the appropriate framework within which to organize and discuss with members the results of work in these areas. Strengthened surveillance will help the Fund and its members to identify vulnerabilities and to anticipate threats to the financial stability of member countries. In this respect, it welcomes the continuing efforts to improve the Fund’s understanding of its members’ economies; the quality and availability of economic and financial data; Financial System Stability Assessments (FSSAs) derived from the joint Fund-World Bank Financial Sector Assessment Program (FSAP); Reports on Observance of Standards and Codes (ROSCs); and vulnerability indicators and early warning systems. It welcomes the joint Bank-Fund work on debt management guidelines, as well as the Fund’s work on sound reserves management practices, and its role in assessing offshore financial centers.
17. The Committee recognizes that the Fund has to play its role as part of the international efforts to protect the integrity of the international financial system against abuse, including through its efforts to promote sound financial sectors and good governance. It asks that the Fund explore incorporating work on financial abuse, particularly with respect to international efforts to fight against money laundering, into its various activities, as relevant and appropriate. It calls on the Fund to prepare a joint paper with the World Bank on their respective roles in combating money laundering and financial crime, and in protecting the international financial system, for discussion by their Boards before the Spring meetings and asks them to report to the Spring IMFC/Development Committee meetings on the status of their efforts.
18. The Committee is encouraged by the experience so far in preparing ROSCs and looks forward to the review later this year of the experience with assessing the implementation of standards. It notes their crucial role in helping countries to improve economic policies, identifying priorities for institutional and structural reform, and in promoting the flow of important information to markets. The Committee looks forward to the next review of the FSAP. It encourages members to participate in these initiatives.
19. The Committee notes that three issues at the core of the Fund’s mandate also require further consideration: exchange rate arrangements; the sequencing of financial sector development and capital account liberalization; and the monitoring and analysis of developments in international capital markets. The Committee encourages the Fund to deepen its work on international financial markets, including by improving its understanding of market dynamics and cross-border capital flows. It also urges the Fund to continue exploring ways of engaging more constructively the private sector on these matters, and welcomes the formation of the Capital Markets Consultative Group.
20. In the context of ongoing efforts to enhance the transparency and openness of the Fund, the Committee welcomes the Executive Board’s agreement to adopt a general policy of voluntary publication of Article IV and use of Fund resources staff reports and other country papers. It encourages members to move in principle toward publication of these documents.
Private Sector Involvement
21. The Committee endorses the report by the Managing Director on the involvement of the private sector in crisis prevention and management. It welcomes the progress on developing a framework for involving private creditors in the resolution of crises. The Committee notes that this approach strikes a balance between the clarity needed to guide market expectations and the operational flexibility, anchored in clear principles, needed to allow the most effective response in each case. The Committee notes that Fund resources are limited and that extraordinary access should be exceptional; further, neither creditors nor debtors should expect to be protected from adverse outcomes by official action.
22. The Committee agrees that the operational framework for private sector involvement must rely as much as possible on market-oriented solutions and voluntary approaches. The approach adopted by the international community should be based on the IMF’s assessment of a country’s underlying payment capacity and prospects of regaining market access. In some cases, the combination of catalytic official financing and policy adjustment should allow the country to regain full market access quickly. The Committee agrees that reliance on the catalytic approach at high levels of access presumes substantial justification, both in terms of its likely effectiveness and of the risks of alternative approaches. In other cases, emphasis should be placed on encouraging voluntary approaches, as needed, to overcome creditor coordination problems. In yet other cases, the early restoration of full market access on terms consistent with medium-term external sustainability may be judged to be unrealistic, and a broader spectrum of actions by private creditors, including comprehensive debt restructuring, may be warranted to provide for an adequately financed program and a viable medium-term payments profile. This includes the possibility that, in certain extreme cases, a temporary payments suspension or standstill may be unavoidable. The Fund should continue to be prepared to provide financial support to a member’s adjustment program despite arrears to private creditors, provided the country is seeking to work cooperatively and in good faith with its private creditors and is meeting other program requirements. The Committee urges progress in the application of the framework agreed in April 2000, and in further work to refine the analytical basis for the required judgments, and it looks forward to a progress report by its next meeting.
