Abstract

Purposes of the IMF

Frontmatter Page

Purposes of the IMF

(i) To promote international monetary co-operation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.

(ii) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.

(iii) To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.

(iv) To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.

(v) To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.

(vi) In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.

The Fund shall be guided in all its policies and decisions by the purposes set forth in this Article.

Article I of the IMF’s Articles of Agreement

ISSN 0250-7498

ISBN 1-55775-843-3

International Monetary Fund

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Washington, D.C. 20431, U.S.A.

Telephone: (202) 623-7430

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E-mail: publications@imf.org

Internet: http://www.imf.org

LETTER of Transmittal

Annual Report of the Executive Board for the financial year ended April 30, 1999

July 30, 1999

Dear Mr. Chairman:

I have the honor to present to the Board of Governors the Annual Report of the Executive Board for the financial year ended April 30, 1999, in accordance with Article XII, Section 7(a) of the Articles of Agreement of the International Monetary Fund and Section 10 of the IMF’s By-Laws. In accordance with Section 20 of the By-Laws, the administrative and capital budgets of the IMF approved by the Executive Board for the financial year ending April 30, 2000 are presented in Chapter 11. The audited financial statements for the year ended April 30, 1999 of the General Department, the SDR Department, accounts administered by the IMF, and the Staff Retirement Plan and the Supplemental Retirement Benefit Plan, together with reports of the External Audit Committee there on, are presented in Appendix IX.

Yours sincerely,

Michel Camdessus

Chairman

Executive Board

EXECUTIVE BOARD AND Senior Officers as at April 30, 1999

Senior Officers

Michael Mussa

Economic Counsellor

Brian C. Stuart

Director, Administration Department

G.E. Gondwe

Director, African Department

Hubert Neiss

Director, Asia and Pacific Department

Michael C. Deppler

Director, European I Department

John Odling-Smee

Director, European II Department

Shailendra J. Anjaria

Director, External Relations Department

Vito Tanzi

Director, Fiscal Affairs Department

Mohsin S. Khan

Director, IMF Institute

François P. Gianviti

General Counsel, Legal Department

Paul Chabrier

Director, Middle Eastern Department

Stefan Ingves

Director, Monetary and Exchange Affairs Department

Jack Boorman

Director, Policy Development and Review Department

Michael Mussa

Director, Research Department

Reinhard Munzberg

Reinhard Munzberg

Carol S. Carson

Director, Statistics Department

David Williams

Treasurer, Treasurer’s Department

Claudio M. Loser

Director, Western Hemisphere Department

Warren N. Minami

Director, Bureau of Computing Services

Patrick Delannoy

Director, Bureau of Language Services

Ernst-Albrecht Conrad

Director, Office of Budget and Planning

Eduard Brau

Director, Office of Internal Audit and Inspection

Kunio Saito

Director, Regional Office for Asia and the Pacific

Christian Brachet

Director, Office in Europe (Paris)

Grant B. Taplin

Acting Director and Special Trade Representative, Office in Geneva

J.B. Zulu

Director and Special Representative to the UN, Office at the United Nations

David M. Cheney

Chief, Editorial Division

Frontmatter Page

Board of Governors, Executive Board, Interim Committee, and Development Committee

The Board of Governors, the highest decision-making body of the IMF, consists of one governor and one alternate governor for each member country. The governor is appointed by the member country and is usually the minister of finance or the governor of the central bank. All powers of the IMF are vested in the Board of Governors. The Board of Governors may delegate to the Executive Board all except certain reserved powers. The Board of Governors normally meets once a year.

The Executive Board (the Board) is responsible for conducting the day-to-day business of the IMF. It is composed of 24 Directors, who are appointed or elected by member countries or by groups of countries, and the Managing Director, who serves as its Chairman. The Board usually meets several times each week. It carries out its work largely on the basis of papers prepared by IMF management and staff. In 1998/99, the Board spent more than half of its time on member country matters (regular bilateral consultations and reviews and approvals of financial arrangements) and most of its remaining time on multilateral surveillance and policy issues (such as the world economic outlook exercise, developments in international capital markets, the IMF’s financial resources, the architecture of the international monetary system, the debt situation, and issues related to IMF facilities and program design).

The Interim Committee of the Board of Governors on the International Monetary System is an advisory body made up of 24 IMF governors, ministers, or other officials of comparable rank, representing the same constituencies as in the IMF’s Executive Board. The Interim Committee normally meets twice a year, in April or May, and at the time of the Annual Meeting of the Board of Governors, in September or October. Among its responsibilities are to provide ministerial guidance to the Executive Board and to advise and report to the Board of Governors on issues regarding the management and adaptation of the international monetary system, including sudden disturbances that might threaten the international monetary system, and on proposals to amend the Articles of Agreement.

The Development Committee (the Joint Ministerial Committee of the Boards of Governors of the World Bank and the IMF on the Transfer of Real Resources to Developing Countries) is composed of 24 members—finance ministers or other officials of comparable rank—and generally meets at the same time as the Interim Committee. It advises and reports to the Boards of Governors of the World Bank and the IMF on all aspects of the transfer of real resources to developing countries.