Good Governance and the Fund
23. The Committee views with concern a number of recent cases of misreporting to the Fund and stresses the importance of the steps being taken to improve the reliability of the information the Fund uses. It welcomes the application of the new safeguards assessment procedure to all new Fund arrangements, which will provide assurances of adequate control, reporting, and auditing procedures in borrowing countries.
24. The Committee strongly welcomes the Executive Board’s decision to establish an independent evaluation office (EVO), including the agreement to publish promptly its work program, and the strong presumption that its reports would be published promptly. The creation of this office will help the Fund to improve its future operations, and will enhance its accountability. It urges that the EVO become operational before the Spring 2001 meeting of the IMFC, and looks forward to receiving regular reports on the EVO’s work.
25. Quotas should reflect developments in the international economy. The Committee takes note of the Executive Board discussion of the work of the quota formulae group, and looks forward to the Board’s continued work on this issue.
26. The Committee takes note of the work of the Working Group to Review the Process of Selection of the Managing Director, which is being carried out in tandem with similar work in the World Bank on the Process of Selection of the President, and notes that the two groups will report together.
27. The Committee considers that the most valuable asset of the IMF is its outstanding staff, and the Committee highly values the staffs professionalism and dedication in executing the responsibilities of the Fund effectively and efficiently.
28. The Committee expresses its sincere appreciation for the excellent hospitality and support provided by the Czech authorities and the people of the Czech Republic.
Next Meeting of the Committee
29. The next meeting of the IMFC will be held in Washington, D.C. on April 29, 2001.
International Monetary and Financial Committee Composition
as of September 24, 2000
Gordon Brown, Chairman
|Ibrahim A. Al-Assaf1||Saudi Arabia|
|Gordon Brown2||United Kingdom|
|Tun Daim Zainuddin4||Malaysia|
|Rodrigo de Rato Figaredo||Spain|
|Mohammed K. Khirbash||United Arab Emirates|
|Aleksei Kudrin||Russian Federation|
|José Luis Machinea||Argentina|
|Pedro Sampaio Malan||Brazil|
|Linah K. Mohohlo||Botswana|
|Lawrence H. Summers||United States|
Dato’ Shafie Mohd. Salleh
Dato’ Shafie Mohd. Salleh
Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund on the Transfer of Real Resources to Developing Countries (Development Committee)
September 25, 2000
1. The 62nd meeting of the Development Committee was held in Prague, Czech Republic, on September 25, 2000 under its new Chairman, Mr. Yashwant Sinha, Finance Minister of India. The Committee expressed its great appreciation to Mr. Tarrin Nimmanahaeminda, Minister of Finance of Thailand, for his valuable leadership and guidance to the Committee as its Chairman during the past two years.1
2. The Ministers’ discussions took place against the background of continuing public debate about the benefits and risks of globalization. Ministers stressed that the more integrated global economy and technological gains brought about by globalization should be a great source for economic and social progress, equity and stability, but that these results are not inevitable. Ministers recognized their important responsibility to help ensure that globalization works for the benefit of all, and not just the few, and reemphasized their commitment to strengthening the Bank, the Fund and other multilateral institutions as valuable allies in this effort whose ultimate objective is global poverty reduction, in particular halving the proportion in extreme poverty by the year 2015.
3. Poverty Reduction and Global Public Goods: In considering the role the Bank might play in global public goods in areas within its mandate, Ministers noted four key criteria for Bank involvement: clear value-added to the Bank’s development objectives; Bank action is needed to catalyze other resources and partnerships; a significant comparative advantage for the Bank; and an emerging international consensus that global action is required. They endorsed four areas for Bank involvement, in cooperation with relevant international organizations: facilitating international movement of goods, services and factors of production; fostering broad inclusion in the benefits of globalization and mitigating major economic and social problems, such as the transmission of disease and the consequences of conflict; preserving and protecting the environment; and creating and sharing knowledge relevant to development.
4. Ministers warmly endorsed the greatly expanded efforts being made by the Bank, the United Nations and other international, national and private partners, to combat communicable diseases, such as HIV/AIDS, malaria and tuberculosis. Ministers noted the progress made since the April meeting of the Committee, and were encouraged that the international consensus that AIDS and other widespread diseases created severe development problems was being turned into strengthened action. They also welcomed the commitment of International Development Association (IDA) donors to expand and make more flexible the concessional resources available for these activities, without compromising fundamental IDA allocation policies. They encouraged the Bank to press further ahead on its commitment to help turn back the global HIV/AIDS epidemic, and welcomed the recently approved $500 million IDA program for this purpose in Africa.
5. Ministers noted the Bank’s valuable role, in partnership with the Fund and other international agencies, in strengthening international financial architecture. This includes helping to develop appropriate standards and codes, taking account of the developing country perspective, in areas that are important to financial resilience and integration into the global financial system, and assisting countries to strengthen their related institutions and policies. Ministers also pointed to the importance for all nations of increased national and international efforts to combat cross-border financial abuse, such as money-laundering and other forms of abuse. They urged the Bank to expand its program of technical and advisory support as a significant contribution to greater participation by developing countries in a more open and equitable world trading system. They reiterated both the promise and the challenge of communications technology to promote equitable growth, and welcomed initiatives by the Bank to help provide greater access, in partnership with others, for poor countries and communities to the knowledge and information opportunities of the digital age.
6. Ministers recognized the need to explore further opportunities for securing appropriate financing for carefully selected priority global and regional programs with substantial impact on poverty reduction. This would require innovative use of World Bank lending and, in some cases, grant facilities, taking into account alternative sources of such funds and financial implications for the Bank, as well as of new forms of collaboration with international, bilateral, philanthropic and private partners. They stressed global public goods investments that benefited all countries should attract new resources.
7. The Committee looked forward to receiving at its next meeting a report on progress made in further delineating priority global public goods investment areas for the Bank, as well as on division of labor between development partners and the development of appropriate financing arrangements.
8. Bank Support for Country Development: Recognizing that working with individual countries remains the backbone of the Bank’s business, Ministers welcomed this initial opportunity for a broad review of the World Bank Group’s role and instruments in support of member countries’ development, taking into account the role of the IMF and other institutions.
9. Ministers emphasized that the Bank must tailor its support to reflect widely differing country situations. To help ensure that country programs are well grounded, Ministers urged the Bank to continue to strengthen its country diagnostic and other economic and sector work. They stressed the need to focus on relevance to the country concerned, and on opportunities for greater synergy with the work of the country and other development partners. Ministers noted that this analytic work, along with capacity building, took on added importance in light of the use of programmatic adjustment lending in support of borrowers’ social and structural reforms, and the vision for Bank and Fund roles and partnership set out in the September 5, 2000 Joint Statement by the President and the Managing Director.
10. Ministers emphasized the urgent need for the World Bank Group to clarify its agenda for institutional selectivity (based in part on its upcoming review of sector strategy papers), to manage carefully total demands made on Bank staff and other resources, and to work closely and systematically with other multilateral development banks and international organizations on a better coordination of responsibilities. Ministers stressed that multilateral and bilateral donors could contribute greatly to country ownership, more efficient use of resources, and achievement of the agreed International Development Goals, by making greater progress on the harmonization of their operational policies and procedures to reduce the burden on developing countries. Ministers asked the Bank to work closely with its partners and prepare a report for the Committee’s next meeting on progress with harmonization.
11. Ministers welcomed the Bank’s overall approach for low income countries and its proposals for achieving greater coherence among various program documents and instruments, including basing Country Assistance Strategies on Poverty Reduction Strategy Papers. Ministers welcomed the discussion of a poverty reduction support credit that would support poverty reduction strategies of governments and complement the Fund’s Poverty Reduction and Growth Facility. They suggested that in its further definition of the instrument, the Bank should also address the nature of the analytic work needed to underpin it, such as public expenditure reviews and poverty and fiduciary assessments. They also requested the Bank and the Fund to review the modalities for their cooperation in implementing both the Bank’s support credit and the Fund’s growth facility. Ministers stressed the importance of effective Bank/Fund coordination given the significant role the institutions play in support of poverty reduction in low-income countries.
12. Ministers reaffirmed the very important continuing role of the Bank Group in helping to reduce poverty in middle-income countries, home to so many of the world’s poor. They stressed that the Group’s focus must be on providing support that the private sector can not or will not provide and on fostering private-sector led economic growth. They welcomed the creation of a task force to address how the Group can best respond to the evolving development needs of this diverse group of economies. Ministers agreed that the task force should consider, inter alia, the modalities of conditionality and instruments to maximize the effectiveness of Bank assistance for countries at different stages of development and reform; the scope and conditions for providing borrowers more financial support for social and structural programs at times of market dislocation; the coverage of economic and sector work; and the costs of doing business with the Bank, including the implications for pricing of Bank products. Ministers looked forward to a progress report at their next meeting.