Contents

  • Letter of Transmittal

  • Executive Board and Senior Officers

  • Board of Governors, Executive Board, Interim Committee, and Development Committee

  • Prefatory Notes

  • I. Overview

  • Financial Crises Prompt Consideration of Proposals to Strengthen the Global Financial System

  • II. The Global Economy

    • 1. Main Developments in the World Economy in 1998/99

      • Emerging Market Economies

      • Advanced Economies

    • 2. World Economic Outlook

      • United States, Japan, and Europe

      • Crisis-Afflicted Economies

      • Other Emerging Economies

      • Preventing Contagion

    • 3. International Capital Markets

      • Annual Review

        • Asian Crisis and Other Emerging Market Developments

        • Mature Market Countries

      • Interim Review

        • Factors Behind Markets’ Response

        • Role of Public Policy

  • III. The IMF in 1998/99

    • 4. Evolution of the Economic Crisis in Emerging Market Economies

      • IMF–Supported Programs in Asian Crisis Countries

        • The Board’s Assessment

      • Russia and Brazil

    • 5. Strengthening the Architecture of the International Financial System

      • Transparency, Standards, and Surveillance

        • Improving Transparency and Accountability of the IMF and Member Countries

        • Developing Standards for Use by Members

        • Role of Standards in IMF Surveillance

      • Strengthening Financial Systems

      • Capital Account Issues

      • Involving the Private Sector in Forestalling and Resolving Crises

        • Intensifying Efforts at Preventing Crises

        • Measures to Facilitate Private Sector Involvement

      • Systemic Issues

        • Implications of Capital Mobility and Exchange Rate Volatility

        • Developing IMF Facilities

        • Strengthening IMF Resources

      • Institutional Reform and Strengthening or Transforming the Interim Committee

    • 6. Surveillance

      • Bilateral Surveillance

      • Global and Regional Surveillance

        • European Economic and Monetary Union

        • West African Economic and Monetary Union

      • Experience of Transition Economies

    • 7. Support for Member Countries’ Adjustment

      • Supplemental Reserve Facility and Contingent Credit Lines

      • Assistance to Postconflict Countries

        • Post conflict Countries with Arrears to International Institutions

      • Access Policy and Limits

      • Staff-Monitored Programs

      • Social Issues

      • Economic Impact of the Kosovo Crisis

      • Member Countries’ Use of IMF Facilities

        • Albania

        • Armenia

        • Azerbaijan

        • Bangladesh

        • Benin

        • Bolivia

        • Bosnia and Herzegovina

        • Brazil

        • Bulgaria

        • Burkina Faso

        • Cameroon

        • Central African Republic

        • Republic of Congo

        • Djibouti

        • Dominican Republic

        • El Salvador

        • Ethiopia

        • The Gambia

        • Georgia

        • Guyana

        • Haiti

        • Honduras

        • Jordan

        • Kyrgyz Republic

        • Former Yugoslav Republic of Macedonia

        • Malawi

        • Mali

        • Mozambiqu

        • Niger

        • Pakistan

        • Russia

        • Rwanda

        • St. Kins and Nevis

        • Sierra Leone

        • Tajikistan

        • Tanzania

        • Uganda

        • Ukraine

        • Uruguay

        • Republic of Yemen

        • Zambia

        • Zimbabwe

    • 8. The ESAF and the HIPC Initiative

      • HIPC Initiative

        • Progress in Implementation

        • Options for Enhancing the HIPC Initiative

      • Distilling Lessons from ESAF Evaluations

        • Design of ESAF-Supported Programs

        • Implementation of ESAF-Supported Programs

        • Social Policies in ESAF-Supported Programs

        • IMF-World Bank Collaboration

        • Monitoring ESAF-Supported Programs

    • Financing the ESAF and the HIPC Initiative

  • 9. Technical Assistance and Training

  • 10. Financial Operations and Policies

    • Membership and Quotas

    • IMF Liquidity and Borrowing

      • General Resources

      • Borrowing

      • Access Policy and Limits on Use of IMF Resources

    • Members’ Use of IMF Resources and Credit Outstanding

      • Stand-By and Extended Arrangements

      • Special Facilities

      • SAF and ESAF

      • ESAF-HIPC Trust

    • IMF Income, Charges, and Burden Sharing

    • Overdue Financial Obligations

      • Progress Under the Strengthened Cooperative Strategy

    • SDR Department

      • SDR Valuation and Interest Rate Basket

      • SDR Operations and Transactions

      • Pattern of SDR Holdings

  • IV. IMF Organization, Staffing, and Budget

  • 11. Organization, Staffing, and Budget

    • Executive Board

    • Departments

      • Area Departments

      • Functional and Special Services Departments

      • Information and Liaison

      • Support Service

    • Staff

      • Recruitment and Retention

      • Salary Structure

      • Diversity

    • Administrative and Capital Budgets

      • Budget Outlook

      • Budgets and Expenditure in 1998/99

      • Budgets and Expenditure in 1999/2000

  • Appendices

  • I. International Reserves

  • II. Financial Operations and Transactions

  • III. Principal Policy Decisions of the Executive Board

  • IV. IMF Relations with Other International Organizations

  • V. External Relations

  • VI. Press Communiqués of the Interim Committee and the Development Committee

  • VII. Excutive Directors and Voting Power on April 30, 1999

  • VIII. Changes in Membership of the Executive Board

  • IX. Financial Statements

  • Boxes

  • Board of Governors, Executive Board, Interim Committee, and Development Committee