13. Heavily Indebted Poor Countries Initiative (HIPC): Ministers welcomed the progress achieved in implementing the Initiative and urged that all appropriate steps be taken to further strengthen the process. They noted that the enhancements endorsed at their meeting last year are resulting in “deeper, broader and faster” debt relief to eligible countries undertaking the economic and social reforms needed to reduce poverty. They noted in particular that to date, 10 countries have reached their decision point under the enhanced framework, and work is being accelerated within that framework to try to reach the goal of bringing 20 countries to this point by the end of the year. This is expected to result in combined debt service relief (including original and enhanced HIPC assistance) amounting to well over $30 billion. Taken together with traditional debt relief mechanisms, a total of about $50 billion will be provided to these countries.
14. Ministers also welcomed the increased efforts to improve implementation of the Initiative. They asked that the Bank and the Fund continue to work with other creditors and eligible countries to ensure that the modifications to the original HIPC framework (reflected in the enhanced Initiative endorsed a year ago), such as the provision of interim assistance beginning at the decision point and adoption of a floating completion point, provide the much needed support to qualifying countries on a timely basis. Ministers expressed support for the strengthened partnership between the two institutions in implementing the Initiative, and for their commitment to move forward as expeditiously as possible. It was recognized, however, that the pace of implementation would also be determined by country factors. Ministers supported maintaining a flexible approach with respect to track record requirements. They endorsed the extension of the “sunset clause” until end-2002 to allow additional countries, particularly those emerging from conflict, to participate in the Initiative. Ministers also reiterated that within the existing HIPC framework the option exists, at the completion point, to reconsider the amount of debt relief for countries seriously affected by exceptional adverse shocks.
15. Ministers stressed the importance of fully financing the enhanced HIPC Initiative, without compromising concessional facilities such as IDA. They urged all donors to meet their commitments of financial support, and welcomed the arrangements in place to accomplish this objective. While recognizing the special needs of particular developing and low-income transition country creditors, Ministers also urged all creditors to participate in the debt relief framework.
16. Poverty Reduction Strategy Papers: Ministers reviewed progress with respect to the Poverty Reduction Strategy approach, endorsed at their September 1999 meeting as a way to strengthen the link between poverty reduction, HIPC debt relief and Bank and Fund concessional lending. They noted the growing momentum in the adoption of the approach and the positive response to it on the part of countries and development partners. Ministers recognized the challenges countries faced due, inter alia, to limited data and institutional capacity, but urged movement from interim to full poverty reduction strategy papers on a timely basis. While strongly reiterating the core principle of country ownership, Ministers called on the Bank, the Fund and other agencies to provide appropriate technical support for countries’ strategy preparation efforts.
17. Comprehensive Development Framework: Ministers expressed support for the comprehensive approach to development reflected in the framework and welcomed the progress being made, and the lessons learned, in implementing it in pilot countries. They recognized that implementation is still at an early stage and many country-specific challenges remain, but noted that a wider application of the framework is already taking place in the preparation of Poverty Reduction Strategy Papers which are based on the framework’s principles, particularly that of achieving strong country ownership. They looked forward to reports of further progress in implementing the comprehensive development framework.
18. IBRD Financial Capacity: Ministers reviewed the World Bank’s updated report on this subject and confirmed that the Bank’s finances remained sound. At the same time, Ministers recognized that the Bank’s financial capacity may, in the case of significantly increased demand, limit its ability to respond. Ministers requested management and the Executive Board to keep this subject under review, including the level of Bank reserves.
19. Bank/Fund Staff: Ministers took this opportunity to express, on behalf of all member governments, their appreciation to Fund and Bank staff for their continued hard work and high level of dedicated service for the goals of the Bretton Woods Institutions.
20. Note of Appreciation: Ministers expressed their deep gratitude for the warm hospitality and support provided by the Czech authorities and the people of the Czech Republic.