  • 1. Asian Crisis Countries: Developments and IMF Response Through the End of April 1999

  • 2. Strengthening the SDDS and Improving Access to Debt Data

  • 3. Enhanced IMF-World Bank Financial Sector Collaboration

  • 4. Measures for Involving the Private Sector in Resolving Crises

  • 5. To Tighten Defenses Against Contagion, IMF Establishes Contingent Credit Lines

  • 6. External Evaluation of IMF Surveillance

  • 7. The Stability and Growth Pact

  • 8. IMF Grants Observer Status to European Central Bank

  • 9. Conference on the Transition Experience

  • 10. IMF Financial Facilities and Policies

  • 11. Conference on Economic Policy and Equity

  • 12. IMF’s Response to Hurricane Mitch

  • 13. IMF Institute and Regional Institutions

  • 14. IMF Publishes Information on Its Financial and Liquidity Position and on Members’ Accounts

  • 15. Operational Budget

  • 16. Operational Implications of the Euro

  • 17. Designation Plan

  • 18. IMF Resident Representatives

  • 19. IMF Internal Evaluations

  • Tables

  • 1. Overview of the World Economy

  • 2. Emerging Market Economies: Net Capital Flows

  • 3. Key Economic Indicators: Indonesia, Korea, and Thailand, 1990-99

  • 4. Article IV Consultations Concluded in 1998/99

  • 5. HIPC Initiative: Status of Country Cases, as of End-April 1999

  • 6. Technical Assistance Delivery

  • 7. General Arrangements to Borrow (GAB)

  • 8. New Arrangements to Borrow (NAB)

  • 9. Access Limits, April 1999

  • 10. Selected Financial Indicators

  • 11. Use of IMF Resources in 1998/99: Regional Distribution

  • 12. Arrears to the IMF of Countries with Obligations Overdue by Six Months or More

  • 13. Arrears to the IMF of Countries with Obligations Overdue by Six Months or More, by Type and Duration, as of April 30, 1999

  • 14. Change in SDR Valuation Basket

  • 15. Transfers of SDRs

  • 16. Nationality Distribution of Professional Staff by Region

  • 17. Gender Distribution of Staff by Level

  • 18. Estimated Costs of Major IMF Activities, Financial Years 1998-2000

  • 19. Administrative and Capital Budgets, Financial Years 1997-2000

  • Figures

  • 1. World Indicators

  • 2. Developing Countries: Real GDP Growth

  • 3. Initiative for Heavily Indebted Poor Countries

  • 4. Composition of Technical Assistance, 1998/99

  • 5. IMF’s Liquidity Ratio, 1984-99

  • 6. General Resources Purchases and Repurchases, Financial Years Ended April 30, 1982-99

  • 7. Total IMF Credit Outstanding to Members, Financial Years Ended April 30, 1984-99

  • 8. International Monetary Fund: Chart of Organization

  • 9. Estimated Cost of Major Activities, Financial Year 1999

Prefatory Notes

This Annual Report of the Executive Board of the IMF reports on the activities of the Board during the financial year May 1, 1998, through April 30, 1999. Most of the Report consists of reviews of Board discussions of the whole range of IMF policy and operations. The discussions are based on papers prepared by the staff. Typically, a staff paper includes background factual and analytical material on various aspects of the issue at hand. It may also present proposals by the IMF’s management on how the Board and the institution should move forward on an issue. Although a staff paper presents the positions of staff and management, it does not necessarily represent the IMF’s position on the issue. The Board may or may not agree with the analysis or the proposals. The position of the IMF is, rather, the position of the Board as reflected in a decision or as explained in a statement summarizing the discussion (usually referred to in the IMF as the “summing up”).

The unit of account of the IMF is the SDR; conversions of IMF financial data to U.S. dollars are approximate and are provided for convenience. As of April 30, 1999, the SDR/U.S. dollar exchange rate was US$1 = SDR 0.740066, and the U.S. dollar/SDR exchange rate was SDR 1 = US$1.35123. The year-earlier rates (April 30, 1998) were US$1 = SDR 0.742580 and SDR 1 = US$1.34666.

As used in this Report, the term “country” does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis.

The following conventions are used in this Report:

… to indicate that data are not available;

— to indicate that the figure is less than half the final digit shown or that the item does not exist;

– between years or months (e.g., 1998-99 or January-June) to indicate the years or months covered, including the beginning and ending years or months;

/ between years or months (e.g., 1998/99) to indicate a fiscal or financial year.

“Billion” means a thousand million; “trillion” means a thousand billion.

Minor discrepancies between constituent figures and totals are due to rounding.