21. Next Meeting: The Committee’s next meeting is scheduled for April 30, 2001 in Washington, D.C.
Development Committee Composition
as of September 25, 2000
Yashwant Sinha, Chairman
|Ibrahim A. Al-Assaf1||Saudi Arabia|
|Victor B. Khristenko||Russian Federation|
|Pedro Sampaio Malan||Brazil|
|Kiichi Miyazawa4, 5||Japan|
|Abdulla Hassan Saif||Bahrain|
|Clare Short||United Kingdom|
|Lawrence Summers7||United States|
|Anne Kristin Sydnes||Norway|
|Tertius Zongo||Burkina Faso|
E . A . S . Sarma
Timothy F. Geithner
E . A . S . Sarma
Timothy F. Geithner
Joint Session of Development Committee and the International Monetary and Financial Committee on HIPC and PRSP Implementation
September 24, 2000
1. Ministers of the Development Committee and the International Monetary and Financial Committee met jointly on September 24, 2000 to review progress on the enhanced Initiative for the Heavily Indebted Poor Countries (HIPC) and the Poverty Reduction Strategy Paper (PRSP) process. The joint meeting symbolizes the close cooperation and high political commitment of all countries and institutions to achieving a virtuous circle of debt relief, poverty reduction and economic growth for the poorest countries of the world.
2. Ministers believed that solid foundations have been laid for further progress in turning last year’s blueprints into this year’s reality. They agreed that since last year good momentum has developed in both the HIPC and PRSP programs and that real progress has been made towards broader, deeper and faster debt relief.
3. Ministers noted that 10 countries have already reached their decision points under the enhanced HIPC Initiative and have begun to receive relief. They welcomed the determination of the President of the World Bank and the Managing Director of the Fund to do everything possible to bring twenty countries to their decision points by the end of 2000. This is expected to result in combined debt service relief (including original and enhanced HIPC assistance) amounting to well over $30 billion. Taken together with traditional debt relief mechanisms, a total of about $50 billion will be provided to these countries. They noted that interim assistance beginning at the decision point had accelerated the provision of relief, and that the incorporation of the floating completion point offers qualifying countries the opportunity to reduce significantly the period between decision and completion point. In addition, Ministers reaffirmed the objective of the enhanced HIPC Initiative to deliver debt sustainability and noted that, within the existing HIPC framework, the option exists at the completion point to reconsider the amount of debt relief for countries seriously affected by exceptional adverse shocks.
4. While it was recognized that implementation would ultimately be determined by country-specific factors, Ministers welcomed recent steps to accelerate progress. These include, in particular, closer working partnership between the Bank and Fund through active work of the Joint Implementation Committee (JIC); flexibility in assessing countries’ track records, which should help to bring forward countries originally expected next year; and greater focus on key reforms to accelerate growth and poverty reduction. Consistent with the goal of broadening the initiative, Ministers supported the extension of the sunset clause for two more years to allow countries, particularly those emerging from conflict, time to enter the process. Ministers looked forward to consideration of Bank and Fund post-conflict work at the time of the Spring Meetings.
5. Ministers reiterated the importance of fully financing the enhanced HIPC Initiative, and urged all donors and creditors to meet their commitments of financial support.
6. Ministers recalled that a central component of the enhanced HIPC initiative is the strengthened link between debt relief and poverty reduction, to be made operational through country-owned PRSPs. They were encouraged that as many as 13 countries had already completed Interim PRSPs, and that two had already completed full PRSPs. They also noted that countries and their development partners had responded positively to both the promise and the challenge of the PRSP process, and were moving purposefully to put poverty at the center of nationally owned strategies. While reaffirming the principle of country ownership, Ministers urged all development partners to increase their efforts to provide additional technical assistance to support countries’ preparation of PRSPs, which should provide the context for IMF and IDA concessional assistance as well as that of donors and other multilateral institutions. In this context they welcomed the Bank’s proposal to develop a Poverty Reduction Support Credit and the key changes in the Fund’s Poverty Reduction and Growth Facility - for example, the enhanced link to PRSPs, ensuring appropriate flexibility in fiscal targets and making budgets more pro-poor and pro-growth.
7. Ministers emphasized that the early progress achieved with the enhanced HIPC Initiative and PRSPs needed to be supported by a sustained global effort from eligible countries, development partners, bilateral donors, multilateral agencies, and international civil society in order to make best use of these new opportunities.